As technology has made it easier for companies and individuals to do business outside their home countries, the global trade industry has seen a significant improvement over the past 20 years. Trans-ocean trade is still difficult due to distance and currencies, among other issues. JD Duarte, an expert in business operations and eCommerce, offers insights into how Asia and Latin America are working together to overcome these obstacles and what this means in terms of a symbiotic relationship moving forward.
The trade relationship between Asia and Latin America has significantly improved over the past 200 years. It now amounts to well over $500 billion. Brazil remains the largest trade partner for Asia. However, other Latin American countries are also gaining ground. According to research, Brazil has been responsible for $60 billion in Asian goods exported to Asia, Australia, and Russia. As these countries improve their economies, Brazil has gained more ground.
Despite the increase in trade, there are still problems with balance between Latin America and Asia. Simon explains that Latin America is facing a significant trade deficit with Asia, which now stands at more than $100 billion. Although commodities for manufacturing are the largest trade segment, Latin America is much more focused on natural resources trade. This results in a discrepancy between what Latin America can import and what Asia can export, as Asia has a wider range of export options.
While it is not unusual for trade to be uneven between regions, this system is detrimental to the long-term sustainability of Latin America. Says Duarte, “The region desperately wants to promote a more balanced trade balance, as it would help boost their economies. The ability to reach more balanced trade relationships is being undermined by the ongoing power struggle for dominance in the global trade market.”
Latin America is unable to spend as much infrastructure money due to this imbalance. Latin America is still experiencing 60% of its roads unpaved, as opposed to 46% in Asia’s emerging countries. This lack of development contributes to the trade problems that Latin America faces. The region’s countries are working to improve their infrastructures and creating policies that emphasize internal development in order to increase access to global trade.
Tourism could be a way to offset this gap and create a more equitable trade relationship. In the 11-year span from 2006 to 2016, tourist arrivals to Latin America increased by 6.8% on average. China has quickly become the largest source of global travel. The country’s outbound tourist market saw a 12% rise in 2016 alone. This resulted in an outbound tourism cost of $261 billion.
Also, the sector’s air sector has seen improvements. The technology of aircraft has advanced tremendously over the past few years, particularly in terms fuel efficiency. This makes it possible to provide faster, more direct connections between regions such as Asia or Latin America. To bring these regions closer together, new air routes are being developed. Although COVID-19 forced the suspension, the sector is slowly getting back on track.
Latin America and Asia can strengthen their trade relations if they continue to focus on policies that will improve its infrastructure. Technology also needs to improve in order to make it more efficient. Latin America will be able to build its economic relationship with Asia as China’s development continues.