La Alianza del Pacífico: un reto para Colombia y una oportunidad para aprender y competir con Asia Pacífico

Por: Carolina Herrera Cano* (caroherca@gmail.com)
Estudiante del Master in International Business (MIB)
Negociadora Internacional de la Universidad EAFIT, Colombia

Durante esta semana se lleva a cabo en la Universidad EAFIT el evento Semana Asia: “Encadenamientos Productivos en Asia Pacífico: Experiencias para América Latina”, organizado por el Centro de Estudios Asia Pacífico. En esta ocasión, Juan Camilo Nariño, Vicepresidente de Comercio Exterior y Encadenamientos Productivos de la ANDI, presentó su conferencia: “La importancia de la Alianza del Pacífico para Colombia”.

El representante de la ANDI resaltó los grandes beneficios que representa la Alianza para cada uno de los países miembros: estos cuatro países representan hoy el mayor mercado en América Latina, un atractivo destino de inversión extranjera directa y un actor económico que supera en muchos sentidos a Brasil; sin embargo, además de estas ventajas, es importante tener en cuenta los retos que este proceso de integración trae consigo, especialmente para Colombia. Como se ha planteado desde sus inicios, esta alianza pretende ser la plataforma política, económica y comercial y proyección al mundo, con énfasis en la región Asia Pacífico. La tesis planteada por Juan Camilo Nariño está enfocada en la necesidad de realizar esfuerzos para la facilitación del comercio regional: la existencia de la Alianza del Pacífico no garantizará un aumento de las relaciones comerciales entre los países puesto que previamente existían acuerdos comerciales entre los países miembros.

De esta manera, el verdadero aprovechamiento del acuerdo dependerá de las iniciativas gubernamentales y privadas en pro del libre movimiento de bienes y servicios. En este sentido, cobran importancia la unificación de reglamentos técnicos y de trámites aduaneros, sanitarios y logísticos, entre otros, que buscarán explotar al máximo los beneficios arancelarios existentes. Por otro lado, la Alianza del Pacífico deberá ser el espacio para promover los encadenamientos productivos no sólo globales, sino especialmente regionales, tal como sucede en la región de Asia Pacífico.

Los retos que esta alianza crea para Colombia requieren una efectiva reorganización de las estructuras internas del país. Para esto será necesario un trabajo conjunto entre el sector público y el privado que permita generar mayor competitividad en la región y que se traduzca en una oportunidad tanto para competir, como para aprender del Asia Pacífico.

Lanzamiento oficial del Reporte Mundial de Inversiones 2013

Ver cubrimiento del Lanzamiento del World Investment Report 2013 de la UNCTAD para Colombia por parte de la oficina de prensa de la Universidad EAFIT.

Artículo disponible aquí.

Lanzamiento oficial para Colombia del Reporte Mundial de Inversiones de la UNCTAD (WIR 2013)

El lanzamiento oficial para Colombia del "World Investment Report"(WIR 2013) se llevará a cabo el martes 5 de Noviembre 2013 vía video conferencia desde el Palacio de las Naciones Unidas en Ginebra (Suiza) por parte de la Conferencia de las Naciones Unidas para el Comercio y del Desarrollo (UNCTAD). Esta transmisión oficial es organizada por el Instituto Virtual de la UNCTAD.
Las universidades en Colombia que transmitirán este evento serán la Universidad de la Sabana, y la Universidad EAFIT.
El Observatorio en Comercio, Inversión y Desarrollo, y UN Society invitan a estar presente en la exclusiva presentación por parte del equipo investigador del  Reporte Mundial de Inversiones 2013.

El Reporte Mundial de Inversiones del año 2013, se focaliza en las implicaciones las cadenas de valor y el comercio en el desarrollo.

• Hora: 10:00 am (GMT+5)
• Lugar: Bl. 19-513. Universidad EAFIT, Medellin, Colombia

Mayores informes: mgonza40@eafit.edu.co 

Value Chain and Entrepreneurs: causality or correlation?

Opinion article by Nathalia Rios Ballesteros* (nriosba@eafit.edu.co)

Economics student at Universidad EAFIT

In colloquial sense, entrepreneurship is usually associated with starting a business, but strictly, this definition and application goes much further and hides behind its words, a wide history and conceptual interpretation of it. The term “entrepreneur” derives its origin from French economists who first introduced the term in the 18th century. According to the Oxford Dictionary, it comes from the French word “entreprendre” which means someone who “undertakes” or “carry out” a significant project or activity. More specifically, it appeals to describe the daring individuals who stimulate economic progress by finding new and better ways of doing things. The French economist most commonly linked and credited for giving the term this particular meaning is Jean Baptiste Say. By the 19th century, Say stated; “The entrepreneur shifts economic resources out of an area of lower and into an area of higher productivity and greater yield”[1]. In brief, entrepreneurs create value.

Along with this “economic conception” of entrepreneurs, Joseph Schumpeter based his definition affirming that the function of entrepreneurs is to reform, change or modify the production pattern through various ways: “by exploiting an invention or, more generally, an untried technological possibility for producing a new commodity or producing an old one in a new way, by opening up a new source of supply of materials or a new outlet for products, by reorganizing an industry and so on.”[2] In a nutshell, Schumpeter’s entrepreneurs are the change agents in the economy.

Following this theoretical conceptions, arise the notion of value chain, which along with entrepreneurs are responsible for creating value. Regarding this, entrepreneurship and innovation cannot be fully understood without a proper understanding of the position and behavior of entrepreneurs in the value chain. Although entrepreneurship involves changes, transformations and improvements in products or services, entrepreneurial opportunities can, in fact, occur as a result of changes in a variety of parts of the value chain, thus raising the value generated by entrepreneurs. In this sense, the entrepreneur’s idea, then, may span several parts of an industry’s through the value chain; entrepreneurs are key for spreading success throughout the value chains which indicates that the presence of entrepreneurship may involve a better outcome obtained through the implementation of value chains.

"Entrepreneur" in this sense may result as an strategic element for; identifying, evaluating and exploiting undiscovered or new business opportunities; for revitalizing, energizing or renewing existing organizations in response to the perceived opportunity and for boosting the economy-innovation, competition, creation of employment through the creation of additional and new value and thus, in sum improving the general welfare of society.

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[1] (Say, (1803, tr. from the 4th ed. 1821))

[2] (Schumpeter, 1911)

Global value chains: Emerging opportunity for developing countries

Opinion Article by: Estefanía Tirado * (etirado2@eafit.edu.co)
*Economics and International Business Student at Universidad EAFIT, Colombia.

During the last couple of decades the world has experienced a trade phenomenon that consist in the expansion of the production networks between affiliates and partners all over the globe. This process has been led especially by multinational companies that seek for better production costs, better access to the necessary production inputs, diversification of risks, access to certain specialized services and between other interest, looking for tax benefits.

Though sometimes this phenomenon is considered as an opportunity for multinational enterprises to overexploit at a low cost developing countries’ human and physical resources, there is an undeniable great contribution of this process, and it has been the redistribution of value added that had been generated by developed economies for a large number of decades. Despite the fact that an amount of value is allocated within the local economy just by the establishment of an international company in the national territory, it is not enough, and the challenge comes at maximizing the percentage of value kept, taking advantage of the real technological transference and becoming conscious of the exhaustibility of natural resources so new non-extractive economic activities can emerge. By doing this, a tangible opportunity comes for developing countries to join the global production chain and generate value added, that with fair redistributive mechanisms, would have a positive impact on peoples’ welfare.
Taking into account that 60% of global trade consists in the exchange of intermediate goods and services (UNCTAD, 2013), and they are being incorporated everyday, in several parts of the world, into the final service or product, this is a massive opportunity for developing countries to integrate trade benefits into the local economies. There would be not only an increase in the number of people employed, but also, as technological transference occurs, both capital and human resources will have a higher marginal productivity, what would elevate the entire economy’s productivity and will end up in more product per capita.

Although it sounds like an extremely palpable opportunity, there are certain factors that must be taking into consideration before a country can boost development by embracing global value chains. Policies of social contribution by foreign companies, concise redistributive mechanisms and building productive capacity through educational programs that train the labor force for the technological absorption, are key factors for maximizing benefits of this kind of trade. If policymakers have this in their minds, the country's integration in global trade will be more than successful, and most importantly it will have a positive impact on the population’s welfare.

Reference:

UNCTAD. (2013). World Investment Report 2013. UNCTAD. United Nations.

Global Value Chains: Governance and Interventions

Opinion article by: Manuela Ramírez Cardenas (mramir67@eafit.edu.co)*
International Business and Political Sciences student at Universidad EAFIT, Colombia.

UNCTAD’s World Investment Report for 2013 highlights the importance of Global Value Chains as contributors for development, stating that they “have a direct economic impact on value added, jobs and income” (UNCTAD, 2013) as well as providing opportunities to build the productive capability of a country that would give it the chance for long term industrial upgrading. The WIR 2013 also highlights the risk in participating in GVC because countries, specially poorer developing countries, capture only a small share of the value created in the chain as they only participate on the low value added activities, like the supply of natural resources, and they risk remaining locked on those low value added activities without actually upgrading in the long term.

To avoid the risk of remaining on the lower part of the value chain it is important to implement policies that would enable GVC to actually work for development and the improvement of a country’s productive capability, however this is difficult due to the governance of the chain. According to John Humphrey & Hubert Schmitz governance “refers to the inter-firm relationships and institutional mechanisms through which nonmarket coordination of activities in the chain is achieved” (Humphrey & Schmitz, 2001), usually done by firms in developed countries, who are the ones that have the intangible competences– i.e. marketing, R&D, etc.- that are characterized by high barriers of entry and high economic returns that allow them to be located on a higher part of the value chain. Access to those intangible competences is tough due to those high barriers of entry that require investment, so developing countries usually remained locked in tangible activities which must follow the requirements set by the governors of the chain, that is, the developed countries’ firms.

The governors of the chain impose requirements that those on the lower part of the chain must meet in order to participate in it, and often developing countries are expected to comply with requirements that do not apply yet to their own domestic market, and this highlights the competitive challenges these countries face, with the possibility of an eventual exclusion in the participation of those markets, and makes it nearly impossible for those countries to implement actual policies that would eventually give them access to a higher value gain in the chain.

In my opinion, if GVC are to be successful tools for development, the governors of the GVC must implement value chain interventions focused on the support for development, not from an economic perspective but instead from a holistic viewpoint, by taking decisions that target the improvement of the quality of the lives of the different actors involved in the value chain and the reduction of poverty.

One of those value chain interventions that could have a positive impact in the reduction of poverty is related to the agricultural sector. There are studies that show that the growth generated by agriculture is more effective in reducing poverty that the growth generated in other sectors (Seville, Buxton, & Vorley, 2011), so it is paramount that developing countries that have a precarious agricultural sector, characterized by the poverty of the small-scale farmers, implement strategies to allow those small-scale farmers and producers to connect to value chains in formal markets to give them opportunities to actually overcome poverty, as it has been theorized that “linking smallholders with well-functioning local or global markets – ranging from local ‘street markets’ to formal global value chains – plays a critical part in long-term strategies to reduce rural poverty and hunger” (Seville, Buxton, & Vorley, 2011). However for countries like Colombia, the process of linking the small-scale farmers to global value chains is complicated, as the agricultural sector in the country has several structural challenges, ranging from lack of adequate infrastructure to lack of skills and training.

References: 

Humphrey, J., & Schmitz, H. (2001). Governance in Global Value Chains . Retrieved August 27, 2013, from Institute of development Studies: http://www.ids.ac.uk/files/dmfile/humphreyschmitz32.3.pdf 

Seville, D., Buxton, A., & Vorley, B. (2011). Under what conditions are value chains effective tools for pro-poor development?. Sustainable Food Lab & The International Institute for Environment and Development . International Institute for Environment and Development/Sustainable Food Lab . 

UNCTAD. (2013). World Investment Report 2013. UNCTAD. United Nations.

Global Value Chains (GVCs): the path towards a global economy

Opinion article by: Nathalia Rios Ballesteros* (nriosba@eafit.edu.co) 

Economics student at Universidad EAFIT, Colombia.

Global capitalism has taken over the current economic field. Over the last two decades, terms such as ‘globalization’, ‘internationalization’ and  ‘international free trade’ have emerged and have jointly given rise to a new line of research and a new ‘form of trade’ which has increased greatly in importance nowadays: Global Value Chains (GVCs).  According to Gereffi (2003) a value chain is the range of activities –understood as a set of process that take place transnationally - involved in the design, production and marketing of a product before it is turn into a final good; it is ‘the functional integration and co-ordination of internationally dispersed activities’’ (Gereffi 1999: 41)

Within this broad framework; the growing integration of the global economy posed by the implementation of the GVCs in the various sectors of the economy, has provided the opportunity for substantial economic and income growth, creating and promoting significant opportunities for developing countries and regions as a way to potentially increase the rate and scope of industrial growth and the upgrading of their manufacturing and service activities as well as a way for addressing the poverty and inequality inherent to its internal situation.

However, at the same time, GVCs carry along not only positive but also negative attributes for these countries. As it was stated by the UNCTAD WIR for 2013, even though developing countries are increasingly becoming active participants of GVCs and thus gaining significant improvements in living standards and domestic value added in their exports - higher contribution to countries’ GDP- through it, it still remains a long way towards equity in contrast with developed economies. In this sense, as global trade grows, developed economies appear to increase import dependence for exports, allowing developing countries to add disproportionately to their domestic value; in a nutshell, innovation activities tend to attract higher incomes and continue to be concentrated in the developed countries.

In this context, it seems like the impact of GVCs on inequality is perhaps a complex and wide reality, but unraveling this ‘complexity’ is the key challenge for all developing economies in order to succeed in their path towards integral growth and economic development. What matters then, is how producers – whether firms, regions or countries – become active participants of the global economy and GVCs to narrow this disparity. Hence, there is a need to manage and control the mode of insertion into this ‘plural economy’, to ensure that incomes are not reduced or further transferred to developed countries. Thus, identifying the circumstances which enable developing countries to extend and transform their production capabilities into innovation capabilities along with profit maximization, acquisition of competitive and comparative advantage, reduction of reliance on developed countries to create own-domestic value added and the diversification and expansion of the range of production, which implies exploring other economic sector and fields, rather than sticking into the one that provides the least profit range: the primary sector, can become useful strategies to forge the way to a true global economy.

References: 

Gereffi, G., 1999, ‘International trade and industrial upgrading in the apparel commodity chain’, Journal of International Economics, Vol 48, No 1, pp 37-70.

Governmental decisions in the context of global value chains

By: Carolina Herrera Cano (caroherca@gmail.com) *

International Business Student. Universidad EAFIT, Colombia

The existence of an interconnected network of production and communication is not a trend arising from the processes of globalization of the last decades. The influence of foreign actors has defined the way in which countries establish its economic policy. This is the case of mining exploitation, and technology exports which are examples of how ancient practices have created global value chains even before telecommunications were imagined. Nevertheless, the effectiveness of these processes has rapidly changed, and the GVCs have gained importance for the international economy, and consequently for governmental decisions.

The interpretations to this fact come from very different perspectives. For instance, the theory of the international division of labor presents a picture of how international economy works out as a result of inequality, and the use of power between countries. On the other side, there is the point of view in which the specialization and free competition are the main driving forces in the context of international commerce. As a result of this kind of confrontations, there is not an absolute truth, but there is a fact that makes this discussion to have sense. This one is the importance the global value chains have in the international realm. In this way, the discussion countries have undertaken is not a matter of the GVCs definition and consequences, but an effort made to effectively participate in this system.

In the context of economic growth, and sustainable development seeking, different considerations emerge regarding the type of industry in which exporters, importers, intermediaries, and so on should participate. These decisions originate from a huge variety of markets forces like supply and demand, international prices, and logistics chains. But these circumstances are not the only ones shaping this environment. The role the public sector plays is also crucial, not only because of its ability to lead states policies, but because the extent the social, and environmental consequences, derived from the participation in GVCs, have is at the end a matter of public concern. 

At this point, governments must decide where to invest and/or what type of investment to attract. But the question is how to coordinate some fundamental aspects like the size of the economy, the composition of exports and its position in GVCs, and the economic structure and export model (UNCTAD, 2013), in a way in which they maximize the benefits from the national economy, and the population. Should it be a process of adaption, in which macroeconomic indexes and market research decide what to produce? Or should be implemented a competitive advantage strategy that supports emergent markets, and (maybe risky) innovative initiatives? Even if these options are not mutually exclusive, governments tend to prioritize according to their goals. As GVCs are modifying the way in which the international economy works, governments must define appropriate strategies in order to respond to this phenomenon in a way that it facilitates the insertion in the system, and that also creates a better domestic scenario.

About the importance of policy stability in the path to development

Opinion article by: David Ricardo Murcia*.  (dmurcias@gmail.com )

*Political Sciences student at Universidad EAFIT, Colombia.

One crucial component of development paths in the 21st century has been the share of a country in the value given to a product during its process in a global value chain (GVC). Using the formers modes of production Transnational Corporations (TNC) distributes among various nations the process of production seeking lower costs according to the characteristics of the nations, id est: TNCs assemble each part of a final product in the state where it is cheaper. It, indeed, hazards developing countries because most of the value will be given to the economy that commercializes the final product. The remaining value splits in each hosting nations according to the step of the production in which it participates. According to the UNCTAD WIR for 2013, nations involved in the primary sector of the economy gain a little percentage of product profit that comes from their commodities.

A way to take advantage of the GVCs, and, therefore, dodging the obstacle described above, is to canalize or specialize a nation’s economy in a sector that gives a bigger share of the value added in the process. These could be seen in the reason why Asian nations gain better revenue of the TNC operations than the Latin-American or African countries, as for the first got involved in high added sector such as technology or high profile services, while the second are stuck in the extraction and production of commodities. One should think that, it will be a simple problem to solve, but it is not like a state could easily change its current economic activities, more, if it is taken into account the political culture of each region.

Let’s take Singapore and Colombia to make the comparison. Singapore took a clear highway to development since the independence from its metropolis. In the head of Lee Kuan Yew, who governed during 25 years (1965-1990), the nation torn itself into the most important merchant port of the South-East Asia and therefore to a prosperous economy. After the Yew Singapore government there has been just two political authorities: Goh Chok Tong with 14 years in office (1990-2004), and Lee Hsien Loong since 2004, who have nothing but continued the same path. This shows a scenario of a politically stable country, although a soft-autocratic, nevertheless, a highly competitive country in the global panorama.

By the other hand, there is Colombia. Since its independence from the Spanish Empire, the Latin-American country has seen no continuity or establishment of a state policy. Each president who climbs in office tries to impose its own view to a very skeptical political class and its interests. That makes every policy proposal a government policy; with no continuity in the future administrations. The former instability turns into a non-specific economy in land with high capabilities to exploit. That is why the various sectors with growth potential can be easily weakened by the lack of institutional support. There was, for sure, a big deal with coffee, minerals, or oil, but there were no state policy giving a stable and endurable frame to any sector to thrive. But that policy instability through history takes place in what could be described as a democratic environment, where each class has, successfully or not, fought for their rights.

The comparison should be extended, but the space is short. In a gross résumé, the former analysis left bitterness in the mouths when it suggests a question for how patience should a democratic society (like the Colombian) be with democracy, if a soft-autocratic government has given such good revenue to the Singaporeans. Or how should we arrange the political system to give policy and economic stability so we could get a better deal out of the TNCs and the current dynamics of GVCs..

References

UNCTAD. (2013). World Invesment Report 2013. Geneva & New Yor. United Nations

Le Monde Diplomatique. (2012). El atlas geopolítico 2012. Valencia: UNED.