Nearshoring could add an an­nu­al $78 bil­lion in ex­ports of goods and ser­vices in Latin Amer­i­ca and the Caribbean in the near and medi­um term, with op­por­tu­ni­ties for quick wins in the au­to in­dus­try, tex­tiles, phar­ma­ceu­ti­cals, and re­new­able en­er­gy, among oth­ers, ac­cord­ing to the In­ter­Amer­i­can De­vel­op­ment Bank (IDB).

The es­ti­mate was pro­vid­ed to se­nior gov­ern­ment of­fi­cials from Latin Amer­i­ca and the Caribbean, in­clud­ing min­is­ters of trade and for­eign af­fairs, and se­nior ex­ec­u­tives from com­pa­nies of the West­ern Hemi­sphere, who re­cent­ly gath­ered to analyse op­tions for tak­ing ad­van­tage of the op­por­tu­ni­ties pro­vid­ed by the re­con­fig­u­ra­tion of glob­al sup­ply chains, trends in trade sus­tain­abil­i­ty and cli­mate change, and the in­creas­ing dig­i­tal­iza­tion of economies.

“In­creased en­vi­ron­men­tal con­cerns, along with the health cri­sis and the re­cent in­va­sion of Ukraine by Rus­sia, has pre­sent­ed an op­por­tu­ni­ty in which the re­gion can con­tribute to the glob­al econ­o­my and the fight against in­fla­tion by tak­ing a more ac­tive role in glob­al sup­ply chains in a way that is sus­tain­able and eq­ui­table,” IDB Pres­i­dent Mauri­cio Claver-Carone ex­plained in a state­ment.

It added that sup­port­ing the re­con­fig­u­ra­tion of glob­al val­ue chains is a pri­or­i­ty of the IDB’s Vi­sion 2025 plan to ac­cel­er­ate the eco­nom­ic re­cov­ery and growth of Latin Amer­i­ca and the Caribbean.

Ad­di­tion­al­ly, for the re­gion to take ad­van­tage of op­por­tu­ni­ties that come with in­creased par­tic­i­pa­tion in glob­al val­ue chains (GVC) the IDB rec­om­mend­ed that coun­tries fo­cus on a “3i” strat­e­gy: in­vest­ment, in­fra­struc­ture and in­te­gra­tion.

It ex­plained that coun­tries should in­crease ef­forts to at­tract in­vest­ment by mak­ing im­prove­ments in the busi­ness cli­mate and in in­vest­ment.

The IDB es­ti­mates that each dol­lar in in­vest­ment pro­mo­tion pro­duces al­most $42 in di­rect for­eign in­vest­ment.

Fur­ther, it said im­prov­ing in­fra­struc­ture in trade, con­nec­tiv­i­ty, trans­porta­tion and lo­gis­tics in the re­gion is key to en­sure firms are cost-com­pet­i­tive.

A 10 per cent re­duc­tion in in­ter­na­tion­al ship­ping costs in­creas­es the val­ue of ex­ports by at least 30 per cent, the IDB es­ti­mat­ed.

Al­so, the IDB ad­vised that the re­gion must deep­en and mod­ern­ize its re­gion­al in­te­gra­tion to low­er trade fric­tion and boost com­pet­i­tive­ness.

This in­cludes re­dou­bling ef­forts to con­verge and har­mo­nize more than 33 pref­er­en­tial trade agree­ments in the Amer­i­c­as, the IDB not­ed.

It added that this har­mo­niza­tion would re­sult in an in­crease in in­trare­gion­al trade of near­ly 12 per cent.