Exerting Economic Influence in Latin America

China has become the top trading partner for certain countries but the U.S. is still the largest source of investment.

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Competition for Influence in Latin America

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In recent years, the U.S. has leaned more heavily on using economic engagement and economic warfare to exert influence over other countries. In Latin America, Washington’s marquee policies in that regard are the Cuba embargo and the running sanctions on Venezuela. But it also pursues a lower-profile, parallel strategy in the Western Hemisphere. Through the International Development Finance Corporation, the U.S. provides direct funding for various development projects and assurances to private U.S. businesses Washington would like to have more involved in the region. The primary purpose in this region is to foster the growth of small and medium-sized enterprises, as well as local-level infrastructure work.

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Though the U.S. is Latin America’s largest trade partner writ large, there are countries in which China has an edge. These include Brazil, Peru and Chile, where China has bought up soy, copper and ore. U.S. trade with top partners such as Colombia, Ecuador and Mexico consists more of manufactured goods, and while U.S. foreign direct investment into the region still surpasses China’s. It’s notable, however, that China used financing and loans to exert its influence in Latin America for much of the 21st century but in the past few years has started to focus more on mergers and acquisitions instead.

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Geopolitical Futures (GPF) was founded in 2015 by George Friedman, international strategist and author of The Storm Before the Calm and The Next 100 Years. GPF is non-ideological, analyzes the world and forecasts the future using geopolitics: political, economic, military and geographic dimensions at the foundation of a nation.