Latin America and the Caribbean
Integration and Growth Advance
Eugenio Díaz-Bonilla and Valeria Piñeiro
Agricultural production in Latin America and the Caribbean (LAC), along with other commodities, has always played a central role in the region’s integration with the global economy. With an evolving range of export crops, the region’s economic performance has been closely tied to trends and cycles in international commodity markets. Through different waves of globalization, the region moved toward greater integration into the global economy only to be followed by periods of de-linking. The last several decades saw increased globalization. For instance, the overall trade-to-gross domestic product (GDP) ratio—a key measure of openness—moved from about 0.20 in the 1960s to 0.37 in the 2010s. Despite this strong shift, LAC is not the most open region in the world; East Asia and the Pacific’s ratio is now at 0.52. Foreign direct investment, which was about 0.7 percent of the LAC region’s GDP in the 1980s, began to increase in the 1990s (to about 1.7 percent) and reached 2.5 percent in the current decade. For comparison, the average for all developing and emerging markets is about 1.8 percent.