Latin America – Stakeholder capitalism and ESG in Latin America: new leadership, challenges and opportunities (Diego Bustamante, Joe Myers, WEF)

  • The latest session of the Regional Action Group for Latin America looked at stakeholder capitalism and ESG in the region.
  • It included remarks by the President of Ecuador, Guillermo Lasso, on his new “Government of the Encounter’s” priorities. He highlighted how companies should be fully integrated across the social and sustainable development purposes of the country.
  • The work of the private sector and the World Economic Forum in defining standardized frameworks and principles for ESG (Environmental, Social and Governance) is already being used by businesses across the region.
  • Business and government leaders shared the challenges and opportunities in the road towards expanding and enabling ESGs adoption in Latin America.

Stakeholder capitalism and ESG in Latin America: new leadership, challenges and opportunities | World Economic Forum (


China/Latin America – China’s trade with Latin America is bound to keep growing. Here’s why that matters (Pepe Zhang, Tatiana Lacerda Prazeres, WEF)

  • China’s trade with Latin America and the Caribbean grew 26-fold between 2000 and 2020. LAC-China trade is expected to more than double by 2035, to more than $700 billion.
  • The US and other traditional markets tend to lose participation in LAC total exports over the next 15 years. It may be increasingly challenging for LAC to further develop its value chains and benefit from the regional market.
  • Scenario-planning and new policies could help stakeholders prepare for changing circumstances.

The rise of China as a trade powerhouse has had profound implications for global commerce over the last 20 years, with key economic sectors in Latin America and the Caribbean (LAC) among the biggest beneficiaries. Between 2000 and 2020, China-LAC trade grew 26-fold from $12 billion to $315 billion.

In the 2000s, Chinese demand drove a commodity supercycle in Latin America, helping dampen the regional spillovers of the 2008 global financial crisis. A decade later, trade with China remained resilient despite the pandemic, providing an important source of external growth for a pandemic-stricken LAC, which accounts for 30% of global COVID mortality and experienced a 7.4% GDP contraction in 2020. In a region with historically strong trade relations with the United States and Europe, China’s growing economic presence has implications for prosperity and geopolitics in LAC and beyond.

This impressive trajectory of China-LAC trade over the past 20 years also raises important questions for the next two decades: What can we expect from this trade relationship? What emerging trends might affect these trade flows and how might they play out regionally and globally? Building upon our recent trade scenarios report, here are three key insights for LAC stakeholders. These findings are also relevant for China’s and LAC’s other main trade partners, including the United States.*

What do we expect to see?

On the current trajectory, LAC-China trade is expected to exceed $700 billion by 2035, more than twice as much as in 2020. China will approach—and could even surpass—the US as LAC’s top trading partner. In 2000, Chinese participation accounted for less than 2% of LAC’s total trade. In 2035, it could reach 25%.

Aggregate numbers, however, conceal great discrepancies within a diverse region. For Mexico, traditionally dependent on trade with the US, our base case estimates that China’s participation could reach around 15% of the country’s Mexico’s trade flows. On the other hand, Brazil, Chile, and Peru could have more than 40% of their exports destined for China.

Overall, a healthy relationship with both of its two largest commercial partners would be in LAC’s best interests. While the United States may see reduced participation in LAC trade relative to China, hemispheric relations —especially those involving deep supply-chain integration— are an important driver of manufacturing exports, investment and value-added growth for the region.

How would China further gain ground in LAC trade?

Although trade is bound to grow in both directions, the dynamism will more likely come from LAC imports from China— rather than LAC exports to China.

On the LAC import side, we foresee China becoming even more competitive in manufactured exports, because of the adoption of Fourth Industrial Revolution (4IR) technologies including 5G and artificial intelligence. Overall, productivity gains from innovation and other sources will likely outweigh the effects of a shrinking workforce, sustaining the competitiveness of Chinese exports.

On the LAC export side, an important sectoral shift could be underway. LAC’s agricultural exports to China are unlikely to continue at the bonanza pace of present times. To be sure, the region will remain competitive in agriculture. But markets other than China, such as Africa, would contribute to higher export earnings. This highlights the importance for LAC countries of exploring new destination markets, as well as diversifying their exports to China itself.

On balance, import growth is likely to outpace export growth, causing a higher trade deficit for LAC vis-à-vis China, albeit with considerable subregional differences. While a very small number of LAC countries are expected to retain their surpluses with China, the broader picture points to greater trade deficits for the region. In addition, complementary, non-trade policies will be vital to determining the extent and the secondary effects of these trade deficits in each country, from labour markets to foreign policy.

What to expect for intra-LAC trade in 2035?

As the pandemic disrupted global supply chains, calls from LAC for reshoring or nearshoring and for greater regional integration have again come to the fore. However, assuming a continuation of existing trends, the future does not look promising for intra-LAC trade. While in other parts of the world, particularly Asia, intraregional trade has expanded faster than global trade in recent years, the same dynamism has not been seen in LAC.

In the absence of a major new impetus for regional integration, significant reduction of intra-LAC trade costs or major productivity gains, LAC could remain unable to further develop its value chains and benefit from the regional market. In fact, our projections show that over the next 15 years, intra-LAC trade could account for less than 15% of the region’s total trade, down for a 20% peak before 2010.

Looking back from the future: What to do today?

Over the next twenty years, China will become an increasingly important determinant of LAC’s economic outlook. LAC’s trade tends to turn even more China-oriented – affecting other trade partners and intra-regional trade itself. We recommend:

Scenario Planning

Building scenarios is not about predicting the future, but it helps stakeholders prepare for different possibilities. Planning for changing circumstances is particularly urgent when there is likely to be turbulence ahead: For example, LAC countries and companies that might be affected by potential changes in the composition of LAC exports to China. The challenge of making export sectors more competitive in the Chinese market just became more apparent for LAC. The same is true regarding the need to develop new, alternative markets for traditional LAC exports, such as agriculture and, increasingly, materials.

Productivity and Competitiveness

LAC stakeholders—and policy-makers and businesses in particular —should be clear-eyed about the trade implications of low productivity affecting the manufacturing sector. Without tackling issues undermining industrial competitiveness in the region, LAC exports to the US, to the region itself and other traditional markets will continue to suffer. At the same time, stakeholders in the US would do well to take measures to reinvigorate hemispherical trade, if retaining US participation in LAC trade is considered an objective worth pursuing.

*We thank David Bohl and the University of Denver’s Pardee Center for International Futures for their support in this Agenda blog post and the report.


Latin America/USA/China – How Latin America Should Navigate US-China Tensions (Felipe Larraín, Pepe Zhang, Project-Syndicate)

larrain2_Frédéric SoltanCorbis via Getty Images_chiletradeshipping

Once a peripheral presence in Latin America, China has become one of the region’s most important partners. Bilateral trade expanded from $12 billion in 2000 to over $300 billion in 2020, raising China’s share of the region’s total trade from 1.7% to 14.4%. China has also become an increasingly significant source of foreign direct investment in Latin America, accounting for nearly 10% of inflows in recent years.

In the short term, the politicization of COVID-19 vaccine access could become the latest trigger for renewed Sino-American tensions. Over the medium and long term – perhaps as soon as 2035 – China could replace the US as the region’s largest trading partner. The country is already the top trade partner of Brazil, Peru, and Chile, and receives 30-40% of their exports.

In this context, the key question for Latin America is whether the region can successfully adapt to – or even benefit from – the persistent competitive dynamics between the US and China. But the answer remains at best mixed and unclear, in part owing to significant differences across the region.

Consider the US-China trade war, which escalated in March 2018 with the first round of retaliatory tariffs. Although Brazil’s soybean exporters have realized sizable gains over the last three years by replacing US exports to China, other Latin American countries and sectors did not necessarily benefit from trade diversion to the same extent. Even in Brazil, there is uncertainty as to the long-term sustainability of the export boom triggered by the trade war.

Moreover, northern Latin America (Mexico, Central America, and the Caribbean) has markedly different trade relations with China compared to the region’s commodity-dependent south. While Mexico previously captured reshoring and nearshoring opportunities as some supply chains shifted out of China, the COVID-19 pandemic wiped out much of that windfall, at least temporarily.

The COVID-19 crisis has laid bare systemic inequities that will have to be addressed if we are ever going to build more sustainable, resilient, and inclusive societies. Join us on June 23, 2021, for our latest live virtual event, Back to Health: Making Up for Lost Time, where leading experts will examine the immediate legacy of the pandemic and explore solutions for bringing all communities and societies back to health.

Latin American economies are susceptible to the indirect spillovers of trade wars as well. On a macro level, the region is among the worst affected by the pandemic in human and economic terms. Latin America accounts for only 8% of the world’s population yet consistently represents 30% of COVID-19 deaths, and in 2020 it suffered the deepest economic contraction of any developing region. Continued US-China tensions may put additional downward pressure on an already uncertain global and regional recovery.

On a micro level, retaliatory tariffs and growing protectionism triggered by the trade war have caused collateral damage for Latin American firms. In 2019, for example, Chilean nut exporters were caught off guard when the Indian government increased most-favored-nation tariffs on nuts in response to bilateral US tariffs on Indian steel. This decision affected a Chilean shipment of nuts already at sea en route to India.

With Latin America facing a potentially unsupportive international environment, owing to divergent post-pandemic recoveries and sustained US-China trade frictions, policymakers should pursue three priorities.

First, Latin American countries must remain vigilant and carefully navigate US-China tensions on issues ranging from trade and investment to 5G technology and COVID-19 vaccines. The region is highly heterogeneous, especially between its north and south, so the only rule of thumb for choosing between the US and China (which many regard as a false dichotomy) should be alignment with national development goals and strategies.

Second, Latin America needs to diversify its exports, starting at the country level. Embracing greater trade openness globally and intra-regionally reduces dependence on individual markets, whether the US or China. Despite widespread protectionism (exacerbated by pandemic-induced export controls), Latin America can play a constructive role in strengthening international trade cooperation. Chile, for example, which has 30 trade agreements with 65 countries, is a regional and global free-trade champion.

US-China tensions are unlikely to abate anytime soon, and Latin America will not be able to insulate itself fully from the fallout. But by heeding the lessons of the last three years, the region’s governments and businesses can better position themselves to succeed over the next three years and beyond.


USA/Latin America and the Carribean – Transition 2021 Series: The U.S. Approach to Latin America and the Caribbean (CFR)


Fellow for Latin America Studies, Council on Foreign Relations; @pol_ange

Principal Economic Advisor, Integration and Trade Sector, Inter-American Development Bank

Professor of Practice, William J. Perry Center for Hemispheric Defense Studies, National Defense University; CFR Member


Host, Weekend Edition Sunday, NPR; CFR Member

Panelists discuss how the Biden administration will approach relations with Latin America and the Caribbean, including issues pertaining to trade, migration, climate, and challenges to democratic governance.



USA/Latin America – The Case for a Positive U.S. Agenda with Latin America (CSIS)

P. Michael McKinley

With the change of administration in Washington, the agenda that the United States is likely to prioritize in its relationship with Latin America has familiar elements: migration, rule of law, governance, counter-narcotics, and the crisis in Venezuela. Newer to the mix are concerns with populism, the inroads made by China, and the social and economic impact of the Covid-19 pandemic.


(Latin America/Carribean) The pandemic is a chance to reshape women’s roles in Latin America and the Caribbean (Atlantic Council)

Eva Lardizábal

María Gonzalez, a sixty-one-year-old Honduran woman, has been her family’s breadwinner since 1995. But when Honduras reported its first case of COVID-19 on March 11, 2020, Gonzalez’s employers informed her that she would be furloughed indefinitely.

The pandemic is a chance to reshape women’s roles in Latin America and the Caribbean


(Latin America) Latin America’s Looming Debt Crisis? (Chatham House)

Andrés Velasco, Alejandro Werner, Lisa Schineller, Jonathan Heath

What are Latin America’s post-COVID-19 economic recovery plans in light of rising debt levels in the region?


(USA/Latin America) Do US institutions still inspire? The case of Latin America (AEI)

Ryan C. Berg, Haroldo Montealegre

The tragic events that unfolded in January at the U.S. Capitol in Washington, D.C., has given rise to elegies of American soft power.

Do US institutions still inspire? The case of Latin America


(China/Latin America) An Overlooked Source of Chinese Influence in Latin America (The Jamestown Foundation)

The People’s Republic of China’s (PRC) engagement in Latin America and the Caribbean (LAC) is drawing increased scrutiny from U.S. policymakers.

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