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Blockchain technology: a new opportunity for international trade

July 29, 2021 by Magdalena Barafani - Pablo M. Garcia - Ricardo Rozemberg Leave a Comment


The countries of Latin America and the Caribbean (LAC) have an incredible opportunity within their reach. By leveraging blockchain technology, they could increase trade within the region and with the rest of the world and help shore up the economic recovery.

To help more countries and users understand blockchain better, the IDB’s Integration and Trade Sector and its Institute for the Integration of Latin America and the Caribbean (INTAL) launched the report “Blockchain and International Trade: New Technologies for a Bigger and Better Latin America International Insertion” (available in Spanish). The publication analyzes blockchain’s benefits and challenges from different perspectives and examines its use at different stages in international trade.

Throughout six chapters, experts on different aspects of foreign trade[1] introduce and discuss the opportunities that blockchain has opened up in cross-border flows of goods and the challenges it poses, with a particular focus on trade in LAC.

How does foreign trade benefit from blockchain?

Blockchain enables data to be recorded in a secure digital format by providing real-time information on transactions between different parties, be they corporations, supplier networks, investment pools, or an international supply chain.

It provides all parties with a record that is secure, encrypted, transparent, easy to access, and impossible to tamper with. Although blockchain emerged within the financial system with the launch of cryptocurrency Bitcoin, today it is used in a wide range of activities, including ones that are directly or indirectly related to foreign trade.

The long value chain tied to international trade includes vast, complex areas like logistics, transportation, customs administration, financing, and administrative procedures between firms, all of which could be streamlined by adopting this technology.

Blockchain optimizes processes, makes goods traceable, guarantees the security of payments and financing, facilitates the verification of digital quality and origin certifications, enables real-time sharing of information on the different stages of trade, and helps improve how related public and private services operate, among other benefits.

Blockchain provides solutions for trade operations by simplifying cross-border trade, contributing to competitive improvements, and reducing transaction costs. Although blockchain has been used within foreign trade for several years, its significance has increased since the start of the COVID-19 health crisis and it is expected to play an even more prominent role in the post-pandemic world.

A concrete example of how blockchain is being used today comes from French retailer Auchan, which has implemented an international food traceability system using blockchain throughout its supply chain. After piloting this solution in Vietnam, it has applied this technology to track goods and services originating in France, Italy, Spain, Portugal, and Senegal, working in partnership with Te-Food. The system enables the tracking of different products from farm to fork and the recording of food quality data (and related logistical information) via QR codes.

Six benefits of blockchain

In the publication, the authors highlight several ways in which trade can benefit from this new technology. Blockchain can be used to:

  • facilitate the traceability of traded goods, which helps reduce logistics costs and safeguard operations from start to finish (chapter 2);
  • contribute to the digitalization of the entire rules of origin process at every stage, which is key to streamlining certifications and customs clearance (chapter 5);
  • address the challenges of cross-border data exchanges between public agencies or authorities and private companies. Through the CADENA initiative, which the IDB is facilitating as part of its LACChain[2] program, eight customs authorities in LAC are now sharing data from firms that have been certified as Authorized Economic Operators (AEOs), as stipulated in their mutual recognition agreements (chapter 4);
  • modernize Single Windows for Foreign Trade (VUCEs) to streamline operations and reduce transaction costs by increasing interoperability between players and facilitating access to information for all parties involved (chapter 3);
  • transfer payments more quickly and cheaply than is currently possible through the SWIFT network. As well as reducing transaction times, blockchain commissions are lower and without maximum limits, which is especially advantageous for exporting SMEs (chapter 6);
  • reduce the time needed to issue a letter of credit from seven to 10 days to as little as four hours (chapter 1).

Blockchain: the challenges facing governments

To make these benefits a reality, the governments of LAC countries need to tackle the challenges that implementing blockchain implies.

These challenges fall into three groups. The first concerns technical issues, which include the difficulties associated with developing technological infrastructure. The second relates to administration and governance, including the need for open standards and the creation of sector and business coalitions in different LAC countries to develop interoperability and economies of scale. The third issue is large-scale implementation, which includes data quality, the participation of all players involved in the transaction, the development of inclusive systems, and secure interfaces with legacy systems.

Through its Integration and Trade Sector, the IDB provides LAC countries with different technical and financial support programs to help spread blockchain technology and its use in international trade, drawing on the lessons learned from the development and implementation of the CADENA initiative.

This is a major new opportunity for international trade, one that is described in detail in “Blockchain and International Trade: New Technologies for a Bigger and Better Latin America International Insertion”. LAC cannot remain on the sidelines when it comes to increasing the quantity and quality of trade flows between countries in the region and with the rest of the world.


[1] Alejandra Radl, Sandra Corcuera-Santamaría, Kati Suominen, Virginia Cram-Martos, Lorena Cano, Ziyang Fan, Jesse Lin, Michelle Moreno, Rafael Cornejo, and Ignacio E. Carballo

[2] On October 30, 2018, IDB Lab (the IDB’s innovation laboratory) announced that it was launching an alliance to foster the development of a blockchain ecosystem in Latin America and the Caribbean (LACChain, www.lacchain.net), in partnership with leading global tech and consulting firms.


Filed Under: Trade Facilitation

Magdalena Barafani

Consultant at the Institute for the Integration of Latin America and the Caribbean (INTAL). She investigates issues related to 4.0 technologies adoption for productive development in the region and the relationship between gender and trade. During 2016 to 2019 she was Head of Advisors in the Secretariat of Productive Transformation (Ministry of Production of Argentina). She has a master's degree in Economics from the University of San Andrés (UdeSA) and a Bachelor of Economics from the National University of the South (UNS) and from the Université de Lille 1 in France.

Pablo M. Garcia

Pablo M. Garcia is a long-experienced development economist. He is currently Head of the Integration Unit at the Inter-American Development Bank (IDB). Previously, he was Director of the Institute for the Integration of Latin American and the Caribbean (INTAL) at the IDB, president of BICE (Argentinean Development Bank) and president of the Latin American Association of Development Financing Institutions (ALIDE). Previously, Pablo was Lead Economist at the IDB specializing in Foreign Trade and Investments. He oversaw the IDB's regional hub on foreign trade and investment issues for Argentina, Brazil, Chile, Paraguay, and Uruguay. While at the hub, he led the design and execution of several projects related to export promotion, investment attraction, and trade in services. He has authored studies on international economy, trade in services, and export and investment promotion. Pablo holds a MA in International Commerce and Policy from George Mason University, a MS in Economics from Di Tella University and a BA in Economics from the University of Buenos Aires.

Ricardo Rozemberg

Economist, trade and integration specialist. Since the beginning of 2020 he has been a Consultant for the IDB INTAL. He is an undergraduate and graduate professor at the National University of San Martín, UBA and UNQ. He worked as an independent private consultant for national and international organizations, former Manager of the National Investment Development Agency. Director of the Center for Studies for Production (Ministry of Industry and Commerce) and Director of the Center for International Economics of the Ministry of Foreign Affairs. He completed a Master's Degree in Economics and Public Policy at the Di Tella Institute and a bachelor's degree at the UBA. He is the author of multiple trade and integration publications in Argentina and abroad.

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Productivity and Trade

This space explores how trade, investment and sustainable development in strategic sectors can boost productivity and strengthen more dynamic, inclusive and resilient economies in Latin America and the Caribbean. From trade facilitation and export and investment promotion to entrepreneurship, the development of public-private synergies, agri-food systems and tourism, we address challenges and opportunities for growth in the region.

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