A changing geopolitical landscape offers an opportunity for Latin America to become a more powerful player in global value chains and leverage its strategic strengths in key resources to boost economic growth.

The new push towards a more influential role in world trade coincides with deepening global concern over fragmentation and vulnerabilities in supply chains. The United States, China, Europe and India are all increasingly eyeing Latin America as a strategic partner to reduce dependencies and secure access to critical resources

The need to secure vital supplies of food and raw materials required for electrification and energy generation, as well as defence, has led to a sharper focus on Latin America’s abundance in critical minerals, clean energy, agri-food capacity, biodiversity, and productive potential. 

However, the region still has obstacles to overcome to fully capitalise on its advantages and achieve higher value participation in the global economy. It has made good progress on issues that have historically restrained growth, capped investment and limited its ability to generate more value-add goods and services. Significant achievements include tackling inflation, public debt and exchange rate regimes and attracting foreign investment.

Further challenges remain, however, including upgrading infrastructure, ensuring investment is accompanied by innovation and technology transfer and improving productivity. Greater clarity is also needed on legal and regulatory issues.

Strengthening local suppliers is also important so that investment has a stronger spillover effect. Labour issues matter too: upskilling and expanding the workforce, including increasing female participation and boosting formal employment.

Reforms are ongoing to make the region more resilient to external shocks as well as internal pressures in a more volatile environment.  These efforts have led to more robust macroeconomic fundamentals, putting Latin America in a strong starting position for its next growth chapter.

It already has a strong base of international alliances, including the European Union-Mercosur agreement, one of several with Europe that collectively cover more than 90% of the region. The US and India are also looking to strengthen ties with the region. 

A key strength is that Latin America’s resource base is not concentrated in a single country or sector. Copper, lithium, nickel, graphite, niobium and rare earths are essential for electrification, batteries, power grids, semiconductors, digital infrastructure and defence systems, while secure energy and food supplies have become a more strategic concern.

The delicate balancing act for Latin America is to keep options open and not replace one set of dependencies for another. Possessing a vital resource does not guarantee control of the value chain. Often, minerals leave Latin America as concentrates and return embedded in batteries, electric vehicles, semiconductors or industrial equipment. Capturing more stages of the value chain would allow the region to turn its natural-resource advantages into investment, technology, skilled jobs and a more sustainable source of growth.