Latin America Bets on Infrastructure

by Dave

At a time of global financial insecurity, Latin American countries have deepened economic ties through a series of large-scale infrastructure project connecting countries and oceans. While political integration also grows through multilateral organizations such as the Union of South American Nations and Mercosur, another sign of stronger bonds rests with governments’ demonstrated willingness to pledge billions and partner with neighbors to bring major construction projects to fruition.

Brazil stands as a leader on spearheading such infrastructure projects, shown by two mega projects through which it can gain access to the Pacific Ocean. In partnership with Ecuador, Brazil launched the $2 billion Manta-Manaus project that includes highways and waterways and stands as a transportation alternative for the busy Panama Canal. At the same time, the governments of Brazilian President Luiz Inácio Lula da Silva and his Peruvian counterpart Alan García will oversee a project connecting Peru’s southern ports of Ilo, Maratani, and San Juan de Marcona with Brazil’s Rio Branco and Madeira River’s Porto Velho. As the Economist notes, these stronger ties come with another benefit for Brazilian firms: By producing sugarcane-based ethanol in Peru, the Brazilian ethanol industry can take advantage of Peru’s free-trade agreement with Washington to tap into the U.S. market, which remains elusive for Brazilians due to a hefty import tax.

A September 30 summit in the Amazonian city of Manaus brought together the leaders of Brazil, Ecuador, Venezuela, and Bolivia to discuss how to connect Caracas and La Paz via highway with the infrastructure projects underway with Peru and Brazil.

Projects are also flourishing in the Caribbean and Central America. Colombia, Panama, and Venezuela recently announced a new venture called Gran Ruta de las Américas, a road that will allow Central American visitors to drive to Cartagena and further east into Venezuela.

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