There are several good reasons to hold an optimistic view about Latin
America (LA) in world trade during the next ten years. These reasons are
related to the region's learning process over the last decades, some significant
cultural changes and the impact of new international realities. As a result,
some LA nations are becoming more assertive, pragmatic and optimistic.
This new attitude also accounts for the internationalization of many regional
firms, including the growing number of small and medium enterprises (SMEs)
that are integrating transnational production networks.
The trend towards improvements will continue despite occasional ups and
downs. This is not to underestimate the huge and familiar challenges that
remain to be overcome over the next years, including those related to
the region's pattern of foreign trade.
It is precisely with those challenges in mind that it may seem convenient,
before continuing, to raise a word of caution. Everyone knows that in
a world of deep systemic changes, forecasting can be dangerous. Mindful
of the views on LA that predominate in many quarters, it has always been
safer to predict negative, if not catastrophic, scenarios. But today it
appears that some factors enable one to risk a more positive forecast
concerning the future contribution of the region to global trade and governance.
To begin with the bad news, let me briefly make reference to the well-known
inventory of reasons to be sceptical about the future trade and investment
performance of LA. The following are some of the factors, among others,
that could feed into a pessimistic view: the extent of poverty and huge
social inequalities; poor institutional quality and weak capacity to assure
the rule of law; political instability with a continued recurrence of
unsustainable populist approaches; absence of a sufficient number of firms
capable of competing in fair conditions in national and global markets;
low levels of innovation and investment in science and technology; and
finally the potential political impact of organized crime and narcotraffic
networks. These factors still prevail in many appraisals of the future
of LA in world trade, even when compounded with positive structural factors
such as natural resources, for example.
Let us now move to the good news, exploring the resilience of these factors.
Before doing so, I must recall that they are not necessarily always valid
for all LA countries. The region is sufficiently large and diverse to
preclude any approach without differentiations. With this in mind, my
argument is that factors which justify a more optimistic forecast about
the future of LA in world trade are not necessarily evident in all of
its countries. Today they are mostly visible in some key countries. And
it is precisely those countries that appear to have a strong potential
to spread their eventual successes to the rest of LA.
One of the most illustrative, albeit not exclusive, examples is Brazil.
Deep changes are transforming the largest country in the region in what
could eventually become a driving force towards a more positive future
for the rest of LA in world trade. This does not imply that Brazil alone
could lead the region - especially South America - to a different pattern
of economic and political development. On the contrary, building a regional
space that is functional to a scenario in which peace, political stability
and sustainable development prevails will require cooperation between
several countries, including third nations with strong interests in LA.
But it does mean that the consolidation of its recent institutional and
economic performance could stimulate, and also amplify, similar processes
in other key countries. Working together, Brazil, Argentina, Chile and
Uruguay in the south, as well as Mexico in the north, for example, now
seem to be in a better condition to take on the role of a core group of
rationality, democracy, economic modernization and social cohesion. In
so doing, they could have a strong and positive impact on the rest of
the region, including those countries which encounter greater difficulties
in overcoming certain social conflicts with deep roots in their national
Let me now move to what I consider to be the main reasons for an optimistic
view about the future of LA in world trade.
The first is that several countries of the region seem to have learned
a lot from their past experiences. This learning process is more evident
in a number of aspects. One is the recognition of the importance of fiscal
discipline and macroeconomic'stability to assure development goals. The
second is that institutional quality is now considered to be crucial for
productive transformation and social cohesion. And the third is the clear
understanding that, within the present international system, the destiny
of every country should be shaped through the deeper and stronger participation
of all society.
A second major reason to be optimistic is the existence of strong signals
pointing to a cultural change taking hold in some LA countries concerning
their future. These signals are related to the greater value attached
to long-term goals and more pragmatic strategies. It implies owning a
sense of where each country is willing to go, of what it can realistically
achieve, and especially of what are the required steps to advance in the
chosen direction. Here, differences among LA countries are more evident.
Unresolved structural problems, including those related to the active
participation of all social sectors in the nation-building process, explain
some of these differences. Some countries are as yet in the transition
toward more integrated societies. It is possible to observe in these cases
greater political instabilities, as well as proposals for more radical
economic and social policies. As a result, their future prospects could
eventually become uncertain and controversial.
And finally, the third main reason is related to the impact of deep changes
that are transforming the global landscape. Today, LA countries have more
options in terms of foreign markets and external sources for investments
and technologies. Diversification is increasing the scope of action for
LA countries' external relations and for the internationalization of their
firms. They also discern greater value in their potential contribution
to solving some critical issues on the global agenda. Energy, food security,
water and climate change are some of the central issues on which LA countries
will have something (or eventually a lot) to say in the next ten years.
The fulfilment of optimistic scenarios for LA trade and development will
require strengthening regional cooperation through patterns of collective
leadership and a wide range of effective heterodox methodologies, including
multiple speed and variable geometry agreements. Mercosur and other formal
integration processes could yet play a positive role. But they will require
the adaptation of their main instruments and working methodologies to
the new regional and global trade and investment realities.
It will also require the drawing of multiple strategic alliances with
countries from other regions with common interests, as well as the active
participation of the region in future multilateral global trade negotiations.
Without doubt, a strong WTO will continue in the future to be one of the
key elements of LA's strategy for expanding its participation in world
trade. And a stronger LA will also imply a positive contribution to a
more effective and development-oriented multilateral global trade system.