Regional versus global production networks: where does Latin America stand?

Abstract

This article quantifies the effects of the Latin American Integration Association (LAIA) and the Southern Common Market (Mercosur) on the trade of intermediate goods and also on the trade of final goods. It is the first article to investigate whether increasing imports of intermediate goods from different regions to Latin America have led to higher exports of final and intermediate goods. The article uses sectoral data for trade in goods between 11 LAIA members over the period 1991-2008. The main results indicate evidence of increasing regional production networks, which have strengthened in the 2000s. Moreover, the findings show evidence of the emergence of global production networks, especially with respect to intermediate imports from China.