Evolution of trade and productive integration in Latin America, 1995-2015: an input-output analysis

Vázquez López, Raúl Article Evolution of trade and productive integration in Latin America, 1995-2015: an input-output analysis Journal of Economics, Finance and Administrative Science Provided in Cooperation with: Universidad ESAN, Lima Suggested Citation: Vázquez López, Raúl (2024) : Evolution of trade and productive integration in Latin America, 1995-2015: an input-output analysis, Journal of Economics, Finance and Administrative Science, ISSN 2218-0648, Emerald Publishing Limited, Leeds, Vol. 29, Iss. 58, pp. 229-245, https://doi.org/10.1108/JEFAS-09-2022-0202 This Version is available at: https://hdl.handle.net/10419/319658 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Evolution of trade and productive integration in Latin America, 1995–2015: an inputoutput analysis Ra ul V azquez-L opez Instituto de Investigaciones Econ omicas, Universidad Nacional Aut onoma de M exico, Ciudad de M exico, M exico Abstract Purpose –The main goal of this paper is to examine the evolution of Latin American productive integration in terms of the regional value added incorporated in intra-regional exports of Argentina, Brazil, Chile, Colombia, Mexico and Peru. In addition, the study traces the trade and productive integration trajectories for each of these countries from 1995 to 2015. Design/methodology/approach –Based on the use of OECD’s global ICIO input-output tables, this paper applies the methodological framework by Wang et al. (2018) for the analysis of trade flows at the bilateral level, which allows breaking down the value of gross exports of each sector-country, depending on the origin of the value added contained in exports, as well as their use. Findings –The estimates show very low shares of value added from regional partners in the intra-regional exports of the countries studied. Conversely, the weight of the value added incorporated in these exports by countries outside the region has increased in tandem with China’s expanding involvement in Latin America. This development, along with the downward trend in domestic value added incorporated in exports, indicates a lack of a regional integration process of any depth. Originality/value –This article addresses an economic problem of conventional importance from a global value chain perspective using a novel methodology based on the use of global input–output tables. Keywords Latin America, Value chains, Input-output, Regional integration, Exports Paper type Research paper 1. Introduction In Latin America, the new global context—led by international organizations—gave rise to a new “open”integration paradigm, with the primary goal of increasing regional trade to foster greater global integration, based on each country’s static comparative advantages (B ertola and Ocampo, 2013). The establishment of open trade and regional preference zones was proposed, but unlike the previous “closed”model, there were no instruments to promote productive transformation with equity (Brice~ no, 2013). These public policy guidelines motivated the formation of NAFTA and MERCOSUR, as well as the region’s leading economies’active participation in these agreements (Brazil, Mexico and Argentina) (Botto, 2019). Latin American productive integration 229 JEL Classification —C67, F15, F63, O54, N76 ©Ra  ul V azquez-L opez. Published in Journal of Economics, Finance and Administrative Science. Published by Emerald Publishing Limited. This article is published under the Creative Commons Attribution (CC BY 4.0) licence. Anyone may reproduce, distribute, translate and create derivative works of this article (for both commercial and non-commercial purposes), subject to full attribution to the original publication and authors. The full terms of this licence maybe seen at http://creativecommons. org/licences/by/4.0/legalcode This work was supported by DGAPA –UNAM [PASPA Program for a sabbatical research fellowship at the Federal University of Rio de Janeiro (UFRJ)] and CAPES-Brazil [process number: 88887. 841978/2023-00]. The current issue and full text archive of this journal is available on Emerald Insight at: https://www.emerald.com/insight/2077-1886.htm Received 27 October 2022 Revised 16 August 2023 1 November 2023 20 February 2024 Accepted 21 February 2024 Journal of Economics, Finance and Administrative Science Vol. 29 No. 58, 2024 pp. 229-245 Emerald Publishing Limited 2077-1886 DOI 10.1108/JEFAS-09-2022-0202 With the arrival of progressive governments at the beginning of the twenty-first century, there was a return—in terms of ideological orientation—to postulates based on productive integration, as a means of progressing in industrialization processes towards more sophisticated modalities and with greater technological content (CEPAL, 2014). While the Bolivarian Alliance promoted an integration model based on solidarity, complementarity and cooperation, MERCOSUR’s agenda was temporarily expanded to include issues related to coordination and productive integration. In 2012, the creation of the Pacific Alliance, with an “open”integration perspective, revealed a process influenced by national political fluctuations consisting of free trade agreements, regional and subregional agreements with opposing approaches and marked by the simultaneous participation of one or more countries in incompatible integration initiatives (L ambarry, 2016). In this regard, Latin American governments have shared the goal of forming and developing international production linkages that allow progress towards complete accumulation of origin. For that purpose, a consensus has emerged to embrace a more modern perspective of the integration process, focusing on the issues of integration in the production base and developing regional or subregional value chains (CEPAL, 2014). At the global level, different national experiences indicate that a more significant share of exports as a percentage of GDP may not reflect long-term progress in terms of income, employment or development if it is not accompanied by increases in domestic value-added content in exports (Banga, 2013). In this context, the benefits of productive and trade integration must be evaluated based on the value added generated in each location. Various authors (Wang et al., 2018;Johnson, 2014) have argued that trade statistics measured in gross terms entail a misinterpretation of the nature of trade integration phenomena, particularly the role of different countries, sectors and productive factors in global dynamics. Recently, the development of global input-output matrices and various methodologies based on these new instruments has made it possible to trace the value of goods and services through the set of participating countries and industries using bilateral trade flow analysis, and thus quantify the contributions of different stages of production to the value of the final product, as well as the distribution between countries of the benefits resulting from the fragmentation of the manufacturing process (Johnson, 2014). In light of this, the main goal of this article is to examine the evolution of Latin American productive integration in terms of the regional value added (RVA) incorporated in intraregional exports of countries for which complete and consistent data is available in the OECD’s global input-output matrices (ICIO) (OECD, 2021) (Argentina, Brazil, Chile, Colombia, Mexico and Peru). In a second instance, the study uses two axes of analysis to trace the trade and productive integration trajectories for each of the countries from 1995 to 2015. The first, based on typical trade statistics, analyses the weight of intra-regional exports in the total exported; the second, based on a Global Value Chain approach, assesses the RVA’s participation in intra-regional exports, in order to highlight the involution recorded in the degrees of complexity of these regional exchanges. The outline of the paper is as follows: Following this introduction, the second section discusses the main aspects of economic integration theories about developing countries and Latin America in particular, as well as the concerns exposed on the issue of economic integration in Latin America within the context of the formation of Regional Value Chains (RVCs). Then, a third sectiondetails the calculations made from the methodology developed by Wang et al. (2018) (hereinafter referred to as WWZ), as well as the statistical sources used. The fourth section conducts a descriptive analysis of traditional trade statistics, which functions as a prelude to the presentation of the integration trajectories for the studied countries, in the fifth section. The fifth section holds also a discussion on the breakdown of intra-regional exports based on the origin of the incorporated value added and presents some theoretical and policy implications, followed by the research’s key conclusions in the sixth section. JEFAS 29,58 230 2. Theoretical framework and literature review The framework of the theory of economic integration as laid out by Jacob Viner (1950) stems from the classical perspective of searching for the most efficient use of resources, emphasizing the static effects of the creation and deviation of trade caused by the liberalization of commerce (Asche, 2021). As the theory develops, particularly with the emergence of the so-called “New Trade Theory”(Krugman, 1980), the potential for different dynamic effects of integration have been considered (increase of investment expenditure, sustainable increase of demand, consolidation of production and increase of its specialization, improvement of the organization and management of production and production technology, rationalization of territorial distribution and utilization of resources, increase of production efficiency, creation of economic growth, etc.) (Marinov, 2014). In this regard, several authors argue that these theories are inadequate for analyzing the specific case of economic agreements between developing countries (DCs) (Draper, 2010). Marinov (2014) regroups the main elements of integration for these cases into four main categories (general economic, market-related and trade-related factors, and effects). Among the general economic aspects, we can highlight the need for partners to coordinate macroeconomic policies, noting that the reduction of potential gains is due to the lack of coordination, particularly in terms of increasing intra-regional trade (Malamud, 2013). The market determinants include, among others, the need to achieve significant levels of complementarity between economies in order to increase the share of intra-regional trade and achieve greater benefits in terms of welfare (Butorina and Borko, 2022). Hosny (2013) mentions that most DCs consider integration as an instrument to increase their competitiveness in the global economy and thus place an increasing number of products in international markets. Starting in the 1950s, specifically in Latin America, the structuralist economic perspective developed by ECLAC brought together some of the aforementioned theoretical elements, attributing a strategic role to regional integration in diversifying exports towards manufactured products, thus strengthening industrialization and expanding the capacity to import (CEPAL, 1959). Regional integration is contingent on the industrialization process and, in particular, on the need to move towards the manufacture of products with a higher value added, based on the concepts of specialization, industrial reciprocity and structural complementarity (CEPAL, 2014). These objectives might be attainable when the participating countries gain access to a much larger market, which at the level of the national productive structure may involve the realization of economies of scale and thus promoting technological development (V azquez-L opez, 2011). The rise of global value chains (GVCs) and the current relevance of geographical proximity for the organization and operation of fragmented manufacturing processes between countries have revalued regional space as a platform for the construction of productive complementarities and showed the need to readapt the integrationist theory and its quantitative instruments of analysis. In terms of potentialities, this new context means that, in addition to the benefits traditionally associated with regional integration (access to larger markets, learning advantages, generation of economies of scale, etc.), increased manufacturing productivity and competitiveness can be added as a result of supply chain formation and regional productive articulation (Milberg et al., 2014). As Amar and Torchinsky (2019) point out, increasing the proportion of regional content in exports makes it possible to strengthen the productive “spillovers”generated by foreign sales. Although final goods are sold on a worldwide scale, the majority of the productive activities, particularly in the manufacturing core, are commonly distributed among countries in the same region (Johnson and Noguera, 2012). The regional bias, according to Estevadeordal et al. (2013), stems from the high costs of transportation and logistics when traveling to long distances, including the existence of preferential trade agreements between neighboring countries. The need for a fast and secure supply of parts and components is yet Latin American productive integration 231 another aspect that recently reaffirmed the potential of regional integration and, as a result, the nearshoring of a whole series of productive activities to locations close to the main markets (Piatanesi and Arauzo-Carod, 2019). In the context of the current development of GVCs, the benefits of regional economic integration are not only an increase in the share of intra-regional exports in the total exports, but also and a very important asset is a greater accumulation of the regional value included in the trade between partners, synonymous with the realization of activities with higher degrees of sophistication and higher demand of highskilled workers (Amar and Torchinsky, 2019). Recent studies of the issues raised by economic integration in Latin America point to a scarce development of RVCs and a limited and shallow insertion of countries into extraregional GVCs (Blyde and Trachtenberg, 2020;Banco Mundial, 2019;Zaclicever, 2017). Among the determinants of these deficiencies, some authors highlight heterogeneous and conflicting rules of origin in the different existing treaties in the region (Romero, 2021;BID, 2017;Cadestin et al., 2016). Cadestin et al. (2016), for example, estimate that differences in rules of origin between existing agreements reduce the positive effects of regional trade exchanges by 15%, and are especially discouraging in the case of intermediate goods exports, where the positive effects are reduced by 30%. For most countries, intra-regional competitiveness in intermediate goods is concentrated in primary sectors and industries with low technological content, while comparative advantages are limited to the regional level in industries with higher technological content, highlighting the potentialities in terms of the construction of production linkages in Latin America (Kreimerman, 2020;Amar and Torchinsky, 2019;Zaclicever, 2017). A particularly prominent aspect in the literature is the growing participation of China both as a provider of intermediate inputs in technology-intensive industries, and as an importer of commodities from the region, with regressive effects on the productive structure of Latin American countries in terms of their degrees of diversification and sophistication (Botto, 2019;CEPAL, 2018;Chun and Guo, 2017). With an abundance of literature as background, the hypotheses put forward in this paper are twofold: Regional productive integration in Latin America has not progressed in terms of the regional value added incorporated in its exports, and the trajectories of productive and trade integration of the selected countries of the region have moved backwards into a more traditional trade based on the exchange of natural resource-intensive inputs with low value added. 3. Method 3.1 Research design/model In Latin America, intra-regional exports have followed the growth pattern of total exports, averaging a solid growth rate of 8% per year between 1995 and 2015. However, with similar economic structures in the countries, trade tied to GVCs expanded by only 0.1% over that time, compared to 19% globally (Banco Mundial, 2019). The absence of a more complex trade in the region occurs in a context in which value chains structured by the industrial and/or service manufacturing sectors are primarily directed to destinations in the region, as are those connected to the primary sector and natural resource manufacturing. In fact, exclusively regional chains occur more frequently in highly technological industries such as the automotive industry and the manufacture of electrical machinery or electronics (Amar and Torchinsky, 2019). Using the WWZ methodological framework (2018) as a starting point, a regrouping of the components described is proposed in this article, in order to distinguish the share of value added (domestic, regional or extra-regional) as well as the use given to these exports (final or intermediate) for intra-regional exports of Latin American countries for which information is available. The WWZ methodological framework for the analysis of trade flows at the bilateral level, based on the use of global input-output matrices, allows breaking down the value of gross exports of each sector-country, depending on the origin of JEFAS 29,58 232 the value added contained in exports, as well as their use. The following seven components are obtained: Component 1: Domestic value added, generated by exporting country (s), incorporated in its exports of final goods to the region (r) 5DVAs FIN. Component 2: Domestic value added incorporated in exports of intermediate goods that will be used by the rest of the region’s countries, either for the production of final goods or intermediate goods for re-export 5DVAs INTER. Component 3: Foreign value added of regional origin, which is incorporated in the exports of final goods from s to the region 5FVAr FIN. Component 4: Value added generated in the region, but contained in the intermediate goods that are exported from the exporting country to the region 5FVAr INTER. Component 5: Foreign value added generated in third countries, outside the region, incorporated in exports of final goods from the exporting country to the region 5FVAt FIN. Component 6: Extra-regional foreign value added, incorporated in the exports of intermediate goods from the exporting country to the region 5FVAt INTER. Component 7: Double counting of domestic and foreign origins that, when eliminated, facilitates a better assessment of the trade flows analyzed. Using these components, the regional value added (RVA) incorporated in a country’s exports can be calculated as the sum of the domestic value added (DVA) and the foreign value added from the region (FVA r ). Namely: RVA ¼DVA þFVAr Consequently, it is possible to distinguish the regional value added incorporated in the exports of final goods from that contained in the exports of intermediate goods. 3.2 Data/variables The source of the data is the OECD’s Global Input-Output Matrices (ICIO) (OECD, 2021), which covers the years 1995–2015. However, the project has published two editions of tables (2016 and 2018) covering overlapping time periods (1995–2011 and 2005–2015), with some changes in the number of sectors (34 in the 2016 edition and 36 in the 2018 edition) and their content. Therefore, it was decided to divide the sectors into three broad groups (extractive, industry and service) and, starting in 2005, use the values provided by the second updated series (2018 edition). Due to the availability of information, the computations were carried out for Argentina, Brazil, Chile, Colombia, Mexico and Peru, which together accounted for 79.6% of Latin American exports in 2015 [1]. Consequently, the group of regional trading partners (r) was, in each case, made up of the remaining 5 countries in the sample. 3.3 Analytical procedure Below, the gross exports of a country (s) to the group of regional partners examined (r), where (t) is the group of third countries, is decomposed into the seven essential components using matrix calculation: Xsr ¼ðVsBssÞT#Ysr |fflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflffl} ð1Þ þ Latin American productive integration 233 ðVsLssÞT# AsrBrsYss þAsrBrr X G t Yrt þAsr X G t≠s;r Brt X G u Ytu! |fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} ð2Þ þ ðVrBrsÞT#Ysr |fflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflffl} ð3Þ þðVrBrsÞT#ðAsrLrrYrrÞ |fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} ð4Þ þ X G t≠s;r VtBts!T #Ysr |fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} ð5Þ þ X G t≠s;r VtBts!T #ðAsrLrrYrrÞ |fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} ð6Þ þ 2 4ðVsLssÞT# AsrBrs X G t≠s Yst!þðVsBss VsLssÞT#AsrPrþ X G t≠s VtBts!T #ðAsrLrrXrÞ3 5 |fflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl{zfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflfflffl} ð7Þ Where Vsis the vector of sectoral coefficients of value added per unit of output that originate in country s (value added that originates in the region (VrÞor incorporated from third countries (VtÞis recognized in a similar way). Bss,B rs yB ts are submatrices of the Leontief global inverse, which represent the input requirements of country s, depending on their origin (s, r or t). Lss is the local Leontief inverse, or the input requirements obtained solely from domestic factors per unit of final demand. Throughout the equation, by multiplying the value added coefficients (Vs ;Vr ;VtÞby Leontief submatrices (Bss,B rs,B ts ;LssÞthe value added multipliers are obtained. By multiplying these coefficients by exports from s to r (X sr ), distinguishing between those produced in the form of final goods (Ysr) and those produced in the form of intermediate goods (AsrPrÞ, the seven components are obtained. A sr is the matrix of intermediate inputs exported from s to r per unit of output of country r, and Pris the vector of gross output of r. 4. Results 4.1 Descriptive analysis An initial look at the evolution of trade integration in Latin America, both in terms of the weight of intra-regional trade in total exports of the countries studied and—in a qualitative manner—considering the nature of intra-regional exports, reveals two distinct trends. In terms of the first trend, despite the significant increase in global trade between 1995 and 2015, the weight of intra-regional exports in total exports has remained relatively constant as a result of the establishment of economic openness policies under “open”trade integration schemes beginning in the 1990s. In fact, the slight increases in intra-regional exports (X sr )asa percentage of total exports (X t ) in Brazil, Chile, Colombia, Mexico and Peru were more than offset by Argentina’s drop from 30.6% in 1995 to 22.2% in 2015. (See Table 1). Significantly, the reduction in Argentine intra-regional trade seems to be due to a reorientation of raw material exports towards China as a result of China’s emergence as the region’s leading buyer of primary commodities, which resulted in a shift in Latin American countries’productive structures in favor of a development model based on static competitive advantages (Botto, 2019). In fact, Latin American exports to its three main extra-regional markets (USA, China and the EU) increased their concentration of products, reflecting a marked trend towards a reprimarization induced by high raw material prices (see Figure 1). In the case of Argentina, the weight of the X sr in total exports of extractive products declined JEFAS 29,58 234 from 33.1% in 1995 to 12.1% in 2015, resulting in a reduction in this percentage from 23.9% to 14.4% in the service category over the same period. Starting in 2012, the beginning of a new negative phase in commodity prices, the stagnation of two of the largest economies in the region (Argentina and Brazil) and the slowdown in global demand as a result of the 2008–2009 crisis severely affected trade flows, especially intra-regional exchanges (Amar and Torchinsky, 2019). In the case of South American countries, the growing importance of exporting natural resources and derivatives as inputs to extra-regional destinations has limited the degrees and types of participation in modern industrial processes fragmented into value chains (Blyde, 2014). Various authors point to the main economies of Latin America (Brazil, Mexico and Argentina) having a greater productive linkage with countries outside the region, a low coefficient of cohesion and a limited degree of interconnection with other regional partners as key explanatory elements for RVC’s limited development (L ambarry, 2016;Bekerman and Rikap, 2010). In support of the foregoing, and as the second noteworthy trend of this first descriptive analysis, theweight of intermediate goods in theX sr of the sampled countries was reduced, going 1995 2015 Intraregional exports (X sr ) X sr / X t Exports of intermediate goods in X sr Intraregional exports (X sr ) X sr / X t Exports of intermediate goods in X sr Argentina 7,606 30.6 52.4 13,822 22.2 48.4 Brazil 5,849 10.6 55.2 25,477 12.2 53.7 Chile 2,501 12.4 68.6 8,948 13.3 62.5 Colombia 903 7.7 65.6 5,086 12.4 61.4 Mexico 3,010 3.5 49.9 12,927 3.5 42.6 Peru 537 8.4 89.0 4,005 10.8 67.0 Total 20,405 10.0 56.4 70,264 9.0 53.1 Note(s): *Intra-regional exports are made up of trade between the countries in the table Source(s): Own elaboration with data from OECD (2021) Note(s): *Monthly frequency excludes gold Source(s): Own elaboration with data from the International Monetary Fund (2021) 70 120 170 220 270 320 370 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Table 1. Intra-regional export data of selected countries*, 1995 and 2015 (Millions of dollars and percentages) Figure 1. Evolution of commodity prices, 1995–2015* (Index base 100 in 2000) Latin American productive integration 235 from 56.4% in 1995 to 53.1% in 2015 (see Table 1). When comparing 1995 to 2015, the indicator shows a decrease in all situations, demonstrating a shift towards classic Ricardian-type trade at the expense of more complex intra-industry exchanges associated with the establishment of industrial RVCs. As the GVC approach shows, “open”integration based on commodity exports limits the possibilities of upgrading [2] in the direction of carrying out industrial tasks or services with greater intensity in value added. This is partly because since raw material markets are dominated by purchasing countries, the supplying countries compete on price, blocking processes of learning and building of technological capabilities in these locations. 4.2 Trajectories of trade and productive integration In order to corroborate and illustrate an evolution of the region’s process of productive integration in the direction of a shallower trend, trajectories of trade and productive integration were developed for each country in the sample from 1995 to 2015 (see Figure 2). These trajectories are depicted in a graph with two dimensions of analysis. The first one represents the evolution of trade relations between the sampled countries in gross terms, based on the share of intra-regional exports (X sr ) in total exports (X t ). Using the results of the applied input-output methodology and the weight of the RVA in the X sr , the second dimension assesses the intensity of these relations in terms of value added. In these graphs, a country’s degree of trade integration grows as it travels to the right in time, whereas an upward trend suggests a larger degree of productive integration. The graphs for each of the countries studied reveal that the trajectories’starting points in 1995 are positioned above the points belonging to 2015. This means that the RVA included in intra-regional exports decreased from 1995 to 2015, indicating a lower degree of productive integration between Latin American economies over the study period. The situations of Brazil and Mexico, the region’s largest industrialized economies, are particularly noteworthy. Due to the rising integration of these countries into extra-regional GVCs, the weight of the RVA in the X sr was reduced by 6 and 12%, respectively. This phenomenon can be explained by these nations’limited use of the regional market to establish economies of scale and learning processes in order to grow their exports to countries outside the bloc, which has prevented the consolidation of reciprocal regional trade. For example, as Bekerman and Rikap (2010) point out, in the bilateral relationship between Brazil and Argentina, the larger economy continues to supply goods to the smaller one, while the latter’s exports are losing ground in their partner’s market. As for Mexico, despite the fact that the X sr portion of X t increased since the first decade of this century, the weight of RVA in X sr remained steady at roughly 68%, the lowest of the sample, indicating a pattern of regional exchange growth, without an increase in productive integration. In Colombia, the weight of the X sr in the X t increased from 7.7% in 1995 to 12.4% in 2015, coinciding with a significant increase within the industrial sectors in the structure of sales to the region, from 51.5% to 66.9% in the same years. However, the RVA’s share of industrial intra-regional exports declined since 2000, from 87% in 2000 to 83.7% in 2015, indicating a scarce productive integration with its regional partners. Moreover, when examining the evolution of the RVA included in intermediate industrial goods traded within the region, all countries show a declining trend as a result of the impoverishment of the tasks carried out with regard to these exports in terms of their sophistication grades (see Figure 3). In Colombia, this decline, from 86.1% in 2010 to 77.5% in 2015, largely explains the observed reduction in RVA in the X sr , despite rises recorded in the weights of both the X sr in the X t , as well as in industrial exports in sales to the region. 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Further reading International Monetary Fund (IMF) (2021), IMF Primary Commodity Prices, Commodity data portal, Washington, DC, available at: https://data.imf.org/?sk5471DDDF8-D8A7-499A-81BA5B332C01F8B9 (accessed 26 Jun 2021). About the author Ra ul V azquez-L opez (PhD) is a full-time senior researcher at the Institute of Economic Research of the UNAM (National Autonomous University of Mexico) and a member of the National System of Researchers of CONACYT, the Mexican National Council of Science and Technology. Since 2012, his contributions to economic research have earned him seven awards in different fields (social sciences, economic research, foreign trade, regional economic analysis and agricultural economics) from prestigious national and international institutions (San Francisco State University, IONA College in New York, UAM, Tianjin University in China, Bancomext (Mexican Foreign Trade Bank), UANL, IIEcUNAM, UDEG). Ra ul V azquez-L opez can be contacted at: [email protected] For instructions on how to order reprints of this article, please visit our website: www.emeraldgrouppublishing.com/licensing/reprints.htm Or contact us for further details: [email protected] Latin American productive integration 245