Export Diversification in Latin America and the Caribbean

Beginning in the mid-1980s the primary development paradigm pursued by Latin American and Caribbean countries undertook a major shift from the concept of import-substitution-industrialization (ISI) to that of export-led growth and openness to international markets. Despite these efforts, virtually no research has been undertaken to assess the degree to which the export structures of Latin American and Caribbean countries have in fact diversified. This is unfortunate as the trade policy environment facing these countries is poised to undergo significant changes. The purpose of this paper is to examine the structure of exports to the U.S. from 19 selected Latin American and Caribbean countries over the 1989 to 2000 period in order to assess the degree to which export diversification has occurred. The analysis is conducted at a reasonably disaggregate level using 2-digit HTS data. The countries included in the analysis provide a mix of commonalities and differences. The results suggest wide differences in the degree of diversification exhibited and suggest that these differences are related to economic size and social capability.