Trade Patterns in Central America and the Dominican Republic:
Authors
-
Leonardo Jose Maldonado
University of Minnesota
http://orcid.org/0000-0002-9400-3346
Abstract
This paper explores international trade data, classified by technology-intensiveness and type of products, to identify stylized facts, strengths, and weaknesses of the trade patterns in the region of Central America and the Dominican Republic, between 1975 and 2016. I focus the analysis not only on the total export of the region but on its exports to the United States (main trade partner). I examine export concentration, comparative advantages, trade specialization, and relative quality of the export basket (characterizing zones with high tax incentives in the region, free zones). The main findings suggest that the region has made little progress in improving trade accounts. The gains in diversification are being lost, the comparative advantages have historically remained in traditional exports, and the region does not appear to export quality to the world. The model of tax incentives is not generating local spillovers, and the relative quality of exports, as well as the specialization patterns, revive the idea of adjusting promotion schemes for local industry and direct investment. It is time for a competitiveness agenda.Keywords:
comparative advantage, exports, free zones, non-traditional manufactures, qualityReferences
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Anastassopoulos, G. (2007). Countries’ International Competitiveness and FDI: an empirical analysis of selected EU Member-Countries and Regions. Journal of Economics and Business, 10(1), 35-52.
Atkinson, R. D. (2013). Competitiveness, innovation and productivity. The Information Technology & Innovation Foundation.–August, 2-7.
Balassa, B. (1965). Trade liberalisation and “revealed” comparative advantage 1. The Manchester school, 33(2), 99-123.
Choudhri, E. U., & Schembri, L. L. (2002). Productivity performance and international competitiveness: An old test reconsidered. Canadian Journal of Economics/Revue canadienne d'économique, 35(2), 341-362.
Cuevas, M. A., Manzano, O. E., & Rodríguez, C. (2014). Promoviendo la transformación productiva: políticas de desarrollo productivo en Centroamérica y República Dominicana. Washington, DC: Inter-American Development Bank.
Durand, M., & Giorno, C. (1987). Indicators of international competitiveness: conceptual aspects and evaluation. OECD economic studies, 9(3), 147-182.
Feenstra, R. C., & Romalis, J. (2014). International prices and endogenous quality. The Quarterly Journal of Economics, 129(2), 477-527.
García-Herrero, A., Dos Santos, E., Urbiola, P., Dal Bianco, M., Soto, F., Hernández, M., Rodríguez, A. & Sánchez, R. (2014). Competitividad del sector manufacturero en América Latina: tendencias y determinantes. Documento de Trabajo, (14/10). BBVA Bank, Economic Research Department.
Giordano, P. (2012). Investing in Integration. Integration and Trade, 34(16).
Izquierdo, A., & Manzano, O. (Eds.). (2012). El mundo cambió: ¿Cambiará el crecimiento en Centroamérica?: Desafíos y oportunidades. Washington, DC: Inter-American Development Bank.
Kitson, M., Martin, R., & Tyler, P. (2004). Regional competitiveness: an elusive yet key concept? Regional studies, 38(9), 991-999.
Krugman, P. (1994). Competitiveness: a dangerous obsession. Foreign Aff., 73, 28.
Lall, S. (2000). The Technological structure and performance of developing country manufactured exports, 1985‐98. Oxford development studies, 28(3), 337-369.
Mann, C. L. (1999). Is the US trade deficit sustainable? Peterson Institute.
Manzano, O., Auguste, S., Alfaro, L., Artana, D., Taylhardat, A., Cuevas, M., & Porto, L. (2015). Partners or Creditors? Attracting Foreign Investment and Productive Development to Central America and Dominican Republic. Washington, DC: Inter-American Development Bank.
Manzano, O., & Maldonado, L. (2016), “Weathering the Storm: Policy Options for Central America and the Dominican Republic in an Uncertain Environment,” Macroeconomic Report CID/IADB. Washington, DC: Inter-American Development Bank.
Porter, M. E. (1990). The competitive advantage of nations. Harvard business review, 68(2), 73-93.
Portugal-Perez, A., & Wilson, J. S. (2012). Export performance and trade facilitation reform: Hard and soft infrastructure. World development, 40(7), 1295-1307.
Schwab, K., & Sala-i-Martin, X. (2017). World Economic Forum’s Global Competitiveness Report, 2016-2017. URL: http://www3.weforum.org/docs/GCR2016-2017/05FullReport/TheGlobalCompetitivenessReport2016-2017_FINAL.pdf
SIECA. (2019). Integración Económica Centroamericana en un Mundo Globalizado. URL: https://bit.ly/2E7latD
Snowdon, B., & Stonehouse, G. (2006). Competitiveness in a globalised world: Michael Porter on the microeconomic foundations of the competitiveness of nations, regions, and firms. Journal of international business studies, 37(2), 163-175.
Utkulu, U., & Seymen, D. (2004, September). Revealed Comparative Advantage and Competitiveness: Evidence for Turkey vis-à-vis the EU/15. In European trade study group 6th annual conference, ETSG (pp. 1-26).
Vollrath, T. L. (1991). A theoretical evaluation of alternative trade intensity measures of revealed comparative advantage. Weltwirtschaftliches Archiv, 127(2), 265-280.
