Back in the 1980’s, trade ties for Latin America and the Caribbean were very similar to those of East Asia — thin and focused on a single key player in the North, United States and Japan, respectively. Today, East Asia’s trade network is much denser and productive, crisscrossing among its countries and extending to the north. In contrast, Latin America’s remains narrow and dominated by the United States, followed at a very distant second by Brazil.
The World Bank’s latest flagship report for the region, “Latin America and the Rising South: Changing World, Changing Priorities” launched here today, provides an in-depth look at these global connections in trade and finance, and a sober assessment of their promise and trials for the region.
The global economic landscape has experienced tectonic shifts that have left the old north-south hierarchy behind. In the past four decades, the gross domestic product (GDP) of the South doubled to about 40 percent of the world’s total, the share of global trade from the South also doubled to 51 percent and its share of global capital inflows nearly tripled to 50 percent. Within a decade the expectation is that the share of the developing world in global GDP will be higher (55 percent) than that of the North.
“The rise of the South has left a noticeable mark upon the world economy. But this unquestionable impact conceals important differences among the countries of the South,” said Augusto de la Torre, World Bank Chief Economist for the region. “The differences between the wealth of connections from Asia, compared to those of Latin America, suggest that our region is still not benefitting from the virtuous circle created by integrating more with your neighbors and then with the world.”