countries are not as strong players in the LAC trade network as may be expected. In fact, the dispersion from a measure of network centrality is zero in the EAP cluster and much higher, 0.17, in the LAC cluster.

The evidence discussed above lead to a rather disheartening assessment: Latin America as a whole does not seem to sufficiently progressing toward greater trade quality—i.e., a type or international trade that, by maximizing technology diffusion and learning spillovers, is supportive of long-term per capita income convergence. Nonetheless, it would be an exaggeration to conclude that there are no bright spots. There are some, in fact, in at least two respects. First, the quality of institutions in many (not all) of the major commodity exporters in LAC has been on an improving trend, which significantly raises the odds that the most egregious manifestations of commodity-related rent seeking behavior can be held in check. The caveat in this regard is, however, that deepening of fiscal decentralization in many LAC countries may complicate collective action around strategic national objectives in the management of commodity wealth.

Second, there is some evidence that certain commodity sectors are benefiting from technological innovation and generating linkages, value upgrading and employment. For instance, there is evidence of increases in value-added, clustering effects, and cross-sectoral linkages in the agricultural sector in Argentina, Chile, and Uruguay, as well as the salmon farming in Chile.<sup>34</sup> A recent case study of metal commodities also suggests some positive spillovers and upgrading in the metal commodity industries in the region. The share of LAC in metal global trade has expanded over time due to both inter-product upgrade and intra-product quality improvement.<sup>35</sup> A study of Peruvian gold mines found rather extensive linkages to local areas with the use of local labor and other inputs.<sup>36</sup> Anecdotal evidence suggests strong clustering effects around CODELCO, the copper mining giant in Chile. In sum, there is spotty but robust evidence that LAC has been not only moving towards the production of more sophisticated and higher-valued-added products within its natural resource based industries but clustering and production chains are being developed.

# **_(c) External versus internal demand-based globalization patterns_**

In this section we explore evidence related to issue discussed in Section 3c, namely, the contrasting aggregate demand structures that have underpinned the economic globalization processes in LAC and Southeast Asia. This is of interest to the extent that an external demanddriven pattern may have some virtues vis-à-vis a domestic demand-driven one when it comes to fostering long-term growth. That would be the case if the relatively high domestic saving rate that is necessarily associated to an external demand-reliant pattern fosters growth, in particular, by sustaining a relatively more competitive real exchange rate. While this section does not establish the actual domestic savings-real exchange rate-growth causal links, it shows comparative data for LAC-SAM (South America and Mexico) and the four Southeast Asian

> 34 See Valdes and Foster (2003), Regunaga (2010), and O'Ryan et al. (2011). 35 See Mandel (2009).

> 36 See Aragón and Rud (2009).

21