Rural Industrial Policy and Strengthening Value Chains
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Rural industrial policy and strengthening value chains Economic Development Economic RAMÓN PADILLA PÉREZ Editor Thank you for your interest in this ECLAC publication ECLAC Publications Please register if you would like to receive information on our editorial products and activities. When you register, you may specify your particular areas of interest and you will gain access to our products in other formats. www.cepal.org/en/suscripciones Rural industrial policy and strengthening value chains Ramón Padilla Pérez Editor Economic Commission for Latin America and the Caribbean (ECLAC) Santiago, August 2017 ECLAC Books 145 Alicia Bárcena Executive Secretary Antonio Prado Deputy Executive Secretary Hugo Eduardo Beteta Chief, ECLAC subregional headquarters in Mexico Ricardo Pérez Chief, Publications and Web Services Division This book was edited by Ramón Padilla Pérez, Chief of the Economic Development Unit of the ECLAC subregional headquarters in Mexico. The chapters were prepared by Stefanie Garry, Carolina Gomez, Ramón Padilla Pérez and Francisco Villarreal, staff members of ECLAC subregional headquarters in Mexico, and Verónica Quiroz Estrada and Nahuel Oddone, ECLAC consultants. ECLAC is grateful for the fnancial support of the International Fund for Agricultural Development (IFAD) for providing technical assistance aimed at strengthening rural value chains and for the publication of this book. Cover design: María Luisa Avaria United Nations publication ISBN: 978-92-1-121953-1 (print) ISBN: 978-92-1-058590-3 (pdf) ISBN: 978-92-1-358057-8 (ePub) Sales No: E.17.II.G.13 LC/PUB.2017/11-P Distr.: General Copyright © United Nations, 2017 All rights reserved Printed at United Nations, Santiago S.17-00274 This publication should be cited as: Ramón Padilla Pérez (ed.), Rural industrial policy and strengthening value chains, ECLAC Books, No. 145 (LC/PUB.2017/11-P), Santiago, Economic Commission for Latin America and the Caribbean (ECLAC), 2017. Applications for authorization to reproduce this work in whole or in part should be sent to the Economic Commission for Latin America and the Caribbean (ECLAC), Publications and Web Services Division, [email protected]. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform ECLAC of such reproduction. Contents Foreword ............................................................................................................. 11 Introduction Ramón Padilla Pérez ............................................................................................. 15 Chapter I Productive development challenges in the rural areas of Central America and the Dominican Republic Verónica Quiroz Estrada ....................................................................................... 25 Introduction ............................................................................................. 25 A. The rural environment................................................................... 27 1. Defning the rural environment.............................................. 27 2. Characteristics of rural areas in Central America and the Dominican Republic .................................................. 29 B. Institutional challenges ................................................................. 35 1. Rules, conventions and coordination .................................... 35 2. Policies and strategies .............................................................. 37 C. Environmental sustainability challenges .................................... 38 1. Adaptation to climate change ................................................. 38 2. Mitigation of climate change .................................................. 41 D. Commercialization challenges ..................................................... 43 1. International commodity price volatility .............................. 43 2. Market access and the role of intermediaries ....................... 44 3. Extraregional and intraregional trade ................................... 45 4 Economic Commission for Latin America and the Caribbean (ECLAC) E. Productivity and innovation challenges ..................................... 47 1. Productivity ............................................................................... 47 2. Size and technological performance ...................................... 49 3. Education and training ............................................................ 51 4. Innovation activities ................................................................. 53 5. Financing ................................................................................... 56 6. Value chains ............................................................................... 58 F. Conclusions ..................................................................................... 60 Bibliography ............................................................................................ 62 Chapter II Rural industrial policy Ramón Padilla Pérez, Verónica Quiroz Estrada ................................................... 69 Introduction ............................................................................................. 69 A. The rural environment................................................................... 72 1. Defnition ................................................................................... 72 2. Importance of the rural environment .................................... 75 3. Cross-sectoral interdependence and complementarity ...... 79 B. Defnition and scope of rural industrial policy ............... 83 1. What is rural industrial policy? .............................................. 83 C. Rural industrial policy tools ......................................................... 87 1. Trade, competitiveness and competition policies ................ 88 2. Productive development policies ........................................... 90 3. Environmental policies ............................................................ 95 D. Experiences with public strategies that can be synchronized with rural industrial policy .................................. 97 1. Chile ............................................................................................ 97 2. New Zealand ........................................................................... 100 3. Costa Rica ................................................................................ 101 E. Conclusions ................................................................................... 104 Bibliography .......................................................................................... 105 Chapter III Methodology for strengthening value chains Ramón Padilla Pérez, Nahuel Oddone ............................................................... 113 Introduction ........................................................................................... 113 A. Value chains and structural change ........................................... 114 B. Key defnitions and concepts ...................................................... 116 1. Value chains ............................................................................. 116 2. Strengthening and upgrading............................................... 118 C. Methodology for strengthening value chains .......................... 120 D. Diagnostic ...................................................................................... 125 E. Roundtables .................................................................................. 130 F. Good practices .............................................................................. 133 Rural industrial policy and strengthening value chains 5 G. Strategies, implementation support and launch ..................... 135 1. Strategy development ............................................................ 135 2. Implementation support ........................................................ 137 3. Launch ...................................................................................... 139 H. Concluding refections ................................................................. 139 Bibliography .......................................................................................... 142 Chapter IV Value chain selection and industrial policy Caroline Gomes Nogueira, Ramón Padilla Pérez, Francisco G. Villarreal ......... 147 Introduction ........................................................................................... 147 A. Why are value chains selected? .................................................. 148 1. Do horizontal industrial policies really exist? .................... 148 2. Market failures ........................................................................ 149 3. The challenge of comparative advantages and creating winners .............................................................. 150 4. Windows of opportunity ....................................................... 151 5. Structural change .................................................................... 151 B. Selecting sectors in practice: tools and strategies .................... 151 1. Identifcation of high-potential clusters in Central America: Central American Institute of Business Administration (INCAE) and Harvard Institute for International Development ............. 152 2. Selection of priority sectors in Mexico by productivityand growth potential ......................................