Monday, January 2, 2012

Logistics as a Driver for Competitiveness in Latin America and the Caribbean

Logistics is becoming a critical element of competitiveness and economic performance both in itself and within the context of increasing globalization.Most Latin American and Caribbean (LAC) countries arefocusing on export:led growth strategies. For such strategies to succeed, a key component is an effective and efficient logistics framework that addresses the full spectrum— upstream, midstream, and downstream — of the value and production chain. 

A logistics framework includes hardware, which is the physical infrastructure needed to move goods effectively, and software, which is the associated services and processes needed to move and trade goods effectively.The impact of logistics costs on competitiveness, productivity, trade, integration, food prices, inequality, and poverty is significant. In LAC, logistics costs range from 18 to 35 percent of product value— and even higher for small and medium: size enterprises (SMEs) at about 40 percent — compared to benchmarks of around 8 percent of product value in Organisation for Economic Coooperation and Development (OECD) countries. 

While in recent years most LAC countries have realized the relevance of logistics and have taken some measures to improve this element of their markets, the region still lags behind in developing an effective logistics framework. This report illustrates the relevance and impact of logistics for competitiveness in LAC and provides a framework, priorities, interventions, and solutions to address the issues

Jose Luis Guasch.Inter-American Development Bank Capital Markets and  Financial Institutions Division DISCUSSION PAPER No. IDB-DP-193.November 2011