
Regional integration does not ensure production in value chains
By Renato Baumann, Co-ordinator, International Co-operation, IPEA, Brazil
Developing economies often face a common challenge: after a period of rapid growth they experience a slowdown in both growth and productivity, falling into what has come to be known as the ‘middle-income trap’. Signing preferential trade agreements and participating in global value chains are two common recommendations presented to countries facing the middle-income trap, and are often seen as intertwining processes. Moreover, regional integration is gaining momentum as an enabler of value chains. However, although regional movement of goods facilitated by regional integration might be necessary, it is not the only condition to ensure production in value chains.
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