Latin America Lags Behind in Global Trade

Traveling along the Paso Internacional Los Libertadores into Chile, a lorry filled with Brazilian-made cars faces numerous challenges that highlight the difficulties of trade within Latin America. As the vehicle navigates the hairpin bends of the road, it is forced to stop four times for road repairs. The harsh weather conditions, including snow, ice, and avalanches, pose a constant threat to the infrastructure, causing frequent delays.

During these stops, drivers and workers alike take the opportunity to smoke and admire the surrounding peaks. Border officials estimate that there is at least one crash a week on this busy trade route between Argentina and Chile. In the winter months, the crossing operates for only 12 hours a day due to dangerous ice conditions. And for approximately 40 days each year, it is completely closed due to heavy snowfall.

While Latin America’s international trade, as measured by exports and imports as a percentage of GDP, has shown some growth over the past twenty years, it still falls behind most other emerging markets. When Mexico’s strong manufacturing sector, geared towards exports to the United States, is excluded, the region’s trade performance appears even weaker.

In South America specifically, the value of trade in goods represents less than 30% of GDP, compared to around 50% in other emerging markets. These challenges, including difficult terrain, weather conditions, and limited trade volumes, highlight the obstacles faced by countries in Latin America when it comes to international trade.