As Western Economies Turn Inward, Will Latin America Stand Up For Globalization?

As British Prime Minister Theresa May officially triggered Brexit this week, and Donald Trump continues its pulse with Congress and the courts to advance its nationalist agenda, it may be up to the emerging world, notably Latin America and the Caribbean (LAC), to preserve the open global economy.

In the current global context, writes the International Trade Centre's Arancha González, LAC has the ability to become a strong advocate for keeping global markets open. And the time could not be better for bringing decades of regional integration efforts to finally deliver results — a World Bank paper points to it as a way to reactivate growth needed to reduce poverty and boost shared prosperity. 

To do this, it's important to leverage the region's trade openness — despite accounting for about 8% of global economic activity in 2015, LAC only accounted for 5.1% of global exports, according to the International Monetary Fund (IMF). LAC trade is also more concentrated with partners from outside the region than within its own members, the IMF says. 

In light of this opportunity, Gonzalez argues LAC needs to push for regional value chain formation, easing obstacles to trade and reducing its costs by building better hard and soft infrastructure. But the region also needs stave off economic populism, with which it's all too familiar, by offering inclusion and broad-based growth that ensures its benefits are widely shared. In a region that some have called the most unequal in the world, it's crucial to pair the defense of the global, open economy with renewed commitment to easing inequality and fostering more sustainable forms of development. Hopefully, LAC's higher dependence on the global trade system will help spur the necessary political will to advance these goals.