THE REAL EXCHANGE RATE AND THE INDUSTRIAL POLICY OF THE PACIFIC ALLIANCE: A QUANTITATIVE APPROACH

This study aims to understand the determinants of export diversification of goods in the Pacific Alliance, emphasizing three variables influenced by the macroeconomic instability of the region: the level, variability of the real exchange rate (RER) and investment in machinery and equipment. A two-phase approach is adopted: firstly, the theoretical and empirical literature related to the interaction between these variables and export diversification is reviewed. This review sheds light on the relevance and potential causal connections between them, highlighting the importance of diversification to mitigate excessive economic dependencies on certain goods or services. Subsequently, empirical evidence is examined, observing export diversification and the performance of the Real Exchange Rate in the Latin American context. This analysis allows for the identification of historical trends and patterns in the region, and based on this, reflections on the potential and real impact of fluctuations in the Real Exchange Rate and investment on the export landscape. The ultimate goal is to provide a comprehensive view that enables the formulation of more effective and resilient policies in the face of global macroeconomic challenges.