When you think of Latin American exports, what comes to mind?
Dances, you might think: steamy tangos and sassy salsas. Or music: just now, YouTube Latin music videos rank among the most-streamed.
And, of course, food. These days, one can find a Mexican restaurant just about anywhere in the UK, and Argentine beef is legendary for its succulence and tenderness.
And how about an ice-cold Corona with a wedge of lime to go with that steak?
All of this makes Latin America sound like a dream holiday destination – which, in fact, it is.
From the clear waters off Costa Rica to the picturesque ports of Saint Lucia, those of us keen for a tropical paradise inevitably head toward the Caribbean or elsewhere in Latin America.
Is that all there is to Latin America? A few holiday snaps and the echo of sultry songs?
Quite the contrary! Countries in Latin America, long ignored on the world stage, are starting to come into their own.
Latin America has collectively been seen as economically weak – in spite of her vast resources, there was little potential for development. For those reasons and more, historically, nobody really saw the need to look closer at those countries and dependencies... but those ideas are changing.
Slowly, other governments are beginning to see the value in Latin America’s vast resources and are pouring money into those countries’ coffers for infrastructure improvements as well as industrial projects.
Is Latin America, long ignored on the global stage, on the rise?
Your Superprof takes a look at global factors impacting Latin America and that region’s geopolitical effects on the wider world.
Latin America’s Beginnings
Historically, South American countries with coastal access were favoured for international trade as well as development.
Indeed, looking at a map of Central and South America today, we see that inland regions are, for the most part, largely unpopulated. The exceptions are landlocked countries such as Bolivia and Paraguay, but they are more sparsely populated than countries that have access to a sea coast.
As an example: Bolivia, with an area of more than 1.1 million km2 has a population of just under 11.5 million (by the latest estimates). By contrast, Chile, with a total area of less than 800,000 km2, is home to over 17.5 million people.
There are several good reasons for inland regions being largely uninhabited; only one of them being the benefits that living near the ocean provides, such as fishing and shipping.
The tropical climate and seemingly impassable jungle terrain made South America’s interior virtually inaccessible.
Central America has a different story to tell.
Relatively early, European powers saw potential in Panama; if only they could create a shipping lane across that narrow land, they could avoid navigating around the dangerous Straits of Magellan!
The flurry of foreign money and resources that poured into that country during the phases of canal building did much to put the spotlight in Central America.
Unfortunately, tropical heat and disease did much to dissuade those wealthy entities from further development in that country or anywhere else in Latin America.
They packed up their tools, took their money and technological savvy, and left Latin America to fend for itself.
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Latin America as She Stands Now
For a long time, crime and violence stalled development in Latin America.
As individual Latin American countries transitioned from authoritarian to democratic rule, juntas, gangs and drug cartels took over even basic civic institutions such as public education, policing and government.
This has led to a vicious circle: with minimal education, there are few job opportunities; with no work, people turn to crime and, as violence escalates, fewer international entities entertain the idea of investing or trading in the region.
Through this constant cycle of action and reaction, the wealth gap in Latin American countries grows ever wider until, stretched to its breaking point, economies snap, plunging countries into chaos and driving citizens to flee.
Venezuela is a particularly dramatic example of such.
Once a wealthy land through oil exports, President Chavez launched several social reforms, promoting education and social welfare programmes. His hand-picked successor has upended those fragile gains.
Under Nicholas Maduro’s tenure, the country’s oil industry – its main economic driver, all but collapsed. Further plundering of the state-owned natural gas and oil coffers led to a profound economic recession.
Sanctions placed on Venezuela by other countries have further impacted the country’s economic viability. Added to that financial crisis is the lack of confidence in the government, caused by Maduro’s ever stronger hold on government affairs.
The Venezuelan crisis is affecting all of the neighbouring countries; from Columbia, which temporarily opened her borders so Venezuelans can buy needed goods to those impacted by migration of the Venezuelan people looking for new horizons.
That’s all the bad sides; now let’s look at the good things driving Latin American geopolitics.
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The Region’s Heavy Hitters
While all eyes are on the Venezuelan crisis, elsewhere in Latin America, things are getting rosier.
Without a doubt, Latin America is a land rich in natural resources and there are plenty of people available to work them.
Historically, the heat and humidity discouraged foreign speculation in the region: how could anyone work in those conditions? Now, with climate control well within reach, other countries are thinking: why not set up shop in Latin America?
The second stumbling block to that idea was intra-national transportation.
Latin American countries typically being underdeveloped and not necessarily on friendly terms with their neighbouring nations, any industry in the middle of South America would not have ready access to international shipping lanes.
Even Brazil, as large and diverse as she is, did not exactly have the roads and rails to transport finished goods produced inland to the various seaports they would ship out of.
That is why there is now intense focus on infrastructure – building facilities, roads and railways, throughout Latin America.
Naturally, those ventures provide jobs which, in turn, stimulate the economy of individual countries and the region as a whole.
As far as energy production, Latin America has it all over the rest of the world; not just for her vast reserves of oil but in renewable energy resources that she is already making ample use of.
- Paraguay exports 90% of the energy it generates at their massive hydroelectric facilities
- other Central American countries draw 65% of their energy from hydro resources
- Andean countries are overwhelmingly powered by solar and wind energy
- those countries include Chile, Peru, Ecuador, Colombia and Venezuela
- The Caribbean countries also rely on renewable resources
From this standpoint alone, we can see why other nations are contemplating investment in Latin America.
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Who Is Contributing to Latin Countries’ Development?
One would expect the United States, Latin America’s closest neighbour, to spearhead investment and development in the region.
As it seems that American interests lie elsewhere for now, other nations are eagerly pursuing free trade agreements, both with individual countries and trade blocs that encompass several countries in Latin America.
Mercosur is one such pact; it serves Argentina, Uruguay, Paraguay and Brazil. They have recently entered into a trade agreement with the European Union, an arrangement that will benefit everyone.
Whereas Japan has longstanding ties with Latin America in general, China is now pouring investment capital into select countries’ infrastructure and modernisation. To wit, several Chinese companies recently bid on Brazil’s planned expansion of their railroad system.
While the Chinese may have a way to go before they can sway Brazilian officials away from their ties with Japan, they are on track to influence Caribbean nations.
Through disaster relief as well as trade deals, loans and investments, China is making its mark in Latin America, almost so quietly that it has gone without notice.
Does China's competition with Japan in Latin America have anything to do with geopolitics in Asia?
Naturally, Russian diplomacy in Latin America is making great strides; theirs is a symbiotic relationship that cannot be overlooked.
Latin America, essentially ignored until recently as a global political and economic entity, and Russia, politically and economically shunned by European and American leaders have found that, together, they can bolster each other's global standing.
Trade deals, arms and technology have made their way from Russia into Nicaragua, Cuba and Bolivia, effectively giving Mr Putin acceptance and validation to balance out the global criticism of his domestic and international policies.
It also provides him with a back door into European and American politics - a possibility that some might say has sinister overtones.
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Finally, South African involvement in Latin America has grown over the last 15 years, specifically with Mexico, Cuba and Brazil; with Peru unveiling a plan to boost ties with several African countries.
Africa and Latin America have several points in common, from the mining of raw materials to being largely overlooked in global affairs.
A look at African geopolitics shows that their main focus for trade and relations remains the northern hemisphere; a position which essentially renders Latin America a competitor because that region’s goals are the same.
Unlike other regions around the globe – Asia and in particular the Middle East, Europe and Africa, Latin America’s impact on world politics and economy has been minimal – and mostly overshadowed by her low place on the global peace index.
That contrasts sharply with those countries’ recent advances in the energy and industry sectors.
Now, wealthier countries are casting avid eyes on the riches to be had in Latin America, till now largely untapped, and are fairly tripping over themselves to be among the first providers of capital and service in order to reap the largest gains.
Only time will tell whether Latin American countries’ leaders will be compelled to ‘sell to the highest bidder’ or whether she will find her place as a global power.
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