Agri-food Trade Competitiveness in Latin America and the Caribbean Region

The agricultural sector represents up to 20% of the value added to the gross domestic product in Latin America and the Caribbean (LAC). Employment in agriculture represented a high share on average in LAC. A decreasing condition in competitiveness and economic growth indicators are the illustrative situation in this region since 2009. The most competitive country is Chile, and the least competitive is Venezuela in the region. LAC has great potential to increase its competitiveness in the agri-food trade and become a leader in the global market. However, all LAC countries have made progress in terms of human, economic, and social development, but their agriculture suffers from comparative disadvantages in certain aspects. Despite the global relevance of the topic, research on the patterns and dynamics in Latin America and the Caribbean is scarce, compared to other regions of the world. The definition of trade competitiveness is associated with the concept of comparative advantage, which means the nation’s ability to produce goods or services at a lower opportunity cost than its competing trading partners. Competitive performance can be determined by different measurements based on indicators such as revealed comparative advantage, market performance, trade success, and others. Revealed comparative advantage (RCA) indices formulated by Balassa and its modified versions such as RMA, RTA, RC, RSCA, and NRCA, as well as the Lafay index, are the most widely used indicators for the trade-based competitiveness of nations. Several studies have been published on analysing comparative advantages in different agricultural sectors in various parts of the world. In contrast, the number of studies that evaluate competitiveness in developing regions, such as Latin America and the Caribbean, is limited compared to other countries of the world. Therefore, this chapter provides an overview of trade competitiveness and revealed comparative advantages in the agri-food sector, focusing on the LAC region.