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April 13, 2016
Exotic, mysterious, enormous and diverse, the South American continent has always held a certain charm for visitors from Europe and elsewhere in the world. Sights such as Machu Picchu, the Amazon rainforest and the glaciers of Patagonia have ensured that, for many years, travellers and tourists have been flocking to the region.
In the 21st century, however, a different type of movement is being spotted. Businesses and investors from overseas have identified South America as an emerging market, and as a result are more willing than ever to get involved with local ventures, teaming up with companies from Ecuador to Argentina in the hopes of a fruitful partnership.
So why are we seeing this great focus on the continent? Here are some of our reasons…
There is no question that in terms of natural resources, South America is one of the richest regions on the entire globe. Venezuela is second only to Saudi Arabia when it comes to petroleum supplies, while Chile is the world’s biggest producer of copper, a mineral vital in modern computer technology. A wish to get involved with the tapping of this wealth has always brought in outside business, and the 21st century is no exception.
Few places as a whole put such a grand emphasis on education as in Latin America. In many countries, such as Argentina, university tuition is free in public facilities, and these are among the most prestigious in the country as they attract the brightest students for both bachelors and masters degrees. This has resulted in a pool of workers that are not only well-educated, but also to a significant degree bilingual, having studied English from early childhood.
A big drawback in the past when dealing with countries in South America was a democratic process always teetering on the brink of collapse. Governments fell or were deposed on a depressingly regular basis, meaning sustained development was also impossible. In recent years, however, there have been signs of change; the vast majority of nations in the region now have a history of presidents completing full terms and handing over power, and economies have only benefitted from this continuity.
Imagine a continent where you can do business with nine different countries, spanning a geographical mass of over 17.8 million square kilometres, in just one language. This is the case for South America. Brazil, where Portuguese is the principal tongue, is the only nation in the region that does not use Spanish as an official language. This makes working on a transnational basis immensely more straightforward, reducing the need for myriad translators as in other areas of the world.
After years of stagnation, mismanagement and corrupt governance holding back progress, Latin America is now one of the fasting growing regions on the planet in economic terms. The methods used to achieve this vary from nation to nation, but almost without exception the region has shown record improvements, even throughout the global financial crisis.
The traditional division of power in South America, between a tiny elite and massive, impoverished working class has been somewhat eroded. One of the benefits seen from recent growth has been a big reduction in the number considered to be living under the poverty line, as well as an improvement in social mobility. This nascent middle class represents a whole new market for both local and international industries.
Before the advent of globalisation and instant communications, South America was relatively isolated from the world power bases in the north and in Europe. For that reason, there is a local commitment to using resources found in the region for products such as foodstuffs, remedies and medication that still holds sway today. This fierce national and regional pride and knowledge of the land makes South America a great opportunity for investors looking to diversify into new products.
While the present state of South America is encouraging, there are also signs to suggest that this prosperity could last well into the future. In Brazil, to name just one example, two events in the next few years will ensure an influx of capital for both the nation itself and the region as a whole. The country hosts the football World Cup in 2014, while in 2016 Rio de Janeiro will become the first South American city to receive the Olympic Games. The two biggest sporting events on the world will be on the continent’s soil, and that can only be good for business as millions of tourists and sports fans flock to Brazil.Regional cooperation
Through institutions such as Mercosur and Unasur, South American nations are now more than ever looking to work as an integrated union, lending and borrowing with each other and sharing technical expertise in an effort to form even closer links. This can only be a positive thing for the investor looking to work across the continent.
Some of world’s most important multinational companies have already started to invest heavily in South America, with the country chosen largely depending on what sort of product is being produced. Argentina and Brazil’s strong industrial base, for example, have traditionally led to auto manufacturers setting up factories in the nation; Volkswagen have had an assembly plant in Sao Paulo since 1953, and it was famously the place that continued making the famous original Beetle long after European production had ceased.