August 12, 2003
Translation: FTAA Secretariat
FTAA – CONSULTATIVE GROUP ON SMALLER ECONOMIESHEMISPHERIC COOPERATION PROGRAM
FINANCIAL COOPERATION AND TECHNICAL ASSISTANCE – PROGRAMS FOR ANDEAN
COMMUNITY COMPETITIVENESS IN THE FTAA
This project identifies the Andean Community’s financial cooperation and
assistance needs in support of the programs for subregional and national
competitiveness to effectively contend with and overcome challenges and maximize
the benefits associated with trade liberalization under the FTAA, thereby
supporting national development strategies and upgrading export capacity as part
of the regional and global trade liberalization process, particularly within the
This project fits into the framework of the principles and objective of the
Hemispheric Cooperation Program.
- Project Title: Financial Cooperation and Technical Assistance in support of
the programs for Andean Community subregional and national competitiveness
The productivity gap between Latin America and developed countries has more than
doubled and is showing signs of increasing2 /. According to World Economic Forum
statistics, competitiveness in Andean countries is low. As with other Latin
American countries, Andean exports to the international market are for the most
part traditional exports and there are trade deficits, except in
intra-subregional Andean trade where more value-added exports and trade
surpluses are being observed in four of the five Andean countries.
Within this context, and with a view to reaping greater benefits from their
participation in the FTAA, the Andean countries have begun a “second generation
of reforms” which in addition to liberalization and macroeconomic reforms, seeks
to increase productivity and emphasize investment- and export-promotion. During
the nineties, Andean countries carried out studies and activities to identify
key sectors and define strategies to enhance their competitiveness.
The national competitiveness organizations in the Andean countries are: Sistema
Boliviano de Productividad y Competitividad (Bolivian Productivity and
Competitiveness System), of Bolivia, created in November 20013 /. Red Colombia
Compite (Colombia Competes Network ) headed by the President of the Republic and
coordinated by the Ministry of Foreign Trade4 /. The Consejo de Competitividad
(Competitiveness Council) of Ecuador, established in 2001. The Peruvian National
Council of Competitiveness was created in May 2002. Venezuela’s Red de
Competitividad (Competitiveness Network), which will be created in the near
future, will be coordinated by the National Investment Promotion Council.
The need to establish subregional coordination to provide direction for
competitiveness-related actions, was underscored at the Andean Competitiveness
Forum (in Santa Cruz de la Sierra, Bolivia, 18 and 19 July 2002).5 /
To this end, we would like to single out some experiments with cooperation and
funding for competitiveness enhancement programs being implemented throughout
- The Andean Competitiveness Program (PAC) – Andean Development Corporation
(CAF) and Harvard University
- Began in December 1999, and seeks to define and promote an integrated agenda
for national and regional competitiveness that is based on sustainable growth
and improves living standards throughout the Andean region.
- Enlists the active participation and support of the government, private
sector, civil society, and academia.
- Addresses the microeconomic aspects of competitiveness, macroeconomic
policies, and the environment and sustainable development.
- IDB support in developing a competitive infrastructure.
As stated in the document Methodologies for Analyzing Competitiveness in Latin
America and the Caribbean (FTAA.sme/inf/64): “In general, all the different
approaches agree that the bottom line of competitiveness is “passing the global
markets text” and that export competitiveness is a basic ingredient in the
creation of the FTAA.”
Hence the importance of supporting efforts made by Andean and other countries of
the hemisphere to improve the competitiveness of their exports in the
The Andean countries have been undertaking efforts to design policies and
strategies to improve the competitiveness of their economies, but the viability
of these policies and strategies will depend on the availability of resources to
overcome current deficiencies which limit efficiency and productivity in the
Latin American private sectors identified in the IDB study: credit markets,
labor markets, infrastructure, technological innovation, and industrial and
It is also worth mentioning that the degree of progress made in competitiveness
programs in the Andean countries is very uneven, even though some Andean
countries began their studies and preparations for establishing a
competitiveness program at the same time. Likewise, the Andean Ministers
Responsible for Trade (Commission of the Andean Community) have reiterated that
a study on the impact of the FTAA is a priority for the development of a joint
strategy to face the risks and take advantage of the opportunities presented by
the hemispheric market. For this reason, the Commission of the Andean Community,
as part of the joint strategy in FTAA negotiations will need to take charge of
the coordination and evaluation of the Program for Andean Community
Competitiveness in the FTAA.
The aim of this project, therefore, is to support subregional and national
competitiveness policies and strategies, with a view to supplementing national
and subregional initiatives already being implemented, by making it possible to
learn from success stories in several Andean countries and other countries of
the Hemisphere, with a view to designing and developing an Andean Community
Competitiveness Strategy to face the challenges of the FTAA.
- Objectives of the project:
- General: Support subregional and
national policies and strategies to improve Andean Community competitiveness
throughout the hemisphere by providing financial resources and technical
Second phase: the development of this program shall:
- Come up with an agreed subregional and national definition of the priority
objectives, guidelines, and activities that would make up the Program for Andean
Community Competitiveness in the FTAA.
- Contribute to improving the Andean Community’s regional productivity and
sustained growth in terms of its share of the hemispheric export and investment
- Strengthen national systems and coordinate national competitiveness programs
in order to complement and support the subregional competitiveness program,
ensuring the continuity of its actions, and the participation of the public and
private sector, as well as other representatives of civil society.
- Include specialized technical assistance to transfer competitiveness
development experiences, implement policies, strengthen institutional
capacities, promote priority-sector exports at the subregional and national
levels, and train human resources, inter alia.
- Financial cooperation needed to develop industrial retrofitting programs,
improve infrastructure, support small and medium-size enterprises, promote
technological innovation, strengthen the financial sector and capital markets.
- Inputs6 : resources needed for the project
Technical assistance resources are needed to finance the following activities
during the first phase:
- Technical Assistance
- Financial Cooperation
- One (1) consultant from the subregion or other country of the hemisphere, who
will be responsible for drafting the proposal on the Program for Andean
Community Competitiveness in the FTAA. –
Funds are needed to cover the consultant’s fees for a six-month period
- Meeting of Experts and Representatives: define guidelines and general
objectives to be taken into account in the preparation of the Program for Andean
Community Competitiveness in the FTAA
Representatives of (1) representative of the Ministry Responsible for Trade (1)
national competitiveness agencies, (3) the private sector, and (1) academics
from the Andean countries,
an expert from the subregion or other country of the hemisphere
representatives of subregional, hemispheric, and multilateral cooperation
entities and financial bodies (as guests)
Airfare and per diems
- Subregional Mission of the consultant and the responsible official from the
General Secretariat of the Andean Community to submit a proposal, receive
contributions and comments for the purpose of consolidating a proposal with the
participation of all the sectors involved in implementing it.
Airfare and per diems for the consultant for a 15-day period
II. Phase: the resources of the second phase will be defined in the Program for
Andean Community Competitiveness in the FTAA
- Anticipated Results
- Set up a subregional coordination mechanism through the Andean Ministers
Responsible for FTAA Negotiations, who oversee actions under the FTAA
subregional competitiveness program.
- Contribute to improving the Andean Community’s share in trade and investment
flows in the FTAA.
- Support and strengthen national competitiveness systems.
- Support competitiveness policies that have national priority.
- Strengthen State institutions, active participation of the private sector and
of civil society in general, and achieve proper coordination.
- Other relevant information
An Andean Competitiveness Forum was held under the auspices of CAF (in Santa
Cruz de la Sierra, Bolivia from 18-19 July 2002). The main objective was to
support Andean countries in framing public policies to improve the
competitiveness of Andean countries and promote the formulation of a joint
strategy for regional competitive development.7
Finally, the Andean countries requested support from ECLAC to develop a study to
make it possible to measure the impact that the FTAA will have on the
competitiveness of Andean economies. The results of this study will be used in
designing national policies and strategy aimed at boosting competitiveness. To
date there have been no responses to this request.
1 Hemispheric Cooperation Program Principles, objectives, and other
general aspects (FTAA.sme/04 of 12 April 2002)
2 Joseph Ramos – Hacia una segunda generación de reformas: políticas de
competitividad en economías abiertas – economic quarter January - March 2000
5 Evaluation and Future Agenda of the Andean Competitiveness Forum – Chapter 5 –
Report – See www.boliviacompite.org
Note: In the event that two or more project profiles are proposed, please
present in order of priority.
6 If information is available.