Analysis of Experiences in Trade and Investment between LAC and Korea: The Case of Member Countries of the Pacific Alliance

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Aug 2015
Santa Gadea, Rosario
Trade and investment have been the main drivers of economic development in Latin America and the Caribbean (LAC) and in the member countries of the Pacific Alliance (Chile, Colombia, Mexico and Peru) in particular, which are the focus of this study. The results of the trade policy reforms made by these four countries are impressive. Exports have increased considerably and a path toward diversification has been forged. Liberalization and foreign investment facilitation efforts also posted outstanding results. To better understand the member countries of the Pacific Alliance, it is necessary to examine their trade and foreign direct investment (FDI) openness, which contributed to average year-on-year growth of 6.3% in gross domestic product (GDP) over the last two-plus decades (1990-2013) compared to the rest of LAC, which posted an average of 5.3%. The member countries of the Pacific Alliance have posted better economic fundamentals and performance than 20 years ago and this put them in good stead to benefit from the various trade agreements that they have signed with many other countries in the world, including Korea. Three of the four countries of the Pacific Alliance (Chile, Colombia and Peru) have free trade agreements (FTAs) with Korea, the only such agreements that Korea has signed with LAC countries. Mexico does not have an FTA with Korea but is the main importer of its products in the Latin American region. Therefore, Mexico represents the missing link to complete Korea's set of FTAs with the member countries of the Pacific Alliance.