![Strategies to promote the economic development of Latin America Strategies to promote the economic development of Latin America](/media/29167/red2005-novedades.jpg)
Strategies to promote the economic development of Latin America
Report on Economy and Development - RED presented today contributes to the debate on how to achieve sustained and quality economic growth in Latin America for the benefit of all the region's inhabitants.
According to the publication, although Latin America has opened its markets to international trade, its relative share of trade has fallen systematically to half that of 40 years ago, revealing the need to design a coherent negotiating strategy for the region for the multiple trade options available, but with the objective of increasing the multilateral opening.
In this respect, the increased and improved participation of Latin America in international trade requires a strategy that uses various routes of participation adapted to the economies of the region.
The evidence presented in RED shows that, subject to the characteristics of each agreement, trade liberalization has a positive impact on the participating countries in economic and social terms.
In the case of Colombia, in the short term RED forecasts 0.68% higher growth of real GDP and 9.57% for exports. In the long term, this growth is expected to increase to 1.50% and 10.87%, respectively.
The report comments that free trade agreements with developed countries are another good option for promoting regional development. Especially in the Colombian case, the FTA with the United States is the second best option because it offer the greatest gains.
In the short term, real GDP growth for Latin America is projected to grow 0.47% and exports 5.03%. In the long term, growth will be 1.12% and 6.37%, respectively; however since these projections are based on static models they do not capture the dynamic effects of increased trade liberalization.
The analysis of the Colombian-US FTA refutes the belief that preferential agreements between small and large economies threaten labor stability and increase poverty rates. The results show that for Colombia this FTA will expand production and employment in sectors intensive in unskilled labor, although in very moderate proportions.
In the world free trade scenario by sector, agriculture and the food industry will be the main beneficiaries in most countries of the region. In Colombia, the agriculture sector will grow 4.61% in the long term, with a slight fall in agroindustry (0.37%). In the case of the FTA with the United States, although the gains in the agriculture sector decline in the long term to 1.68%, they are accompanied by gains in most other sectors (except heavy manufacturing), especially the textile sector whose long-term growth is estimated at 13.22%.
With this publication, CAF is contributing to stimulating the debate and guiding the implementation of public policies designed to increase access to international markets, with the ultimate purpose of achieving greater growth and a better quality of life for the region’s inhabitants.
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