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Logistics and Competitiveness in Central America
UK-Central America Business Conference
Sebastian Nieto Parra
OECD Development Centre
London, 5 March 2014
Central American Business Council
Perspectivas económicas de América Latina
Contents
1
Competitiveness and Productivity in Central America
2
Policies to boost logistics in Central America
La
contribución
de la región
al proceso
de reequilibrio
la riqueza
The
region’s contribution
to shifting
wealth
is relatively de
modest
es relativamente modesta
Contribution to global GDP (1990-2011)
(in percentages)
1990-1995
2%
1995-2000
Advanced economies
6%
5%
18%
1%
8%
Emerging Asia
4%
8%
50%
59%
20%
Latin America
19%
3%
3%
10%
9%
6%
7%
46%
7%
Middle East and North
Africa
2005-2012
2000-2005
32%
Sub-Saharan Africa
9%
Rest of the world
27%
41%
3
Source: Authors’ calculations based on data and regional aggregates from IMF (World Economic Outlook).
The structure of Central American economies differs in comparison with
Una transformación estructural impedida
South American economies: different policies to boost productivity
Net barter terms of trade (2000 = 100)
South America
Central America
160
150
140
130
120
110
100
90
80
2000
2001
2002
2003
Source: World Bank World Development Indicators
4
2004
2005
2006
2007
2008
2009
2010
2011
An
structural
transformation:
challenges remain for
Unaimpeded
transformación
estructural
impedida
Central American countries
Productive capacities indicator (1990 and 2009)
1990
2009
2.5
2
1.5
1
0.5
0
-0.5
-1
-1.5
-2
Note: Productive capabilities index. Higher values ​in the variable let a country produce a more sophisticated range of goods. At any given moment, the capacity variable
depends on the level of connectivity of the network of products, which is why it is normalised. Thus a value equal to 0 implies capability levels equal to the worldwide
average. A value of 1 (-1) indicates capabilities one standard deviation above (below) that average.
5
Source: Authors’ calculations based on data from COMTRADE and Feenstra, R. C., R. E. Lipsey, H. Deng, A. C. Ma y H. Mo (2005), “World Trade Flows: 1962-2000”,
NBER Working Paper Nº 11040.
While in Asia the productivity gap has decreased, it has expanded in
most Central American countries
Changes in productivity gaps between selected Asian and Latin
American countries and the United States (1980-2011)
(as percentages, annual growth rates in GDP per worker)
Asia
Central America
Other Latin American countries
1
0.5
0
-0.5
-1
-1.5
-2
-2.5
-3
-3.5
-4
Source: Authors’ calculations based on World Bank,“World Development Indicators” and CEPALSTAT data.
6
Total Factor Productivity: signs of improvements should be permanent
Total factor productivity index, 1960 = 100
Costa Rica
Panamá
140
260
130
240
120
220
200
110
180
100
160
90
100
60
80
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
120
70
Source: Calculations based on Penn World Tables
7
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
140
80
Perspectivas económicas de América Latina
Latin American Economic Outlook 2014
1
Competitiveness and Productivity in Central America
2
Policies to boost logistics in Latin America
Improved logistics performance could boost labor productivity in Latin
America by 35%
Logistics and economic performance: Partial correlations
(Values, 2012)
OECD
Latin America
Other countries
Labour productivity not explained by GDP per capita
60000
50000
40000
30000
20000
10000
ARG
0
VEN
CRI
DOM
JAM
-10000
MEX
URY
PER
GTM
ECU
-20000
CHL
BRA
COL
BOL
-30000
-40000
-1
-0.5
0
0.5
1
Logistics performance not explained by GDP per capita
Source: Authors’ work based on The Conference Board Total Economy Database, World Bank (LPI), Comtrade.
9
1.5
The logistics gap remains high, especially due to the poor
performance of transport infrastructure
Logistics performance gap to the best-performing OECD country (2012)
OECD
LAC7
LAC
OECD country with lowest GDP per capita in 1990
2
Policy control areas
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
LPI
Infrastructure
Customs
Source: Based on World Bank data (Logistics Performance Index).
10
Logistics quality
Tracking and tracing
Timeliness
International shipments
However, there is variation in logistics performance within the region
Logistics performance gap to the best-performing OECD country (2012)
Customs
Infrastructure
2.5
2
1.5
1
0.5
0
11 Source: Based on World Bank data (Logistics Performance Index).
Logistics quality
LPI
The Latin American production structure implies that a high proportion of
exports are sensitive to logistics
Time-sensitive, logistics-intensive exports (2010)
(% of total exports)
Logistics-intensive
Time-sensitive
100
90
80
70
60
50
40
30
20
10
0
Note: Logistics-intensive sectors include mining, forestry and logging, wood manufacturing, paper publishing and printing. Time-sensitive sectors include agriculture,
fisheries, food and drink manufacturing, clothing and horticulture. Latin America and the Caribbean (LAC) consists of 18 countries.
12 Source: UN COMTRADE.
To boost trade, it is essential to reduce transportation costs
Ratio of freight costs to tariffs (2012)
70
60
50
40
30
20
10
0
13
Source: Based on data from the U.S. Census Bureau.
The logistics lag can affect the development of international trade.
Example: customs formalities
Number of days needed to clear direct exports through customs (2011)
Average
Manufacturing sector
20
18
16
14
12
10
8
6
4
2
na.
0
14
Note: Data not available for the manufacturing industry in Panama. Latin America and the Caribbean (LAC) consists of 27 countries.
Source: World Bank Enterprise Survey.
The use of ICTs: Contribute to improved logistics performance
Access to technology and logistics performance: Partial correlations
(2012)
OECD
Other countries
Latin America
Logistics performance not explained by GDP per capita
1.5
1
0.5
ARG
0
BRA
MEX
URY
CHL
COL
ECU
BOL
PER
GTM
CRI
-0.5
DOM
VEN
JAM
-1
-2
-1.5
-1
-0.5
0
0.5
1
Technology availability not explained by GDP per capita
15
Source: World Bank (Logistics Performance Index) and World Economic Forum (Global Competitiveness Index), 2012.
1.5
2
Improvements in infrastructure are essential for logistical development
1. More and better investment
2. Implementation of appropriate regulations and a better
institutional framework for the planning phase of the
policy process
3. Expansion of intermodal connectivity and
development of transportation modes other than road
4. Finding appropriate mechanisms to maximize private
investment in infrastructure
16
However, reducing the infrastructure gap takes time, and in the short
term “soft” solutions can be found
Maximizing the infrastructure of existing transport:
1. Greater coordination between agents involved in
logistics and a move toward a comprehensive policy.
2. Simplification of customs procedures.
3. Promotion of competition in the transport sector.
4. Appropriate use of ICTs to simplify procedures and
facilitate the tracking and delivery of goods.
17
Thank you!
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