Workers load a tractor during a seedling harvest on a sugarcane plantation at Bom Retiro Farm in Artur Nogueira, Brazil, Tuesday, March 24, 2026. (AP Photo/Andre Penner)
Latin America’s economic importance is difficult to overlook. Its copper supports global electrification, its lithium contributes to battery production, and its agricultural exports serve markets across the world. Yet the value of what the region supplies does not necessarily reflect the prosperity it generates at home. The World Bank projects regional economic growth of only 2.2 percent for Latin America and the Caribbean in 2026, though countries like El Salvador and Paraguay are growing at twice that pace. This contrast raises a question beyond the region's position in global affairs: What determines whether strategic importance becomes lasting economic development?
The distinction between economic importance, bargaining power and prosperity is essential. A country may supply resources critical to global industries without controlling the technologies, production networks or commercial relationships that generate additional value. Regional fragmentation may reinforce these constraints by limiting opportunities for cooperation, although domestic capabilities and international market conditions also shape outcomes. The challenge is therefore not simply to increase Latin America's global importance but to understand how its economies capture and distribute the benefits of their participation in international markets.
Latin America’s strategic importance is particularly visible in the global energy transition. According to the International Energy Agency’s 2026 Global Critical Minerals Outlook, the region accounts for approximately 40 percent of global mined copper production and around one-quarter of lithium output. Yet the IEA estimates that Latin America and the Caribbean refined only about 20 percent of the key energy minerals extracted within the region in 2025, excluding lithium. Much of the associated processing takes place elsewhere, illustrating the difference between supplying raw materials and participating in additional stages of industrial production.
Expanding domestic processing is not always economically advantageous Refining and manufacturing require capital, reliable energy, infrastructure and technical expertise. In some circumstances, exporting raw materials may generate greater returns than investing in costly processing facilities. The relevant objective is to identify where investments in skills, suppliers, research and infrastructure could create sustainable competitive advantages. Economic transformation depends less on retaining every activity within national borders than on developing the capabilities needed to participate productively in international markets.
In his World Economic Forum article, “How Latin America Can Break the Innovation Paradox and Jumpstart Growth,” William Maloney, the World Bank Group's chief economist for Latin America and the Caribbean, argues that stronger entrepreneurial capabilities and institutions are essential to improving regional productivity. Natural resources can create opportunities but their contribution to development depends partly on the broader economic environment. The question is not simply what Latin America produces, but what its economies learn, develop and build around that production.
Pools of brine turn into lithium at the SQM mine in the San Pedro de Atacama desert of northern Chile, April 18, 2023. Chile's state-owned Codelco, the world's largest copper producer, announced on Friday, May 31, 2024 the signing of an agreement with private miner SQM for the joint exploitation of lithium. (AP Photo/Rodrigo Abd, File)
Regional fragmentation introduces another dimension to this challenge. The Inter-American Development Bank reported that intraregional trade accounted for approximately 13 percent of Latin American and Caribbean trade in the first half of 2025. Its 2025 Trade and Integration Monitor also found that the region lagged Europe and Asia on institutional integration, scoring 0.32 on its comparative index, against 0.96 and 0.41, respectively. Although greater regional integration does not automatically guarantee prosperity, these differences raise an important question: Are Latin American businesses missing opportunities to develop complementary production networks closer to home?
In a Council on Foreign Relations analysis, Shannon K. O'Neil, a fellow at the Council on Foreign relations, examines how limited regional economic integration has constrained Latin America’s participation in global supply chains. Production networks can allow firms in different countries to specialize in particular components, exchange intermediate goods and share technical expertise. Where transport costs, customs procedures or incompatible regulations obstruct these relationships, businesses may face additional barriers to expanding production. Regional integration matters most when removing such barriers creates opportunities that individual economies would struggle to develop independently.
The region already has institutions intended to facilitate cooperation. MERCOSUR, comprising Argentina, Bolivia, Brazil, Paraguay, and Uruguay, provides a framework for trade and economic integration among its members, while the Community of Latin American and Caribbean States (CELAC) primarily facilitates political dialogue. Yet diplomatic engagement does not necessarily translate into coordinated investment, integrated infrastructure or stronger commercial relationships. Agreement on the importance of regional unity does not resolve the practical obstacles confronting businesses.
These challenges are complicated by the region’s varied economic structures and international relationships. Mexico’s integration into North American manufacturing, Brazil’s diversified industrial and agricultural economy and the mineral-exporting sectors of Chile and Peru create different incentives for trade and investment. A regional strategy that benefits one economy may offer fewer advantages to another. Fragmentation therefore reflects not only institutional limitations, but also legitimate differences in national interests.
A more practical approach would prioritize cooperation where countries share concrete economic interests. Cross-border transport networks, customs interoperability, shared research initiatives, and compatible technical standards do not require governments to adopt identical foreign policies. They require agreement on specific objectives whose economic benefits can be measured. Regional cooperation should therefore be judged by the barriers it removes and the opportunities it creates, rather than by the extent of political agreement among participating countries.
Regional fragmentation should not be confused with an absence of international agency. As international relations scholar Nizar Messari emphasizes, Latin American governments have pursued different strategies to preserve autonomy and diversify their foreign relationships. Bilateral agreements can offer flexibility, and participation in global production networks does not necessarily require extensive regional coordination. The relevant question is not whether national strategies should give way to a common regional position, but when cooperation creates benefits that independent action cannot achieve as effectively.
Latin America's economic future therefore shouldn’tdepend on a single political vision or development model. Its strategic resources establish an important position within global markets, but productive capabilities determine how economies build upon that position. Regional cooperation offers potential advantages where shared infrastructure, complementary industries or reduced trade barriers improve economic opportunities.
Ultimately, international influence should not be treated as an end in itself. Its economic significance depends partly on whether governments and businesses translate opportunities into higher productivity, competitive enterprises, quality employment and improved living standards. The world already recognizes Latin America's strategic value. The more consequential question is how much of that value becomes lasting prosperity for Latin Americans themselves.