Upgrading value chains through professional and supporting services: Lessons from three agro-industry chains in El Salvador and Guatemala

Abstract

There is an increasing acknowledgement of the key role of services for technological upgrading and increasing value added in manufacturing and primary goods value chains. Over the past two decades, Central American countries have experienced significant export growth. Yet exports have not been an engine of sustained economic growth and employment generation. Agro-industry exports, in particular, frequently incorporate only scant domestic value, with limited or no industrial transformation at all. This paper aims at studying the role of professional and supporting services in increasing domestic value added and fostering technological upgrading in agro-industry value chains. It presents empirical evidence on three agro-industry value chains: shrimps in El Salvador, and non-traditional vegetables and fine woods in Guatemala. Research and development services, technical assistance, support for certification processes, logistics and transport services and market research, among others, have a positive impact on productivity, efficiency, quality and revenues.