Latin America is a region whose exports have traditionally been concentrated in goods, with a special preponderance of raw materialsThe region's exports have traditionally been concentrated in goods, with a special preponderance of raw materials (with the exception of Mexico, thanks to its status as a factory for the U.S. market). The region's exports of services, however, have shown a significant increase in the last ten years. the last ten years, however, have shown a significant increase, part of a global phenomenon that has seen this type of trade grow in importance since the 1990s, raising its share to 22% of the value of total global trade. Latin America and the Caribbean, however, still have a long way to go to catch up with the global trend: in 2022, services exports accounted for only 13% of its total exports.

Now, what are we talking about when we talk about service exports? It encompasses a wide range, ranging from tourism and transportation to customer services, telecommunications, financial and HR process outsourcing and information technology. ranging from tourism and transportation to customer services, telecommunications, financial and HR process outsourcing and information technology. As might be expected, tourism is one of the most important services exported by the region, given its attractiveness to travelers from all over the world. This is the main reason for the sharp drop in 2020 as a result of the pandemic.

In the aftermath of the pandemic, services exports have shown a clear recovery, again closely linked to the reopening of the world to travel. But in addition to tourism and transport, what other sectors fuel exports of this economic activity? A report by the Economic Commission for Latin America and the Caribbean (ECLAC), places special emphasis on the export of so-called "modern services", services that mainly encompass those that can be delivered thanks to the use of information and telecommunications technologies. The accelerated digitalization of the global economy opens up great opportunities for this type of services.

In this sense, Latin America and the Caribbean has lagged behind the trends observed in the rest of the world. The region's exports of "other services," composed mainly of the aforementioned modern services, reached US$78.5 billion in 2022, setting a record, reached US$78.5 billion in 2022, setting a record. Brazil is the clear leader in this type of exports, followed by Costa Rica and Argentina. Anecdotally, Cuba leads in exports of "personal, cultural and recreational services", mainly due to its export of medical services. In financial services, Brazil was the largest exporter, with a quarter of the region's foreign sales, followed by Panama. Mexico and Uruguay.

In the ranking of "other services" exports, only four countries in the region are in the global top 50: Brazil (27th place), Argentina (43rd), Costa Rica (46th) and Cuba (49th). What lessons can be drawn from ECLAC's analysis of the region's potential to compete in these exports? Human capital formation, a framework of economic and regulatory stability and communications infrastructure. It is interesting to note the cases of Costa Rica and Uruguay, small economies that have managed to make "modern services" exports a prominent part of their total exports.

Source: World Bank / content (cepal.org)