loans at the bilateral sectoral level are matched with sector-level trade data. As discussed in Section 2, we analyze bilateral data for 14 sectors for which both trade and financial flows information is available. For ease of exposition of the broad trends, we group these sectors into three broad categories: primary, light manufacturing, and heavy manufacturing sectors. The primary sector includes the following sub-groups: agriculture, hunting, forestry, and fishing; mining (coal, metal and mining, and quarrying of nonmetallic); crude petroleum and natural gas. The light manufacturing sector includes: manufacturing of food, beverage, and tobacco; textiles and apparel (including leather); wood and paper related products. The heavy manufacturing sector includes: manufacturing of refined petroleum and related; chemicals and plastics; non-metallic minerals; metals; machinery and equipment; transport equipment.<sup>19</sup> Figure 11 shows the average flows from and to LAC countries by receiver and sender region, as well as their sectoral composition for different sample periods.<sup>20</sup> Overall, it shows that the increase in financial flows from LAC has occurred both in the primary and in the heavy manufacturing sector. In contrast, the growth in financial flows to LAC has been mostly driven by the primary sector.

The patterns for LAC as a sender (Figure 11, Panel A) show that no single sector explains the increase in financial flows from LAC countries. For LAC-South and LAC-LAC flows, the primary sector drove the growth in syndicated loans, while the heavy manufacturing sector grew more in M&A and greenfield flows. In contrast, for LAC-North flows, the heavy manufacturing sector accounted for most of the growth in syndicated loans, and the primary sector powered the increase in M&A and greenfield flows.

For LAC as a receiver, the primary sector drove the growth in syndicated loans and M&A flows. Flows to the heavy manufacturing sector also increased during this period, although growth was more subdued. In contrast, there was a small decrease in both North-LAC and South-LAC greenfield flows. The reduction in flows to the primary sector accounts for the decline in North-LAC

> 19 In this aggregation of the data into three sectors, we dropped all transactions classified as “other manufacturing” - SIC codes [3900-4000) - and “utilities and infrastructure” - SIC codes [4000-5000) - as they do not clearly fit in either light or heavy manufacturing.

> 20 Appendix Figure 2 shows the details for the sub regions of LAC, for the period 2003-2011. The specific countries included in each region are as follows. The Caribbean: Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, Cayman Islands, Cuba, Dominica, Grenada, Guyana, Haiti, Jamaica, Puerto Rico, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Caicos Islands, Virgin Islands. Central America: Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, and Panama. Pacific South America: Chile, Colombia, Ecuador, and Peru. Other South America: Argentina, Bolivia, Brazil, French Guiana, Paraguay, Uruguay, and República Bolivariana de Venezuela.

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