— in nearshoring opportunities from the US and other LAC countries, says IBD

WITH massive opportunities for the realignment of the supply value chain, Latin America and the Caribbean (LAC) could increase their exports by more than US$80 billion in the short-and-medium-term through nearshoring, as countries seek solutions to the historic supply chain disruptions.
Guyana could stand to gain approximately US$400 million in this sector, according to studies by the Inter-American Development Bank (IDB).
IDB President, Mauricio Claver-Carone, on Tuesday presented on the LAC region’s vast potential for nearshoring, and increased involvement in supply chain, while making remarks at the opening session of the Trade and Investment Forum with Ministers and CEOs, organised by the IDB on the margins of the IX Summit of the Americas.
“More than 50 per cent of the world’s trade happens with in global value chains. Today Latin America and the Caribbean is lagging other parts of the world in its global value chain participation. We estimate that the region would experience an annual increase of an estimated $80 billion in exports by seizing short-term nearshore opportunities,” Claver-Carone related. .
A type of outsourcing, and similar to offshoring, nearshoring is the practice of a company transferring one or more business operations to a nearby country, instead of to a more distant one, as is the case in offshoring.
The IDB hosted the forum as part of efforts to open up new investment and trade opportunities in the region, with a particular emphasis on growth in nearshoring. The forum brought together nearly all of the region’s trade ministers, as well as heads and executives of global companies.
According to the IDB statistics, Guyana could stand to benefit from over US$23 million in nearshoring from the US and over US$370 million in nearshoring from other LAC countries.
In Guyana, the government has already signalled its strong commitment to laying down necessary infrastructure to support the growth of the country’s outsourcing capabilities, particularly in the area of Business Process Outsourcing (BPO), which primarily involves call centres that do outsourcing work.
Over the past two years, the country has seen massive growth in the BPO sector, particularly through expansion in the telecommunications sector, which the government liberalised upon assuming office in 2020.
According to Claver-Carone, the time is ripe for the LAC countries to capitalise on the opportunities presented due to the deficiencies highlighted during the historic supply chain disruptions brought on by the COVID-19 pandemic and subsequently the Russia/Ukraine war.
As countries look to find alternative solutions to existing systems, Claver-Carone believes that the place that they could find those solutions is in the LAC region, describing the region as a sea of peace and prosperity among the fluctuations.

OPPORTUNITIES
“I could not be more excited for the opportunities that exist today in Latin America and the Caribbean. We have before us a once-in-a-generation opening for global trade insertion and nearshoring, and the moment to seize that is now. If we lose it we’re not going to see it again in any of our lifetimes. The stars have never been more aligned for Latin America and the Caribbean,” Claver-Carone expressed.
“We ace yet another upheaval regarding the importance of recalibrating and repositioning global supply and value chains. Doing so particularly to the benefit of Latin America and the Caribbean. It’s about creating jobs investment and opportunities in Latin America and the Caribbean first and foremost.”
Claver-Carone noted that the IDB is positioning itself to support growth in this and other trade sectors that are ripe for the picking, as businesses are positioned to see the LAC region as an attractive destination for the global delivery operation.
“We must properly acknowledge the region’s long-standing potential and have the vision to recognise the ripening possibilities, an increasing number of companies have already done so,” The IDB head said that is responding to calls from the region for more to be done on trade, commerce and nearshoring.
He added: “We hear you were working on it. We’re excited about the historic reforms that were provided by our Board of Governors this year. That set us on this pathway towards the new 21st century business model and mandated a proposal by the way for capital increase for IDB Invest, the bank private-sector arm.”
In 2021, the IDB and IDB Invest approved a record of nearly US$4 billion to strengthen regional value chains and integration
“That’s ranged from investments to modernise key trade infrastructure to logistic procedures to loans for increased productivity and digitisation of trade systems and also includes IDB Invest’s support for the regions banks, which have made more than $12 billion available for foreign trade operations. It’s also includes technical support for regulatory reforms,” he related.
According to Claver-Carone, while countries in the past have customarily capitalised on offshoring opportunities to Asia, particularly China, the tides are turning and new novel areas can stand to capitalise.
“Some of you may be shocked to learn that for the first time investment indicators are going down for China at the same time as they’re going up for Latin America and the Caribbean,” he noted.
For medium and long-term growth, however, the region needs more public and private co-operation and a clear focus on the issues surrounding trade. According to Claver-Carone, the IDB will be investing in identifying hundreds of products and businesses across industries that can readily benefit from nearshoring possibilities in the 26 countries of LAC.