Latin America was the region with the lowest growth from 2000 to 2020, with a performance similar to that of the so-called lost decade of the 1980s. It shows a worrying lack of competitiveness—only 2 countries are present in the top 50—and innovation—only 1 country in the top 50, and it continues to be one of the most unequal—18 countries among the 50 with the worst income distribution according to the Gini Index. It is difficult to think that Latin America can achieve sustainable growth, reduce inequality, and innovate without diversifying production and exports, without improving the quality of international linkages, and without substantive investment in education, innovation, and worker training.

Considering trends in globalization, technological change, and productive organization around value chains (VC), the question is whether regional integration can help to address these issues. The answer is yes, of course. Integration can and should help diversify the productive apparatus and improve the quality of the region’s international linkages. However, getting there involves overcoming several obstacles. Examining some of them and suggesting policy proposals is the goal of this chapter. We will first examine the logic of VCs and the impact on them of the pandemic and of former US president Donald Trump’s protectionist and mercantilist policies. We will conclude with a reflection on the spaces for action that the region can use to improve the quality of its international linkages and strengthen its spaces for regional cooperation and integration.

Value Chains: Breakthrough, Features, and Phases

From the 1980s onward, the rise of new information and communication technologies, on the one hand, and trade liberalization, on the other, facilitated the relocation of productive operations, breaking them down into multiple segments and locating them to maximize price efficiencies. This gave rise to the process known as relocation. In it, companies migrate from their native country and locate the various segments of the production process in those places where the cost can be minimized, without affecting the quality of the product. Thus, VCs arise in instances where multiple companies from different countries participate, each one representing a link in the manufacturing process.