October 22, 2018 / by Mijail Santos & Sara Delgado / In Geopolitics
Alliances and Associations in Latin America: The Complexity of Opportunities
More than just vibrant societies, Latin American countries ought to be understood as emerging economic markets immersed in a complex political and social environment. Only then, will businesses, governments, and societies be able to maximize the potential growth and opportunities in the region.
Making the most of this context depends how much information can be accessed. Anyone who has a stake in these markets, should not only be aware of local powers but also consider the underlying rationale of the regional regulations. By doing so, it is possible to unveil networks that are crucial to defining allies, understanding competitors and leveraging emerging players. All this information can be overwhelming, since powerful influencers can range from a person in a small village to international players like WHO, FDA or World Bank. Yet, we live in a world in which digitalization makes targeting, organization, and management of information possible.
Clear examples of this complexity are the cooperation and trade agreements that have been established in the region. Many countries are continually looking for new opportunities to connect with their neighbors, and with some of the largest economies in the world. Associations such as Mercosur, The Pacific Alliance, and the Andean Community have developed a legal and regulatory framework that facilitates trade and cooperation. This, however, also means that local regulations are often defined by, and adapted from, the resolutions of regional agreements, which are in turn influenced by a variety of standards and guidelines at the international level.
Mercosur is a South American organization established to promote free trade and fluid movement of goods, people and currency, with the ultimate goal of setting up a common market like that of the EU. In the third quarter of 2018, Mercosur has faced ups and downs that must be monitored. On the one hand, it struggles to stay cohesive as a result of Venezuela’s suspension as a member due to its political situation; its status quo is also threatened by virtue of Brazil’s elections. On the other hand, however, it has restarted talks with China and the European Union, which could mean the expansion of markets and hence the development of new opportunities. Not only are Mercosur’s resolutions incorporated into national legislation, but it is also the fifth major economic bloc of the world, and connects 295 million people.
Additionally, there is the Pacific Alliance, an economic and commercial integration mechanism. The Pacific Alliance has a Business Council, a private initiative comprised of several of the most representative business people in each of the member states. While integration attempts in Latin America have been government-driven, the council gives a voice to the private sector in the decision making processes affecting and driving their markets. In 2018, this Alliance kept growing, aiming to connect more than the current 225 million people and 9 million SMEs. During the past year, it has started bilateral agreements with Mercosur and other global economic powers such as Singapore, Australia, Canada, and New Zealand. By opening the opportunity to be part of global value chain networks, it represents one of the most important economic structures for the region’s future.
There are other commercial integration mechanisms, like the Andean Community that has established free trade zones and other regulations. Each one of them makes the context more complex. If we wanted to see, for example, how Peru is connected to the different markets we could expand connections and map the regulatory power of each stakeholder.
Thus, to prevail and excel in Latin America’s dynamic geopolitical and economic framework, it is necessary to become a player in both the local and the international agenda setting. Using TSC revolutionary technology and digitalizing processes, it is possible to know, monitor, and engage with the most relevant stakeholders in any market, government, or organization.
|Mercosur||Pacific Alliance||Andean Community|
|Members||Full members: Argentina, Brazil, Paraguay, Uruguay, Bolivia (in process) and Venezuela (suspended)
Associate members: Peru, Chile, Surinam, Colombia, Ecuador and Guyana
|Colombia, Chile, Mexico and Peru||Bolivia, Colombia, Ecuador, and Peru|