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THE DNA OF INTEGRATION

By Federico Mazzella ,
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After partnering to carry out 20,000 exclusive surveys in 18 countries in the region, INTAL and Latinobarómetro have created an overview of economic, political, technological, social, and environmental integration.

The well-known smart phone app Waze provides up-to-date information on the quickest, least congested route to where you want to go. Few roads have been as winding as Latin America’s path to integration, which has involved progress and setbacks, bogus shortcuts, and, from time to time, roadblocks and picket lines. So how can we find the best roads to integration?

The secret of Waze’s success is simple: it provides information on the things that other people are doing that we weren’t previously aware of. If there is a traffic jam because too many cars are trying to use a particular street, the app recommends an alternative route. If a highway is clear, the app immediately suggests we take it.

Information sharing is also the cornerstone of the partnership between INTAL and Latinobarómetro, which have worked together to identify the neuralgic points in the region’s demand for integration through 20,000 exclusive polls in 18 countries in Latin America and the Caribbean.

How close is a given country’s desired export profile to other countries expectations of this? How receptive to foreign investments are countries that are seeking to attract capital? How willing are people to pay for better infrastructure in a country that has not made any major improvements to its internal logistics in recent years?

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Let’s look at some examples to illustrate how useful this new tool is. A few months ago, Colombia began negotiations with China toward a free trade agreement (FTA). What outcomes have been observed in countries that already have FTAs with China? Perceptions of China are particularly high in Peru, Chile, and Costa Rica, three countries that have already signed FTAs with the Asian giant and where over 40% of the population expressed positive opinions of it.

Another example is beef, Argentina’s most prized export product. But how do other Latin Americans rate it? Contrary to what might be expected, food is far from being one of the distinctive features that other Latin Americans associate with Argentina. Sports (80% of mentions) and tourism (41%) are the backbone of Argentina’s nation branding, while food culture is one of the features that people associate with Peru (79%). How can countries bring their nation-branding strategy in line with the economic sectors that they are actually trying to promote?

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By cross-referencing analyses of public opinions with national statistics and data on trade, we can assess how issues such as trade agreements, investment agreements, nation-branding strategies, or immigration reform may impact integration policies and learn more about the objective and subjective consequences of these in other countries.

Table 1. The Dialogue between Subjective and Objective Indicators

Aspect INTAL/Latinobarómetro National Statistics
Trade How important is political and economic integration for development?

What aspects of life does integration have an impact on?

How much support is there for trade in goods and services?

Share of exports covered by the five main export products (%)

Number of free trade agreements signed

Average MFN tariff (%)

Herfindahl-Hirschman export concentration index

Investment Which economies are most willing to receive foreign capital?

What impact is integration perceived as having on investment?

How important do citizens think foreign capital is and which sectors do they prefer it in?

Exports per capita (thousands of US$)

Agriculture and fisheries as a percentage of GDP

Foreign direct investment (% of GDP)

Infrastructure How important do citizens think infrastructure is for development?

How willing are they to pay to improve their infrastructure?

Infrastructure competitiveness ranking

Income from transportation, warehousing, and communication (US$ per capita)

Innovation How important do citizens think innovation is for development?

How important do citizens think creativity is in children’s education?

How much do citizens know about new technologies and their potential impact?

What should countries’ scientific innovation priorities be in the future?

Research and development expenditure (% of GDP)

Exports of high-technology products (% of exports of manufactured products)

Fixed broadband internet subscribers (per hundred people)

Nation branding What are the main features of Latin American countries in the eyes of the rest of the world?

What country do citizens prefer the goods and services that they purchase to come from?

Income from international tourism (% of total exports)

Homicide rate per 100,000 inhabitants

Environment

 

How important do citizens think care for the environment is for development?

How willing are citizens to pay more for products that respect workers’ rights?

How will innovations impact energy-related matters?

C02 emissions per capita (tons per inhabitant)

Carbon footprint (hectares per person)

Use of alternative and nuclear energy (% of total energy use)

Electricity production based on renewable sources, excluding hydropower (% of total)

Social Inclusion

 

How willing are citizens to pay more for products that respect workers’ rights?

What impact is integration perceived as having on employment?

How important do citizens think social policies are for development?

Total immigrants from other countries in Latin America

index of restrictions on the movement of people and capital

Gini coefficient

Source: The DNA of Regional Integration

Cross-referencing subjective and objective data has allowed us to establish behavior patterns that form what we call the DNA of regional integration, an exercise that reveals connections between each country’s actual economy and the subjective opinions of its inhabitants. Without delving into causal explanations, this process reveals interesting relationships that function rather like an interactive map: they tell us where others made headway and where they got stuck. The conclusions that this Waze for integration has reached are categorical:

  • Countries which show greater support for integration also show greater support for democracy and higher levels of trust in their government.
  • Countries with more concentrated export baskets show greater support for economic integration.
  • Countries that prioritize investment tend to receive higher levels of foreign investment.
  • Countries with greater infrastructure deficits are more willing to take on credit or pay taxes to finance infrastructure works to facilitate integration.
  • Countries that value innovation more highly tend to have larger shares of exports with technological content.
  • Countries whose populations prioritize the environment make greater use of alternative energy sources.
  • Countries where people are more willing to pay for products that respect workers’ rights also have more equal income distributions.

In a time of growing protectionism, Latin America has one invaluable point in its favor: 77% of Latin Americans support regional economic integration processes and 60% of them support political integration processes.

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The challenge that lies ahead is how we can build on these beginnings to foster high-quality integration. With our sights set on this horizon, it won’t hurt to look down at the Waze of integration from time to time.

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