Traveling through the Paso Internacional Los Libertadores into Chile, a lorry carrying Brazilian-made cars faces numerous challenges that showcase the difficulties of trade within Latin America. As the vehicle winds its way up 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 delays at every turn.
During these stops, drivers and workers alike take advantage of the opportunity to smoke and admire the stunning peaks surrounding them. 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 has shown some growth over the past twenty years, it still falls behind most other emerging markets when measured by exports and imports as a percentage of GDP. When Mexico’s strong manufacturing sector, geared towards exports to the United States, is excluded from the equation, the region’s trade performance appears even weaker.
In South America specifically, countries face significant challenges in terms of international trade. The value of trade in goods represents less than 30% of GDP in most countries in this region compared to around 50% in other emerging markets. These obstacles include difficult terrain, weather conditions and limited trade volumes which make it difficult for countries in Latin America to compete on an equal footing with their counterparts in other regions of the world.
Overall, these challenges highlight the need for greater investment in infrastructure and logistics within Latin America if countries are to overcome these obstacles and fully realize their potential as players on an increasingly globalized economy.
