Latin American economies too dependent on commodity exports

SANTIAGO, Chile, Sept. 3 (UPI) -- Most of the Caribbean and Latin American countries did well with their commodity exports in the first half of this year but economic planners in those nations need to diversity and increase the ratio of processed goods and manufactures in their earnings abroad, a U.N. report said.

The U.N. Economic Commission for Latin America and the Caribbean issued the reminder to regional leaders not to be complacent about commodity export earnings that can be volatile and unpredictable.

Latin America's emerging economies led by Brazil, Argentina and Chile have benefited from exports of primary goods -- raw materials, oil and minerals -- but experts warned against the heavy reliance on earnings from raw materials, minerals and other natural resources.

"The diversification of exports, a strong boost to competitiveness and innovation and greater regional cooperation will allow Latin America and the Caribbean to improve the quality of its insertion in the global economy," said ECLAC Executive Secretary Alicia Barcena at the launch of the report at the commission headquarters in Santiago.

She said that diversification would also help "close productivity gaps and capitalize the opportunities of international trade in order to grow with more equality."

Exports from Latin American and Caribbean markets are set to grow 21.4 percent this year, the ECLAC report said. When surveyed over the past 10 years, however, the picture is less rosy.

Export growth during the 10 years was slower than in the 1990s and lower than in other developing regions, both in value and volume, ECLAC said. However, the region took two different routes during that time: South America doubled export growth, while in Mexico and Central America the rate dropped more than 50 percent.

Exports that most increased were natural resources from South America at the expense of manufactured products and services with varying degrees of technological content, ECLAC said.

Statistics for the period show the region has reverted to an export structure based on prime materials similar to that of 20 years ago.

Export growth rate to China soared from minus 2 percent in the first half of 2009 to 44.8 percent in the first half of 2010 but the recovery isn't homogeneous.

The region's overall recovery was sustained with mainly South American countries exporting commodities in agriculture, livestock and mining sectors while countries from Central America and the Caribbean exported less of those and relied more on tourism and remittances.

ECLAC said the Caribbean region in particular would benefit from greater intra-regional trade and economic collaboration.