Regional Integration in Latin America

Cover of Regional Integration in Latin America

Dynamics of the Pacific Alliance

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Synopsis

Table of contents

(14 chapters)

Prelims

Pages i-xvii
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Abstract

This chapter discusses the creation of the Pacific Alliance comprising four countries: Mexico, Chile, Peru, and Colombia. It shows that is not only a free trade agreement between these countries but also a multidimensional regional integration with political, economic, and cultural perspectives. Programs and actions have been structured in a way that allows and promotes integral growth of Latin American citizens. For this reason, it is important to analyze in this chapter the opportunities that Alliance Pacific generates with respect to each of these three aspects. (1) Political and diplomatic implications like eliminating visa requirements for the members, sharing some embassies, facilitating labor mobility between these countries, and proposing the creation of a joint parliament. (2) Economic and trade implications with a gradual elimination of tariffs that will allow companies to be more competitive, creation of different government agencies in each country to support business and promote intra-regional trade of goods and services, and create a joint platform to promote innovation, entrepreneurship and gender equity. Finally, (3) Cultural and educational implications, as the creation of “Student and Academic Mobility Platform” of the Pacific Alliance with scholarships for students and researchers, the integration of a “Technical Education Group” to foster integration and social inclusion of children and adolescents, and the creation of “Sports Diplomacy Program” and a “Scientific Research Network on Climate Change.” Although there are still several challenges for improvement in the Pacific Alliance, it is an agreement that will bring stability, welfare, and development effects for the members of these countries.

Abstract

The Pacific Alliance (PA) arose from a project for economic integration and strategic cooperation between the four member countries – Mexico, Chile, Peru, and Colombia – with the hope of driving competitiveness in the region through specialized production and exportation of assets, and to an extent consolidating them, which would have a strong impact on the process of regional integration within Latin America. Considering this, the purpose of this chapter is to review the current economic scene for regional integration that promotes competition in the countries of the PA. A documentary and statistical investigation are carried out and presented to show the primary advances of the PA in different economic and strategic areas that propel competition among its member countries. The primary findings show that there are economic and commercial indicators that encourage the achievement of a unified perspective and stability between these member countries, which allows for more competitiveness with regard to economic and commercial development in other blocks or alliances. Today, the PA shows itself as an innovative process that seeks and promises to change the economic relations of both the countries involved in it and the region in general, which is the reason for the dynamism shown in decision making and the interest in the international community. It is concluded that the PA responds to the shared interests of the four member countries while being more competitive to take advantage of any opportunities that appear from the opening and incursion of new international markets.

Abstract

One of the most profitable industries worldwide is automotive manufacturing, with an estimated economic impact of 2.9 trillion dollars, which employs 8% of the economically active world population, both directly and indirectly. The main 12 world powers in the automotive sector account for 80% of the total manufactured vehicles, and Mexico ranks seventh in the world and is part of the free trade agreement in the Pacific Alliance (PA). This fact may have a direct impact on boosting the domestic automotive industry in Mexico by leveraging the manufacturing supply chain in primary and secondary industries in the three commercial partners: Chile, Colombia, and Peru. This chapter found that there is a coincidence in the competitiveness pillars of the Mexican automotive industry and its business partners in the PA. This presents a strategic panorama of competition and economic development for the region.

Abstract

This chapter aims to analyze whether member countries of the Pacific Alliance agreement showed economic and financial convergence during the 2010–2016 period. The sample consists of four Latin American countries that are members of the Alianza del Pacífico (Pacific Alliance): Mexico, Chile, Colombia, and Peru. We use an economic convergence index (ECI) to classify the degree of the countries’ convergence regarding a given monetary area, considering the size of their economy, and compute three criteria: (1) nominal variables (used to define the Maastricht criteria), which are inflation, long-term interest rates, public debt, fiscal deficit as percentages of gross domestic product (GDP), and exchange rate volatility; (2) real and cyclical variables such as real GDP growth, gap between real GDP and potential GDP, unemployment, current account balance as a percentage of GDP, and short-term interest rates; and (3) a conditional combination that unequally weights nominal and real variables. We also use correlation analysis to compare coefficients. The results can be analyzed in the medium term in terms of descriptive statistics of their real and nominal variables, convergence indexes, and correlation analysis. The results show that the countries of the Pacific Alliance under study are converging in terms of nominal variables such as interest rate, exchange rate, fiscal deficits, and government debt. Also it can be observed that convergence occurs in real and weighted variables, although to a lesser magnitude. In relation to real variables related to GDP growth and foreign trade, these variables adjust less quickly than nominal ones.

Abstract

This chapter presents information regarding the significance of the Pacific Alliance in the commercial development in Mexico. Mexico’s integration with the countries of the Pacific Alliance (Peru, Colombia, and Chile) is highlighted through statistical analysis of the composition of Mexico’s exports, the future of the country’s exports, and the balance of trade. Some of these challenges are the growth and diversification of exports, internationalization of small business enterprises, and reduction of the balance of trade deficit with respect to some of its main export products. Results showed that Mexico’s three Latin American commercial partners together represented the third-highest destination for its exports, where Mexico had a favorable balance of trade, which suggests that a further opening of these countries’ economies would bring benefits to Mexican economy.

The decrease of Mexican exports since 2012 to countries such as Chile and Colombia are symptoms that the Pacific Alliance free trade agreement needs more support in order to represent an opportunity to increase export diversification, since most of the Mexico-exported goods go to the United States. This can bring economic and political risks because of the overreliance on one trading partner.

The results also showed that most of Mexico’s exports to the Pacific Alliance country members are hi-tech products. The principal exports in terms of sales come from the telecommunications industry, transportation industry, and the home appliance industry. The rest of the main products exported come from medium- or low-technology industries, with high levels of local added value.

Abstract

This chapter aims to identify differences in the perception of transformational leadership (TL) of three generations – Baby Boomers, Generation X, and Generation Y or Millennials – for an in-depth understanding of the immediate role and challenges facing leaders in organizations. Current days is an excellent time to question what is known and what should be known about leadership and leaders. Latin American leadership characteristics can have a direct effect on the success of business ventures in the region. Leadership can be understood in diverse ways: as an attribute of a position in the organization; as a trait, according to the characteristic of the person; as a behavior, according to the way in which the person acts (Mallma-Vivanco & Córdova-Marcelo, 2015). Several studies carried out in Mexico, Colombia, and Chile show that the Latin American leaders believe that having good working relationships with low conflict is essential to their satisfaction and high performance, and they are usually authoritarian and prefer aggressiveness and assertiveness (Romero, 2004). This study reviews the literature across different generations and related best organizational practices to identify key definitions and empirical results. We compared and contrasted the data from different generations. The findings show that Baby Boomers have a better perception of TL of their leaders than Millennials and even those from Generation X. Thus, the empirical results allow business leaders to understand the differences in perceptions and the unique characteristics of the three generations of workforce in organizations: Baby Boomers, Generation X, and Millennials.

Abstract

This chapter analyzes organizational culture and organizational citizenship behavior in Peru. A research was conducted at the beginning of 2017 in Peru, and 250 employees in Lima, Peru, participated in the research. The research was on the influence of organizational culture on citizen behavior. The results of the research study conducted in Peru indicated how participation, consistency, adaptability, mission, and performance impact the dimensions of behavior such as help, loyalty, initiative, civic virtue, self-development, and sportsmanship. It revealed a broad influence of consistent cultural traits on citizen behaviors of support, in addition to the development of citizen behaviors for initiatives and self-development if the company excelled at offering an opportunity for participation for collaborators. Overall, the results demonstrated the role of culture in Peru’s economy. Accordingly, knowledge regarding Peru’s language, religion, customs, cuisine, crafts, music, and dance is significant. The methodology of this study was based on the collection of documents and studies where the Andean culture has been the main reason for economic development in Peru. This chapter helps clarify the foundations for doing business in Peru by understanding the perception of Peruvian citizens and their distinctive characteristics of organizational behavior. The results presented in this chapter are obtained from the analysis of the economic evolution of Peru, its culture, its demography, and the study of how they do business in that country, in addition to analyzing how they make decisions, agreements and how they develop based on the principles of the Andean culture.

Abstract

In emerging economies, internationalization endeavors have been historically complex and uncertain. Issues such as competitiveness and financial volatility often act as detractors for exploring foreign markets. Nevertheless, state policies and commercial agreements have been boosting an increased participation in host economies, particularly relating to the metalworking sector. This study explores the underlying factors related to the internationalization of small- and medium-sized enterprises (SMEs) in two rising Latin American economies: Mexico and Peru. Comparisons are presented with the aim of understanding the global arena through both perspectives.

Abstract

This chapter presents an overview of social entrepreneurship and social innovation in Colombia and explores its implications in the Pacific Alliance. It is organized into five sections that provide an overview of the fields of social entrepreneurship and social innovation with the aim of sharing experiences that have occurred in the country with the international academic community. It offers a description of the social and economic context of Colombia and then presents the situations that currently serve as the basis of social entrepreneurship and social innovation. It also discusses the main actors that are active in this context. In particular, the chapter emphasizes the experience of the city of Medellín, which is thought to provide an auspicious scenario for the establishment of a business ecosystem based on social entrepreneurship and social innovation. The learnings of Colombia can serve as a relevant example for the countries of the Pacific Alliance that are currently building their social business ecosystems.

Abstract

To succeed in acquiring appropriate resources, socially innovative firms must develop social capital, by making connections with traditional partners, such as universities and multinational corporations, and nontraditional partners, such as nongovernmental organizations and the communities in which they work. This study is designed to show the application of social capital through the pursuit of bilateral relationships. In addition, it shows that collaborations are possible among partners – pertaining to social innovative firms. This study begins with a conceptual foundation that is included to define key constructs and propositions. The methodology is a qualitative case study of socially innovative firms in the agriculture industry in Mexico and Colombia. Both case studies show the creation of bilateral alliances with traditional and nontraditional partners to obtain resources. Moreover, the findings suggest that a social firm can unite its partners’ objectives toward social value creation. Having a common ground could trigger multilateral collaborations among the socially innovative firm’s partners to combine, integrate, and leverage the business ecosystem. This chapter provides evidence that today’s social entrepreneurs are willing to use hybrid structures that include for-profit and nonprofit elements to provide a solution for a social issue.

Abstract

This chapter analyzes the practices of corporate social responsibility (CSR) and sustainability in Chilean small- and medium-sized enterprises (SMEs). This work follows an explorative and descriptive methodology that uses analysis of secondary information as data collection instrument. Results suggest that SMEs in Chile seem to have a higher degree of adoption of CSR practices when compared to those of other countries in Latin America. Chilean SMEs tend to concentrate their efforts in the area of human resources; therefore, these organizations are more willing to invest in labor-related issues than in the negative impacts they may generate in the environment and society. This can be evaluated as a natural first stage, since worker-focused CSR programs generally have a faster return on investment than those focused on other areas. Also, the relations that SMEs develop with local communities to create value are still an area of opportunity that can be addressed through the SMEs and CSR technical groups of the Pacific Alliance. This alliance is an ideal platform to share best CSR practices among SMEs, which probably will increase their competitiveness.

Abstract

This chapter provides an overview of entrepreneurship in Latin America and indicates the relevance of this for economic development in Mexico and Chile. Through the literature review we explore first entrepreneurship and then the relationship between this and economic development, mainly in the developing countries. Therefore, the evolution of entrepreneurship in Latin America is analyzed and a comparative data drawn from Mexico and Chile presented. We made a specific analysis of the undertakings at the services sector, their initial stages, and their degrees of participation in early entrepreneurial activity. Finally, considering the importance of the Sustainable Development Goals developed by the United Nations, entrepreneurship as a trigger for social and economic impact in Mexico and Chile was also studied. This study summarizes the broad exploration of the importance of entrepreneurship in Latin America. It indicates how important it is to focus on the task of solving social and economic problems; exploratory, descriptive, and documentary researches have been utilized for this purpose.

Index

Pages 177-186
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Cover of Regional Integration in Latin America
DOI
10.1108/9781789731590
Publication date
2019-05-30
Editors
ISBN
978-1-78973-160-6
eISBN
978-1-78973-159-0