Covid-19 is rapidly turning Latin America irrelevant to Global Value Chains. First, because the region -with the notable exception of Mexico- did not enter into the productivity and technology competition vis-à-vis Asian economies early on. Second, structural limitations in infrastructure, institutional enabling conditions and human capital lingering since the early 1990s have worsened under the pandemic. Simply put, Latin American participation in GVCs is uneven and domestic creation of value added for this GVCs are meagre to say the least.
On July the 8th, the Mexican president Andrés Manuel López Obrador (AMLO) flew to Washington to celebrate the official July 1 enactment of the revised North American Free Trade Agreement with the US President Donald Trump. The summit was a public relations event in which the two leaders showcased an unusual moderate narrative, and celebrated their good neighbour relations in an attempt to sweep below the carpet their record of political and economic failures
The calm before the storm, the flat calm that preludes to the earthquake, the long quarantine in which anger and frustration mount: this is Latin America swept by Covid. The continent saw the outbreak spreading in Europe and had time to prepare for the impact. However, the pandemic has overcome every barrier and has spread everywhere. Not only for countries who exposed themselves to disaster with their governments not taking any actions towards interventions and mitigation, like Brazil and Mexico: they are now paying dearly for it.
The future is always uncertain but it seems particularly true for Argentina. As elsewhere, it is unclear how the COVID-19 epidemic will pan out, but Argentina’s proximity to Brazil, a country of 210 million people where contagions seem out of control, poses risks that few other countries have to face.
The Covid-19 pandemic, economic crisis, and political turbulence have created a “perfect storm” for Brazil, causing a panorama of strong uncertainties for the future of South America’s largest country. Already in April, the Johns Hopkins University predicted today's dramatic scenario.
For centuries, Latin American states have sought to leverage extra-hemispheric powers, Spain, France or the Soviet Union, to gain a modicum of autonomy and power relative to the hegemon to the north, the United States. China today is no different from those other extra-hemispheric crutches, but Beijing’s long-term vision and the global balance are markedly different from the past.
With the United States, Latin America has become an epicenter of the COVID-19 pandemic. This situation is endangering already fragile political and economic structures, with an increasing risk of social unrest and democratic derailment. How are major countries in the region reacting to the crisis? How will the pandemic impact the region in the long run? And how is Latin America’s role in the US-China confrontation going to change after the pandemic is over?
Ecuador is one of the hardest hit Latin American countries by the Covid-19 pandemic. As of July, the latest figures of detected cases are above 60 thousand and the death toll rate is among the highest of the entire region. Actual data could be even worse, in particular because the port city of Guayaquil, the largest in the country, shocked the world between March and April showing bodies left on the streets as morgues had filled up.
As COVID-19 cases continue to climb in the Western Hemisphere, Central American countries’ chronically weak governing institutions, economies and public health systems must cope with this additional strain. The pandemic has aggravated political polarisation in some capitals and caused economic contraction in countries already wracked by poverty. In some places, officials may be exploiting the crisis for corrupt purposes. At the same time, criminal gangs have resumed predatory activities they had suspended at the start of the outbreak.
After a long period in which Costa Rica seemed to have managed to contain the spread of the COVID pandemic in the country, cases are now on the rise following the relaxation of the previously enacted containment measures.