Latin American economy

Many parts of the region had favorable factor endowments of deposits of precious metals, mainly silver, or tropical climatic conditions and locations near coasts that allowed for the development of cane sugar plantations.

[3] A number of regions have thriving economies, but "poverty and inequality have been deeply rooted in Latin American societies since the early colonial era.

[6] Morgan Stanley suggests that this drop in economic activity is a combination of low commodity prices, capital flight, and volatility in local currency markets.

Because of its strong growth potential and wealth of natural resources, Latin America has attracted foreign investment from the United States and Europe.

[14] Rabobank reports that Latin American has achieved rates of agricultural productivity that are above the global average, however, there is a lot of variation in the performance of the individual countries.

The economies of Argentina, Brazil, Chile, and Mexico have been the most heavily industrialized countries, accounting for 75% of Latin America's manufacturing sector.

[45] Because of the transportation challenges in Brazil, with coastal cities not easily connected by road or rail, the country took steps to develop an aircraft industry and in 1969, the company Embraer was founded, specializing in regional jets.

At that time, benefiting from the abundant local raw material, the low wages paid to the labor force and a certain specialization brought by immigrants, countries such as Brazil, Mexico and Argentina, as well as Venezuela, Chile, Colombia and Peru, were able to implement important industrial parks.

The industrial parks of Brazil, Mexico, Argentina and Chile, however, present much greater diversity and sophistication, producing advanced technology items.

Central banks have been established in most countries of Latin America to issue currency, manage flows, and implement monetary policy.

Brazil has 44 international airports, such as those in Rio de Janeiro, Brasília, Belo Horizonte, Porto Alegre, Florianópolis, Cuiabá, Salvador, Recife, Fortaleza, Belém and Manaus, among others.

Argentina has important international airports such as Buenos Aires, Cordoba, Bariloche, Mendoza, Salta, Puerto Iguazú, Neuquén and Usuhaia, among others.

The 2024 World Bank report, "Revitalizing Growth: An Urgent Agenda for Latin America and the Caribbean," highlights critical infrastructure deficiencies that are impeding economic progress and exacerbating inequalities within the region.

The findings indicate that significant portions of infrastructure, particularly in transportation, energy, and telecommunications, are inadequate and unevenly distributed, especially affecting rural and marginalized communities.

[83] The World Bank recommends increasing infrastructure investment to 5% of the region's GDP, a substantial rise from current levels, to address these critical gaps.

These partnerships are viewed as vital for mobilizing the capital, innovation, and expertise needed to enhance infrastructure and, by extension, to support sustainable development across Latin America and the Caribbean.

[114] Brazilian president Michel Termer and former governor of the central bank, Henrique Meirelles, have proposed an overhaul of Brazil's economic governance.

[115] Under this plan, public spending, including the pension system, will be cut and regulations will be lifted, beginning in the oil and gas sector, which has suffered due to over leverage and corruption.

[116] BBVA research expects improvements in the coming year for industrial activity oriented in foreign markets, driven by the recovery of Brazil.

Household consumption began improving at the end of 2015 due to higher retirement income catalyzed by the implementation of the historical reparations program.

At the end of 2016, the Congress of Colombia approved a tax reform bill, with the goal of making public accounts more sustainable and replacing revenue that the government lost from the oil sector.

[126] In 2020, the European Investment Bank provided €516 million in finance in Latin America and the Caribbean, contributing to sustainable and equitable development as well as climate action.

Despite its arcane law requiring foreign investors to deposit money with its Central Bank before being allowed to have a business operating, no government or multinational has protested this, fearing antagonizing the powers that be in Brazil.

With the impeachment of Dilma Rousseff and the embezzlement scandal behind them, Brazil is set to benefit from stronger commodity prices and attract more foreign investment.

[133][134] Such a loan also assists in meeting the working capital and investment needs of Brazilian micro-enterprises affected by the COVID-19 pandemic in northeast Brazil, with a focus on the most vulnerable and low-income borrowers in the region.

[133][136] This operation adheres to the Bank's 2X challenge criteria, which are in accordance with the EIB Group Strategy on Gender Equality and Women's Economic Empowerment.

[138] Santander Bank expects Argentina to receive an influx of foreign investment thanks to the favorable business environment set by President Mauricio Macri.

Over the past 10 years, Bogotá has received 16.7 billion in direct foreign investment in financial services and communications, allowing it to emerge as a leading business center in Latin America.

:[144] Potential import tariffs from the United States and limits on trade present significant risks for Latin American economies.

[145] The context of potential U.S. policy shifts affecting trade will cause diplomatic relations between the United States and Latin America to be more volatile.