How Nearshoring Can Reinvigorate Latin American Industry

Latin America faces a new world of multipolarity and nearshoring. It's a chance to reindustrialize and integrate, becoming a hub for innovation in pharma and manufacturing. Collaboration is key, with universities and ECLAC playing a vital role.

How Nearshoring Can Reinvigorate Latin American Industry
Reimagining integration: Latin American and Caribbean nations collaborating for a stronger regional economy.

The world is experiencing a new period of globalization, multipolarity and in which the relocation of production — known as nearshoring — shows opportunities to relaunch integration efforts in Latin America and the Caribbean, stated the rector of UNAM, Leonardo Lomelí Vanegas.

“It is a moment that we must take advantage of and advance in a new industrialization of the region, which allows us to promote technological development and achieve an increase in the generation of added value,” said the rector, when participating in the presentation of the special edition of the ECLAC Magazine “75 years of ECLAC: Towards a more productive, inclusive and sustainable development model.”

At the event, held in hybrid format, the rector of UNAM stressed that some sectors in which this integration must be deepened are the pharmaceutical and life sciences, advanced manufacturing medical devices, among others.

Before the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), José Manuel Salazar-Xirinachs, Lomelí Vanegas stressed the need to seek complementarities between countries, to achieve rapid growth, which will take the region out of the trend of increasingly lower and volatile inertial growth, experienced in the past four decades.

Likewise, he maintained that sustainable and environmentally responsible development must be promoted, inclusive, that generates quality jobs, helps reduce inequality and increases mobility, hand in hand with the expansion of social protection and the welfare state. , in other aspects.

Previously, Salazar-Xirinachs explained that the special edition of CEPAL Magazine is a way to commemorate the 75 years of that multilateral organization and invites us to rethink, reimagine and transform the present; to distinguish the whats and the hows to manage major changes, detect existing gaps, major challenges and ways to move forward. “So that Latin America and the Caribbean can successfully navigate this new stage of globalization.”

He highlighted that there have been great geoeconomic structural changes that have transformed geopolitics. Among them, for example, that the share of the United States in world production measured by Purchasing Power Parity fell from 20 percent in 1991 to 16 percent in 2022, while that of China increased from four percent to 18 percent, in the same period.

The Asian nation has also become the main trading partner for most countries, with 14.4 percent of global exports, while those of our northern neighbor represented 8.3 percent in 2022. Likewise, Russia, India, China, and Southern Africa have surpassed the production of the countries known as G7.

The head of ECLAC explained 11 major transformations necessary in the development model, among which are: high, sustained, sustainable and inclusive growth; reducing inequality and increasing social mobility and cohesion; the expansion of social protection and the Welfare State, effective education for all and broad access to vocational training; progress towards gender equality and a caring society; the environmental drive to promote sustainability and confront climate change; digital transformation; orderly and regular migration, among others.

On the occasion, the director of the Institute of International Studies of the University of Chile, Dorotea López Giral, pointed out that the exercise of strategically rethinking the region is not only the responsibility of governments but also of other actors such as universities, responsible for forming human capital. , a fundamental pillar to consolidate development.

“The responsibility that universities have, particularly public ones, is in all aspects of training, such as research and the generation of spaces for change,” she said.

Meanwhile, Cecilia Vera, Economic Affairs Officer of the Economic Development Division of ECLAC, commented that the articles included in the magazine show that we are witnessing a new order of globalization, which began in 2018, with the trade war between States. United States and China, and which has generated the fragmentation of trade and financial flows along geopolitical lines.

This scenario was accentuated after the COVID-19 pandemic, Russia's invasion of Ukraine and has demanded that countries and multilateral companies seek to decouple their supply chains from the most geopolitically distant countries. This is a scenario that Latin America and the Caribbean have to try to understand navigating successfully, she asserted.

Miguel Torres, editor of the CEPAL Magazine, explained that the work contains 11 articles by prominent researchers from the same Economic Commission for Latin America and the Caribbean, as well as external analysts, who review the structural development gaps in the region and the policies that are suggested to implement.