English
| Autor | Yoel Modesto González Bravo |
| Cargo | Universidad Católica Andrés Bello |
| Páginas | 7-57 |
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Latin American Journal of Trade Policy 13 (2022) - ISSN 079-9668 - Universidad de Chile
ABSTRACT
This article explores the main issues in relation to the
current trend towards the deglobalization of supply
chains. Specically, it investigates the nearshoring from
China of manufacture activities, mostly intermediate in-
dustrial goods, by US corporates, and how the Americas
can best take advantage of this trend. This relocation
into the region represents an important opportunity to
speed up its economic development. For this purpose,
the regional economic and administrative readiness for
this trend will be explored based on the CAGE model
proposed by Ghemawat (2007) to identify key areas for
further improvements to enhance the regional nearsho-
ring potential.
Keywords: Nearshoring – CAGE model – manufacturing
industry – special economic zones – Americas.
JEL Classication: F10, F23, F55, F63, O14, O51, O54.
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Nearshoring of US manufacturing corporates’ supply
chains: exploring administrative and economic issues
for their potential expansion across the Americas
Yoel Modesto González Bravo*
Professor at Center of Innovation and Entrepreneurship, Catholic Universi-
ty Andres Bello, Caracas, Venezuela. Email: ygonzale@ucab.edu.ve. Received:
February 3rd, 2022; modications: June 28th, 2022; accepted August 18th
2022.
*
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Latin American Journal of Trade Policy 13 (2022) - Universidad de Chile
RESUMEN
Este artículo explora los temas principales en relación
con la tendencia actual hacia la desglobalización de las
cadenas de suministro. En particular, analiza el proceso
de nearshoring desde China de la manufactura de bienes
industriales, principalmente intermedios, por corpora-
ciones norteamericanas y cómo las Américas pueden
tomar ventaja de esta tendencia de la mejor manera. Esta
reubicación hacia la región representa una importante
oportunidad para acelerar su crecimiento económico.
Para este propósito, la adecuación económica y adminis-
trativa regional a esta tendencia será explorada basada en
el modelo CAGE propuesto por Ghemawat (2007) para
identicar áreas clave a mejorar con el n de incrementar
el potencial regional para el nearshoring.
Palabras claves: Nearshoring – modelo CAGE – indus-
tria manufacturera – zonas económicas especiales – las
Américas.
INTRODUCTION
After the end of the 20th century, different companies world-
wide massively procured to outsource several operating activities
to third parties in an attempt to control their costs within a context
of trade barrier reductions for foreign trade (Varma et al., 2006).
This trend led many of them, as outsourcers, to transfer these
activities to third parties, known as outsourcees, operating in
countries with relatively much lower operating costs, in a process
known as “offshore outsourcing”. This foster a new trade pattern
known as “trade in tasks” that was intended to be easily coordi-
nated through improvements in transport and telecommunication
technologies (Elia et al., 2014; Lewin et al., 2009; Manning et
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Yoel Modesto González Bravo
Nearshoring of US manufacturing corporates’ supply chains: exploring administrative and economic
issues for their potential expansion across the Americas
al., 2008). Other companies preferred to keep full ownership of
their displaced operations through “captive offshoring” (Gray et
al., 2013). Within this trend, China and India emerged as leading
destinations for these activities, with specialization trends in ma-
nufacturing activities in China and in business support services
in India. However, these countries started to lose competitiveness
with the rise in the cost of their human resources, lack of legal
protection for sensitive issues such as intellectual property, trans-
port and inventory costs, cultural and language barriers as well
as coordination problems with outsourcers from Europe and
North America due to time differences leading to delays in critical
decisions as well as for concerns about excessive concentration
of outsourcees in few jurisdictions (Minder, 2008).
In order to cope with what has been deemed as a high reliance
on manufacturing suppliers from China, the United States (US)
authorities have enacted legislation to bring back manufacturing
activities, including a recent proposal for an initiative known as
“Back to The Americas”, mostly aimed at returning manufactu-
ring activities from China and relocating some of them across
the Americas (Cortiñas & Schechter, 2021). This trend represents
a promising opportunity for developing countries across the
Caribbean and Latin America to create new trade ows through
knowledge transfers from North American corporates that are
in the quest for outsourcing alternatives at lower costs, high
efciency, lower cultural barriers, shorter physical distances and
time differences, in comparison to their traditional offshoring
destinations. This is aimed at reducing coordination problems
as well as supply chain waiting times and trade disruptions as it
was evidenced in 2020 with international transport restrictions
due to the COVID-19 pandemic crisis.
Furthermore, a traditional large outsourcing destination such
as China has been able to establish entry barriers to players from
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