In the past five years American politicians, Voters and even some business leaders have called for it relocate of manufacturing. This trend was accelerated by the need for warranty caused by the coronavirus pandemic the manufacture and transportation of essential medical equipment. Even President Joe Biden has one to plan intends to rebuild domestic manufacturing capacity in the US.
But what if the calls to bring American manufacturing back from Asia turned into an opportunity to expand US cooperation with its neighbors?
In one recently report published by the Latin America Program at the Wilson Center, Professor Richard Feinberg advocates using US economic policies to improve cooperation with the Greater Caribbean Community (GCC), which are considered countries of the Great Caribbean Basin (GCB)to include the Caribbean Islands, Central America, and Mexico, Colombia, and Venezuela.
Professor Richard Feinberg of the Wilson Center
“There is a string of elements here: anti-globalization tendencies, competition between the USA and China, the Central American migration crisis and the renewed relevance of supply chain security. These factors make nearshoring an attractive political option to move forward on a large scale, ”Professor Feinberg recently told Nearshore Americas.
The report, titled Widening the Aperture: Nearshoring in Our ‘Near Abroad’, received praise from policy experts for its bold ideas, such as: US infrastructure plans locate Technology centers in the GCC states.
“Imagine if the United States joined its GCC neighbors in locating technology centers in the GCC region. These hubs would attract much-needed foreign and domestic investment in both high-tech companies and more traditional assembly “maquilas”. The hubs could build on existing ones Free trade zones or build profitable greenfield projects, ”Feinberg wrote in the report.
“Imagine if the United States joined its GCC neighbors in locating technology centers in the GCC region” – Professor Richard Feinberg
Industry leader for a long time and more recently multilateral organizations have predicted the benefits of nearshore for US companies and recipient countries alike. According to Feinberg, US politics as an enabler of nearshoring has the potential to Curb migration patterns in Central America and help to reduce poverty in the region.
However, it is important to understand some of the challenges to effective implementation. “This system of GCC technology centers would of course not be a panacea for solving all development problems in the region. But the hubs would be a creative response to the challenges of the 21st century facing both the United States and the other nations in the region, ”added Feinberg.
The report recognizes the problems of the education systems in Central America and the Caribbean as the main obstacles to the development of technology centers in the region. “People with a certain level of education will benefit immediately, but we have to recognize that a large proportion of the workforce does not have the skills to fully participate and that higher education in the region is still weak,” said Feinberg.
These Problem has already been identified by the private sector and foreign companies outsourcing to the region. There is a Tendency towards further training and retraining of the workforce to correct the inefficiencies of the education system and to adapt new technologies.
“People with a certain level of education will benefit immediately, but we must recognize that a large part of the workforce does not have the skills necessary to fully participate” – Professor Richard Feinberg
Even so, funding and attention to education are still low and the Covid-19 pandemic has caused further damage to the area’s school systems. According to the World Bank, learning poverty, defined as the percentage of 10-year-olds who cannot read and understand simple text, has increased from 51% to 62.5% since the beginning of the pandemic. At the regional level, less than 43% of primary schools and less than 62% of secondary schools have internet access for educational purposes.
“When we look at the current educational landscape in Latin America, it is easy to see how the Biden government’s plans for education, including investing billions of dollars in professional training programs and tuition fees, could be of great benefit if combined with a regional one Approach. But local actors need to commit to improving this, ”added Feinberg.
The report suggests an initial network of six different technology centers with potential locations in El Salvador, Honduras or Guatemala; the border between Haiti and the Dominican Republic, an English-speaking Caribbean island like Guyana or Jamaica, Barranquilla, a Colombian port city and all US Gulf states that suffer from high unemployment and poverty.
According to Feinberg, the employment targets could be 100,000 jobs at each technology center by year five, and 300,000 by year ten; Cumulatively, the six centers would create 600,000 new jobs by the fifth year, and 1.8 million by the year 10. The success of this endeavor depends heavily on “reaching bilateral agreements or a regional pact with the United States,” added the author.
However, the trade arrangements negotiated over the past few decades have successfully spurred more investment and trade across the region, although much more could be done. In implementing these trade agreements, Central American countries have moved from fundamental measures such as harmonizing tariffs and reducing delays in cross-border customs facilities to more complex issues of harmonizing national rules and tax systems that have influenced migration rules and flows in recent years.
Feinberg does not propose to reopen existing regional trade agreements. However, he can envision measures to make them more consistent, to encourage trade between countries in the region, as well as between the region and the United States. Specifically, agreements could be made on common regional rules of origin (required added value to benefit from trade preferences and to enable cumulation (summation of the added value along the supply chain within the participating countries). Broader broadband access and better transport connections would also promote trade between the countries of the GCB stimulate.
Corruption, Political Instability and Cross-Border Crime
Corruption Concerns drug related illicit drug trafficking in Central America and the Caribbean have increased in recent years. For the Biden administration it is one important point, especially where corruption is widespread or affects the highest political levels.
It is reasonable to assume that the US would make any kind of agreement conditional on improvements in the rule of law to ensure that taxpayers’ money spent on the hubs, associated infrastructure, and professional training is well spent, rather than through corrupt practices were diverted.
“In many countries in the region, weak, corrupt public institutions are undoubtedly wasting taxpayers’ money and discouraging private investors” – Professor Richard Feinerg
“In many countries in the region, weak, corrupt public institutions are undoubtedly wasting taxpayers’ money and discouraging private investors; the Northern Triangle and Haiti do poorly on indicators such as transparency, corruption and business competitiveness, although Costa Rica and Barbados set higher standards of performance, ”Feinberg said.
Feinberg suggests that countries currently facing US economic sanctions – Venezuela, Cuba, and Nicaragua – could eventually be included in the initiatives, but only if their diplomatic relations with the US have improved noticeably.
Feinberg suggested Biden could use the US-hosted Ninth Summit to launch the technology hubs initiative to engage politicians and business leaders in both the US and the rest of America.