14 Mar 2014

On the rise: the growth of services value chains in Latin America

A new publication sponsored by the academic cooperation project of WTI and the Swiss State Secretariat for Economic Affairs (SECO) explores the recent growth of services value chains in Latin America and their policy and business determinants.

The volume, entitled “Latin Americaʹs Emergence in Global Services: a new driver of structural change in the region?” grew out of a conference held in October 2012 at the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC) in Santiago, Chile, and supported by SECO.

The spread of information and communication technologies and the continued trend towards trade and investment liberalisation have facilitated the global unbundling and offshoring of services activities from advanced to developing countries.

Such offshoring has gradually morphed into more sophisticated forms of business process outsourcing. Several countries in Latin America are today upgrading their services exports towards knowledge process outsourcing, including research and development, product development and more advanced vertical functions and activities within value chains.

Co-edited by Pierre Sauvé, the WTI’s Director of External Programs and Academic Partnerships, the volume documents how several countries in the region have entered the offshore services sector – both by attracting multinational companies and through the internationalisation of domestic service suppliers.

Among the volume’s central insights is that the future of the offshore services sector in Latin America will hinge crucially on the ability of firms throughout the region to upgrade their knowledge- and skill-intensive product offerings. This in turn will call for the strengthening of domestic technical capabilities, the adoption of novel industrial support measures, the promotion of backward and forward linkages, and the continued upgrading of human capital and information technology-integrated manufacturing.