These are the Three Factors for Nearshoring Success

The Nearshoring Working Group, created by the Atlantic Council, has identified a trio of elements needed for the movement to grow.  

There’s no doubt that the movement to bring manufacturing and sourcing closer to the U.S. is in full swing based on a number of economic, climatic and political considerations but a new study points to three critical areas that need to be addressed to take it to the next level.

The Atlantic Council, a nonpartisan organization that “galvanizes U.S. leadership and engagement in the world, in partnership with allies and partners, to shape solutions to global challenges,” created the Nearshoring Working Group as a multi-sectoral group of practitioners and experts from the United States and the region to help advance actionable policies to accelerate economic engagement across the hemisphere.

Its newly issued report identifies three overarching conditions that need to be met to materialize nearshoring.

1. Improving domestic “pull” factors

The region must modernize port and telecommunications infrastructure to reduce transportation costs associated with nearshoring, and expand internet access. Countries must also improve border crossing infrastructures, create reliable and clean energy sources and offer predictable “rules of the game” for investors by strengthening independent regulatory agencies and pursuing digitalization of public services.

2. Unlocking U.S. “push” factors

Existing U.S. trade needs to ensure provisions of current free trade agreements (FTAs) are best utilized in promoting nearshoring and supply chain resilience and sustainability.

Development and investment policies must be tailored to U.S. strategic goals and existing government faculties must be a tool of intragovernmental, bilateral engagements to catalyze nearshoring.

3. Enhancing public-private sector collaboration

Closer collaboration between the public and private sectors is essential to close the skills gap between jobseekers and employers and improve the region’s human capital. Trade and investment promotions need to be enhanced through multisectoral collaboration and governments should provide incentives for winning industries to further grow, avoiding the draining of fiscal resources for industries that have yet to prove their yield.

Read the full Atlantic Council report.