Latin America’s Infrastructure Crisis

With this year’s Wold Economic Forum having taken place in Panama at the beginning of this month (April 2014), the region’s economic integration is at one of its most pivotal moments in Latin America’s history. This year marks the 100th Anniversary of the opening of the Panama Canal which since its conception has made Central America today, an incomparable catalyst for international trade. At this pivotal moment in the region’s history and with the world paying an increasing amount of attention towards Latin America, the stakeholders need to begin to recognise that both sustained economic growth and investment in physical infrastructure go hand in hand. The Panama Canal resonates what is needed throughout the region and acts as a call to action for more investment in infrastructure.

Barriers Faced By Latin America Countries

Although in recent years Latin American countries such as Brazil have been boasting about their developing economic capabilities, the majority rank near the bottom amongst the emerging nations for their quality of infrastructure. This is one of the most severe barriers to regional economic integration and the results of this situation have been debilitating. Latin America with its attractive trade policies, natural resources, growing middle class and proximity to North America is attracting interest from the Asia-Pacific region as they look to implement offshore sourcing models. With the pumps primed and ready for action and continued growth the debilitating factor has been that the transport systems cannot handle or do not exist in order to implement the integrated trade causing failure in this operation really gaining any sort of momentum.

The Shining Example Of Panama

Countries within Latin America need to look no further than Panama to see the several positive steps to integrate its physical infrastructure in order to maximise its supply chain capacity. Those in charge should however recognise their own countries capabilities and restrictions as Panama is at the advantageous confluence point between North and South America and is situated between the two largest oceans. The existing asset of the Panama Canal should not diminish the country’s development in infrastructure with the international airport at Tocumen and the Colon Free Zone adding to Panama’s capabilities. With the Panama Canal Expansion Project looking to be completed on time by 2015, Panama looks set to be an even greater hub by increasing the container vessel capacity and the amount of maritime traffic that can pass through the Canal.

Room For Investment And Opportunities

Whilst recognising the obvious strengths of Panama, it would be wrong to ignore the recent and encouraging signs of investment in infrastructure around Latin America. In 2013, private equity firms made a conscious effort to supply the funds necessary to kick-start the venture. In total more than USD$3.5 billion was invested in energy, telecommunications and supply chain ventures and was more than double the amount of investment seen in 2012. Governments have started to get involved by looking to public-private partnerships in order to reduce the inadequacies currently experienced in the trade relationship. In Mexico for example, the telecom and energy sectors are promising new opportunities and avenues for investment.

It’s Now Or Never For Latin America’s Infrastructure

The call and need for Latin America’s stagnant infrastructure to be shaken up needs to be addressed sooner rather than later with the situation being most urgent for Brazil with the upcoming World Cup and Olympic Games. Both national governments and companies need to implement plans which should translate into a new era for transportation and infrastructure development. The burden therefore lies with those creating the policies in the countries of Latin America as well as those who are tasked with implemented said policies. It would be a great shame for Latin America if the Panama Canal has been and will be the last great infrastructural achievement in the region that has so much promise and could have a very bright future indeed.

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