Spending cuts, corporate tax reductions, and the easing of permitting requirements are part of a package of measures the government seeks to spark Chile’s economic takeoff.

The economic agenda in Chile under President José Antonio Kast combines fiscal austerity, investment incentives, and tax adjustments with the aim of restoring growth and strengthening confidence in the country’s economy. His program includes cuts in public spending, reductions in corporate taxes, and measures to accelerate investment permitting, in a context marked by expectations of economic recovery and internal political challenges.

Marking a clear departure from his two predecessors, the new president of Chile, the ultraconservative José Antonio Kast, decided that he will reside in the Palacio de La Moneda rather than in a residence financed with state funds—an action that could signal austerity as one of the defining features of his administration, which he described during his campaign as an “economic emergency” government.

The announcement has been well received by Chileans, who trust that Kast will fulfill his promise to reinvigorate key areas such as:

• Economic growth and productivity
• Greater efficiency within the public sector
• Improved security and public order

These are three of the issues that most concern the inhabitants of a nation that has long displayed one of the most stable economic performances in the region and that, despite its shortcomings, continues to be perceived as a model for its neighbors.

In other words, the new president will do everything possible to return Chile to its pre-2019 state, when the social upheaval that erupted in September destabilized the social and economic foundations that had underpinned its reputation as an advanced country, although he must do so in the midst of a turbulent global environment and persistent domestic tensions.

Lowering expectations

Although his characteristic determination remains unchanged, José Antonio Kast appears to have understood that moderation is an indispensable quality in political discourse. Perhaps for that reason, he has recently repeated the phrase “don’t ask us for miracles,” alluding to the fact that solving Chile’s structural challenges will not happen overnight.

“The most complex challenges for the new government will probably have to do with managing expectations,” says Arturo Garnham, a partner at the Santiago-based firm Garnham Abogados. His opinion aligns with that of several analysts who believe that the economic agenda in Chile will require patience from investors and citizens alike.

According to Garnham, the new occupant of La Moneda must generate confidence, and this requires stabilizing the political ground on which he operates. Key political challenges include:

• Determining whether the political opposition will support or obstruct the government’s policy agenda.
• Ensuring that government officials possess the political skills needed to avoid unnecessary conflicts.
• Maintaining stable relations with business associations and economic stakeholders.

“The second issue is determining whether members of Kast’s government will have sufficient political skill to avoid unnecessary conflicts with business associations—which are largely influenced by the opposition—and with the opposition itself, in ways that provide enough short- and medium-term confidence to investors and the markets,” Garnham explains.

Fiscal cuts: a major challenge

A proponent of reducing the size of the state and improving its efficiency, Kast made the ambitious campaign promise to reduce government spending by $6 billion during his first 18 months in office.

This fiscal consolidation is one of the most important pillars of the economic agenda in Chile under the new administration.

Several factors support the rationale behind this objective:

• According to the Inter-American Development Bank (IDB), Chile loses roughly $5 billion annually due to inefficient fiscal spending.
• Public debt has been increasing steadily as government expenditures have outpaced revenues.
• Administrative inefficiencies have expanded the cost of government operations.

Hermann González, who until last year served as vice president of Chile’s Autonomous Fiscal Council (CFA), has stated that fiscal adjustment is necessary because the country is spending more each year than it generates.

“That $6 billion addresses the fiscal deviation that has caused public debt to grow steadily,” he said.

However, Garnham believes that achieving this reduction will not be easy, particularly because many structural constraints exist within both the central government and municipal administrations. Reforms may therefore include:

• Changes to public-sector employment structures
• Reduction of inefficient government programs
• Improved oversight of administrative spending

“There is probably room for reductions. In recent years, it has been demonstrated that public spending is very inefficient. The challenge will be how to withstand resistance from the incumbents,” the lawyer notes.

Several studies support this concern, indicating that approximately 30 percent of Chile’s public spending is allocated to bureaucracy and salaries, significantly higher than the OECD average of around 20 percent.

Vicente Sáez Pinochet, a partner at the Chilean firm Sáez y Compañía, reinforces this view by arguing that the public administration payroll has become excessively large.

He notes that many positions within the public sector are associated with:

• Overtime payments and performance bonuses
• Inflated administrative structures
• Poorly evaluated social programs

“With political will and by trimming the excess from the state apparatus, it would be possible to reduce spending by much more than $6 billion,” Sáez says.

As part of this fiscal restructuring, the government also plans to review and potentially reorganize social programs considered inefficient, including universal subsidies for first-time home purchases. These programs could be replaced by direct cash-transfer mechanisms targeted at those most in need.

Nevertheless, the government must carefully balance fiscal discipline with political stability, since Chile’s powerful unions and professional associations have historically demonstrated their ability to mobilize against reforms.

The necessary reform

Another important component of Chile’s economic agenda is tax policy reform aimed at stimulating investment and improving competitiveness.

Although Kast’s proposal does not constitute a comprehensive tax overhaul, it includes several significant changes:

• Reduction of corporate tax rates
• Elimination of certain business levies
• Creation of a more integrated tax system

Under the proposal, corporate tax rates would change as follows:

• Large companies: 27% → 23%
• Medium-sized companies: 25% → 23%

Supporters argue that these reductions could increase capital inflows and strengthen business confidence.

However, critics point out that the measure would directly benefit only about 11 percent of Chile’s companies, leaving the remaining 89 percent—mostly small businesses—without significant tax relief.

To address this issue, the government is considering making the provisional tax regime introduced for small and medium-sized enterprises (SMEs) after the pandemic permanent.

Nevertheless, Garnham argues that investors prioritize stability over marginal tax reductions.

“Apparently, Iraq has a corporate tax rate of 15 percent, and I don’t see many people going there to invest,” he says, emphasizing that institutional stability and legal certainty remain the most important factors for attracting investment.

Even so, fiscal analysts warn that tax reductions could create questions about long-term fiscal sustainability, particularly regarding funding for social programs.

Attracting investment

A central objective of the economic agenda in Chile is to attract both domestic and international investment in key sectors.

Chile’s economic growth has historically relied on resource-intensive industries such as:

• Mining
• Energy
• Infrastructure
• Services

Kast’s economic team has identified approximately $100 billion in investment projects currently on hold, largely due to uncertainty about regulatory policies and political conditions.

Recent data suggests that investor confidence may already be improving:

• Foreign Direct Investment (FDI) reached $14.152 billion in 2025, representing a 13 percent increase compared to the previous year.
• InvestChile’s investment portfolio reached $65.689 billion, a 17 percent increase from 2024.

The sectors driving these investment flows include:

• Renewable energy, particularly green hydrogen
• Mining projects
• Service sector expansion

However, improving investor confidence also requires addressing regulatory bottlenecks. For many companies, one of the biggest obstacles to investment has been the complexity and slow pace of environmental and sectoral permitting processes.

To address this issue, the government will rely on the Framework Law on Sectoral Authorizations (Law No. 21.770), which:

• Modifies more than 40 regulatory frameworks
• Seeks to reduce permit processing times by 30% to 70%
• Introduces new administrative procedures for investment projects

Although the implementation of the law will be gradual, policymakers believe it could significantly reduce bureaucratic obstacles that have delayed large-scale investments.

Dangerous relationships

For a country whose GDP depends on international trade for more than 60 percent of economic activity, maintaining stable diplomatic relationships is essential.

This aspect represents one of the most delicate challenges for the economic agenda in Chile, given the geopolitical rivalry between the country’s two largest trading partners:

• China
• The United States

Although Kast has ideological affinities with U.S. President Donald Trump, economic realities complicate the situation.

According to Chile’s Undersecretariat for International Economic Relations (Subrei):

• China receives 35.2 percent of Chile’s exports
• The United States accounts for 17.8 percent

Tensions between the two powers have already affected Chilean policy decisions. A notable example is the controversy surrounding a submarine fiber-optic cable project linking Hong Kong and Valparaíso.

The United States has argued that the project could:

• Undermine regional security
• Expand Chinese technological influence in Latin America

In response to progress on the project, Washington imposed sanctions on three members of Gabriel Boric’s cabinet, intensifying diplomatic tensions.

The issue also complicated the transition between Boric and Kast, marking one of the first major controversies of the new administration.

Despite these tensions, analysts expect Kast to strengthen relations with the United States while maintaining pragmatic ties with China.

As Garnham observes:

“Trump will remain in office only for a few years, whereas the Chinese Communist Party has been in power for more than 75 years.”

For this reason, Chile’s leadership will likely seek a careful diplomatic balance as it implements the economic agenda in Chile aimed at restoring growth, attracting investment, and reinforcing the country’s position as one of Latin America’s most stable economies.

Mexico continues to attract foreign investment for electric mobility. Just last week, two U.S.-based companies announced that they will be investing nearly half a billion dollars in electric vehicle charging infrastructure and electric buses throughout central Mexico.

The companies that will be developing the electric mobility project are Invisible Urban Charging Inc. (IUC) and ATX Smart Mobility. For both companies, Mexico presents an opportunity to grow their electric mobility services throughout Latin America.

The announcement continues several recent efforts to invest in electric mobility in Mexico. Electric vehicles are gaining popularity throughout Latin America’s second-largest economy as demand for cleaner transportation solutions grows in Mexico City and other large metropolitan areas.

The Investor-Owned Companies

Two American companies have announced plans to invest approximately $500 million USD in Mexican electric mobility, starting with electric buses and charging infrastructure in and around the Bajío region.

Headquartered in Atlanta, Invisible Urban Charging Inc. will provide financial assistance and hardware for the charging portion of the project. ATX Smart Mobility, a Miami-based tech company, will implement artificial intelligence technology to manage how the buses move about city streets.

Together, the companies say they will install 38 electric charging stations and 140 electric buses throughout Mexico. Officials from both companies added that they hope to break ground within the next few months.

IUC provides a combination of financing and hardware for its charging stations. The Georgia-based company focuses on cities looking to add scalable charging infrastructure.

Some of IUC’s primary responsibilities include:

• Financing charging station installations
• Supplying hardware for charging stations
• Installing and maintaining software to run charging stations

Software provided by IUC allows EV drivers to find nearby charging stations through a mobile application. Station operators and business owners can also track energy usage and station utilization.

Jake Bezzant, co-founder and CEO of Invisible Urban Charging, said in a statement that his company is looking toward Mexico as a beachhead into the Latin American market for electric mobility solutions.

“In particular, we’re initially focused on commercial electric vehicle fleets such as buses and delivery vehicles,” Bezzant stated. “Once you put in that infrastructure for commercial vehicles, you then allow for ease of adoption for consumers.”

AI Will Power Smarter Transportation

ATX Smart Mobility’s electric buses will run on technology designed to create a smarter transportation network. Using artificial intelligence, the company’s software will allow officials to:

• Optimize route efficiency for electric buses
• Increase the energy efficiency of buses
• Schedule vehicle charging
• Analyze city transportation needs

ATX Smart Mobility says its intelligent routing software will help municipal leaders get the most out of their electric bus purchases by maximizing efficiencies and reducing energy costs. Routing isn’t the only service that will be powered by AI, however.

“Routing is one piece of the puzzle,” said a company spokesperson. “Electric buses require smart maintenance and charging schedules, predictive analysis, and real-time data to truly transform transportation.”

CBRE To Help Build Out Charging Infrastructure

International commercial real estate services company CBRE Group will also help develop locations for charging stations.

The services CBRE will provide to the charging network include:

• Determining ideal charging station locations
• Assisting with charging station installation
• Maintenance and operations for stations

CBRE will use its data and analytics platform to determine where to recommend installing charging stations. This platform will take into consideration population density, traffic patterns, and nearby business districts.

Where will the charging stations be located?

Initial installations will be made throughout central Mexico, including:

• Mexico City
• State of Mexico
• Puebla
• Querétaro

Why central Mexico? As previously mentioned, the Bajío region alone has attracted new passenger and commercial vehicle manufacturers to areas such as Querétaro. The proliferation of automotive manufacturing will continue, but the demand for EV chargers is not yet meeting expectations.

“There are approximately 280 vehicles per charger in Mexico,” said an ATX Smart Mobility executive. “We believe that an ideal ratio is somewhere around 40 vehicles per charger.”

Electric mobility in Mexico is attractive to investors because the demand is there. Mexico’s urban population is growing every year, putting a strain on public transportation and commercial transportation fleets. At the same time, the nation is building up its automotive manufacturing sector to support new electric vehicle market entrants such as:

• BYD
• Geely

The environmental benefits of replacing gas-guzzling buses with electric alternatives are obvious. Increasing the adoption of electric passenger vehicles in Mexico also requires building out a network of chargers. Projects such as this aim to do just that.

Electrifying Mexico’s Transportation Network

Electric mobility in Mexico can have lasting impacts on the country’s economy and environment. It:

• Helps increase the adoption of EVs by making charging more accessible
• Could help reduce emissions with electric buses
• Helps grow Mexico’s EV economy by bringing in new investment from the United States
• Creates jobs across multiple sectors (charging infrastructure, software, transportation, etc.)

Global automotive manufacturers are already sensing an opportunity in Mexico. Domestic manufacturers such as Zacua are following in the footsteps of established EV brands, giving consumers even more reason to purchase electric cars.

Conclusion

Mexico has the opportunity to join countries such as China and the United States as one of the global leaders in electric mobility. Supporting global efforts to electrify transportation, companies such as Invisible Urban Charging and ATX Smart Mobility are taking steps to attract more international investment to Mexico.

ATX’s executive concluded: “Latin America has an opportunity to leapfrog right to the newest and most innovative transportation technologies. We’re just getting started.”

The development of Argentina’s mining sector has long been seen as one of the country’s most promising economic opportunities. However, even projects with strong investment backing can encounter obstacles tied to infrastructure, regulation, and coordination among government authorities. Such is the case with the largest mining project in Argentina, a copper initiative known as Vicuña that has already generated intense debate even before construction has officially begun.

The Vicuña mining project, which involves an investment of approximately US$7.1 billion, is located in the province of San Juan, one of Argentina’s most important mining jurisdictions. The project aims to develop copper deposits at extremely high altitudes in the Andes Mountains, but disagreements over the expansion of the electricity transmission network required to power the operation have delayed progress.

While mining companies behind the project insist they are following national regulations and proposing to finance the necessary infrastructure themselves, provincial authorities have raised concerns about access to the electrical grid and the broader implications for regional development.

A Strategic Copper Development

The Vicuña initiative is considered the largest mining project in Argentina because of its scale, investment value, and projected copper output. The development integrates two major deposits:

• Josemaría
• Filo del Sol

Both deposits are located in the high Andes along the Argentina–Chile border and are expected to become major contributors to global copper supply once operational.

Copper is increasingly important in the global economy due to its role in:

• Renewable energy infrastructure
• Electric vehicles and battery systems
• Transmission networks and electrification projects
• Digital and telecommunications infrastructure

Industry analysts believe that demand for copper could increase dramatically over the next two decades as countries accelerate the transition toward clean energy.

According to mining specialists, projects like Vicuña could position Argentina as a much more prominent player in the global copper market.

“Argentina has some of the largest undeveloped copper resources in the world,” noted one mining industry consultant. “Projects such as Josemaría and Filo del Sol have the potential to transform the country’s role in global metals supply.”

Infrastructure Challenges at High Altitude

One of the main challenges associated with developing the largest mining project in Argentina is the extreme environment in which it will operate. The mining complexes are planned at more than 4,200 meters (13,780 feet) above sea level, where conditions can be harsh, and infrastructure is limited.

Currently, exploration camps operate using diesel-powered generators, with fuel supplied by the Argentine energy company YPF and transported by truck to the remote site.

Key characteristics of the current energy setup include:

• Diesel generators providing a temporary electricity supply
• Fuel deliveries transported by truck along mountain roads
• Storage tanks capable of holding 330 cubic meters of fuel
• Energy reserves sufficient for approximately 14 days of operation

However, this system is not viable for full-scale mining production, which will require a stable and large electricity supply.

To address this need, the mining companies have proposed a major infrastructure plan involving:

• Construction of medium- and high-voltage power lines
• Expansion of transformer substations
• Integration with Argentina’s national interconnected electrical grid
• Approximately 220 kilometers of new transmission lines

The projected electricity demand for the Josemaría and Filo del Sol complexes is estimated at 260 megawatts, comparable to that of a medium-sized city.

A New Regulatory Framework for Energy Infrastructure

The controversy surrounding the largest mining project in Argentina is also linked to recent changes in national energy policy.

In 2025, Argentina’s Secretariat of Energy issued Resolution 311/25, allowing large energy consumers—such as mining companies—to finance and build their own electricity infrastructure when necessary.

Under this framework:

• Companies can propose expansions to the national electricity grid.
• Private investors can finance new transmission infrastructure.
• Investors receive priority access to the additional capacity created by their projects.

This mechanism was designed to address Argentina’s longstanding lack of investment in electricity transmission systems.

The plan is supported by reforms introduced under the government’s broader economic restructuring agenda.

These reforms include:

• The Ley de Bases, approved by Congress
• Decree 450, which updated Argentina’s electricity sector legislation
• The creation of Article 31, allowing private capital to finance grid expansion

Government officials argue that these measures are necessary to unlock investment in industries such as mining, energy, and manufacturing.

The Proposed Power Grid Expansion

Within this regulatory framework, the National Electricity Regulatory Entity (ENRE) published Vicuña’s request on February 18 to expand the electricity transmission network needed to power the mining project.

The proposed infrastructure plan includes:

• Upgrading several transformer substations
• Building 220 kilometers of transmission lines
• Creating new capacity capable of supplying 260 MW of electricity
• An estimated investment of US$400 million to US$500 million

In exchange for financing the infrastructure, the mining company would receive priority access to 90% of the additional transmission capacity generated by the expansion.

This priority would last for approximately 25 years, which corresponds to the estimated operational life of the mining project.

Company representatives emphasize that the proposal does not grant exclusive control over the electrical network.

“Argentina’s electrical system operates under the principle of open access,” company representatives explained. “Any project requiring energy can request a connection, and if capacity is insufficient, it can propose expansions to the grid.”

They also noted:

“Priority access applies only to the specific capacity created by the expansion financed by the project itself. It does not prevent other companies from requesting connections or proposing additional infrastructure investments.”

Objections from Provincial Authorities

Despite the regulatory framework that allows private infrastructure investment, the proposal has encountered resistance from provincial authorities in San Juan.

The Provincial Electricity Regulatory Entity (EPRE) submitted a formal objection to the ENRE, raising procedural, technical, and legal concerns about the plan.

The provincial agency requested that:

• Authorization for the expansion not be granted immediately
• A public hearing should be held before approving the project
• The broader implications for the province’s electricity system be examined

In its official communication, the EPRE warned that granting priority access to such a large share of transmission capacity could affect future development projects.

The agency stated:

“The attempt to capture 90% of the remaining capacity constitutes an abusive exercise of the right of access that undermines the social and strategic function of the transmission system.”

Provincial officials argue that the electrical grid must remain flexible enough to support other economic initiatives in San Juan.

At the same time, they insist that relations with the mining companies remain constructive.

Efforts to Reach a Compromise

Despite the dispute, authorities in San Juan emphasize that negotiations are ongoing and that the issue could still be resolved through dialogue.

Provincial officials say that they are currently working on a separate electrical infrastructure development plan, financed through provincial trust funds, which could also support mining operations in the region.

Officials have indicated that:

• The permitting process remains ongoing
• Multiple stakeholders are involved in negotiations
• A final agreement is still possible

“There is no conflict with the company,” one provincial official stated. “The relationship is very good, and we are confident that solutions can be found that benefit both the project and the province.”

A Broader Structural Challenge for Argentina

The debate surrounding the largest mining project in Argentina highlights a broader structural challenge facing the country: a chronic deficit in energy infrastructure.

Argentina’s electricity transmission network has long struggled with:

• Limited capacity for new industrial projects
• Insufficient investment in transmission lines
• Bottlenecks connecting remote regions to the national grid
• Delays in permitting and regulatory coordination

These limitations have become particularly problematic as Argentina attempts to expand sectors such as:

• Mining
• Renewable energy generation
• Industrial manufacturing

Large-scale projects often require new infrastructure that can take years to develop.

A Key Test for Argentina’s Investment Strategy

The regulatory dispute surrounding the largest mining project in Argentina may ultimately serve as a crucial test for the country’s new approach to infrastructure development.

If the mechanism allowing private investors to finance energy infrastructure proves successful, it could unlock billions of dollars in investment across multiple sectors.

However, if conflicts between national and provincial authorities persist, they could slow progress and discourage potential investors.

What happens in the Vicuña case will likely shape:

• Future mining investments in Argentina
• The development of new electrical infrastructure
• The role of private capital in financing national energy systems

For Argentina, resolving these issues efficiently will be critical if it hopes to fully capitalize on its vast mineral resources and position itself as a major supplier of strategic metals in the global economy.

The recent announcement that the Dominican Republic will produce semiconductors before 2028 marks a significant milestone in the country’s economic development strategy.

According to the Minister of Industry, Trade, and Micro, Small, and Medium Enterprises (MICM), Yayo Sanz Lovatón, the country is positioning itself to become an emerging player in one of the most strategic industries of the modern global economy.

During the presentation of a report on the development of the country’s semiconductor sector, the minister stated that the Caribbean nation is strengthening its role in the evolving global production network. As supply chains continue to reorganize due to geopolitical tensions, nearshoring trends, and technological transformation, the Dominican Republic is seeking to capitalize on its geographic and economic advantages.

“The Dominican Republic is not merely observing the technological transformation of the global economy,” Sanz Lovatón said. “We are actively positioning ourselves to participate in it.”

The official emphasized that the Dominican Republic will produce semiconductors as part of a long-term national strategy aimed at attracting high-value investment, stimulating innovation, and generating skilled employment.

A Strategic Report on Semiconductor Development

The announcement took place during the presentation of the report titled “Analysis of the Enabling Environment for the Semiconductor and Microelectronics Industries in the Dominican Republic.” The study was jointly prepared by the Ministry of Industry, Trade, and MSMEs and the Organisation for Economic Co-operation and Development (OECD).

The report analyzes the country’s potential to integrate into semiconductor and microelectronics supply chains by examining several critical dimensions:

• Regulatory and institutional frameworks
• Availability of skilled human capital
• Infrastructure readiness
• Industrial capabilities

Opportunities for integration into global value chains

The document also evaluates the country’s competitive advantages for attracting investment in advanced manufacturing industries that rely on precision engineering and specialized talent.

According to the study, the Dominican Republic already possesses several important foundations that could support semiconductor production. These include a robust free trade zone sector, established manufacturing capabilities, and a track record of successful export-oriented industries such as medical devices, electronics assembly, and pharmaceuticals.

National Strategy to Promote the Semiconductor Industry

The initiative is part of the National Strategy to Promote the Semiconductor Industry, which was formally launched through Presidential Decree 324-24. The decree establishes the institutional and policy framework necessary to attract investment in semiconductor manufacturing and microelectronics development.

The strategy seeks to coordinate government agencies, academic institutions, and private-sector stakeholders to create an ecosystem capable of supporting advanced technology industries.

Among the key objectives of the strategy are:

• Developing specialized technical training programs
• Strengthening research and development capabilities
• Attracting foreign direct investment in semiconductor manufacturing
• Promoting partnerships between universities and industry
• Integrating local suppliers into global technology value chains

By implementing these initiatives, policymakers aim to ensure that the Dominican Republic will produce semiconductors not only as a short-term project but as part of a sustainable industrial transformation.

Public-Private Collaboration as a Key Factor

During the event, Sanz Lovatón highlighted the importance of collaboration between government institutions and private sector actors. He explained that sustained progress in complex industries such as semiconductor manufacturing requires a shared national vision.

“Coordination between the public and private sectors allows development efforts to transcend political administrations and become a long-term national policy,” he said.

The minister stressed that the semiconductor initiative is a central pillar of the country’s economic strategy, emphasizing innovation, competitiveness, and technological modernization.

Industry representatives attending the presentation also expressed interest in exploring opportunities related to semiconductor assembly, testing, and packaging operations. These segments of the semiconductor value chain are often considered entry points for emerging manufacturing hubs.

OECD Perspective: A Shift in the Production Model

At the same event, OECD Deputy Secretary-General Yasushi Masaki offered an international perspective on the Dominican Republic’s strategy. He noted that the country’s efforts reflect a broader shift in global manufacturing patterns.

“The Dominican Republic is not diversifying by chance,” Masaki stated. “It is deliberately upgrading its production model to participate in more sophisticated sectors of the global economy.”

Masaki added that success in the semiconductor industry will depend on the country’s ability to transform geographic proximity into a competitive advantage. The Dominican Republic’s location provides relatively quick access to major markets in North America and Latin America.

However, he emphasized that attracting high-tech investment requires adherence to international standards, regulatory transparency, and strong institutional frameworks.

“In today’s global value chains, trust and predictability are just as important as infrastructure,” Masaki said.

Technical Findings from the OECD Analysis

The technical presentation of the report was delivered by Guy Lalanne, Acting Head of the OECD’s Productivity and Innovation Division. Lalanne explained that the study combines both quantitative data and qualitative analysis to evaluate the country’s readiness to participate in the semiconductor ecosystem.

According to the OECD analysis, the Dominican Republic has several strengths that could support industry development.

These include:

• An established advanced manufacturing base
• A well-developed free trade zone regime that attracts export-oriented companies
• Political and macroeconomic stability compared with many regional peers
• Modern port and airport infrastructure that facilitates global trade
• Geographic proximity to the United States and other key markets

Lalanne noted that these advantages position the country to attract semiconductor-related investments, particularly in areas such as chip assembly, packaging, and testing.

Areas for Improvement

Despite the promising outlook, the report also identifies several challenges that must be addressed to ensure the Dominican Republic produces semiconductors and sustains long-term growth in the sector.

Among the key recommendations are:

• Strengthening the institutional framework for technology industries
• Improving the overall business environment for high-tech investors
• Expanding science, technology, and innovation programs
• Increasing the supply of engineers and specialized technicians
• Enhancing electricity reliability and water infrastructure

Semiconductor manufacturing is highly sensitive to infrastructure reliability. Stable electricity supply, advanced logistics systems, and access to purified water are essential for many semiconductor fabrication processes.

The OECD also recommended greater investment in research partnerships between universities and private industry in order to accelerate technological learning.

Nearshoring Opportunities in the Americas

Global semiconductor supply chains are currently undergoing significant restructuring. Companies and governments are seeking to diversify production away from highly concentrated manufacturing hubs in Asia.

This trend, often referred to as nearshoring, is creating opportunities for countries in the Americas to attract investment in advanced manufacturing.

The Dominican Republic hopes to benefit from this shift by positioning itself as a strategic partner for companies seeking production locations closer to North American markets.

In this context, the government believes that the Dominican Republic will produce semiconductors as part of a broader effort to expand the country’s role in technology-driven industries.

A Vision for the Future

If the country succeeds in implementing the recommendations outlined in the OECD report and the National Strategy for Semiconductors, the initiative could transform the Dominican Republic’s industrial landscape.

High-tech manufacturing sectors such as semiconductors offer several long-term economic benefits:

• Creation of high-skilled jobs
• Increased foreign direct investment
• Greater export diversification
• Technology transfer and innovation
• Integration into advanced global supply chains

Government officials believe that the semiconductor initiative represents an opportunity to move beyond traditional manufacturing sectors toward a more knowledge-based economy.

As Minister Sanz Lovatón concluded during the presentation:

“The future of industrial development lies in technology and innovation. By building the right ecosystem today, we ensure that the Dominican Republic will produce semiconductors and participate in the industries that will define the global economy of tomorrow.”

The trade agreement between the United States and El Salvador provides new opportunities for foreign investors by eliminating barriers and granting better access for Salvadoran exporters in priority sectors.

A trade agreement between the United States and El Salvador, signed on January 29, elevates key sectors for investment in El Salvador by eliminating barriers and providing preferential treatment to Salvadoran exporters, signaling an openness to productive economic integration between the two countries, a new report by the Inter-American Dialogue said.

Trade pact sends clear signal to markets

Under the terms of the trade agreement between the United States and El Salvador, markets received a clear signal that both countries were willing to increase productive economic integration by eliminating barriers and increasing predictability between trade partners.

But beyond providing certainty on tariffs and improving the investment climate through deregulation, the pact acts as a key turning point in Salvadoran economic policy.

Entering into force at a critical time for El Salvador’s economic development agenda, this deal is expected to stimulate economic growth by improving macroeconomic conditions.

Investment enhanced by macroeconomic growth

El Salvador expects its economy to grow by approximately 3% over the next two years, helped by fiscal policies seeking to consolidate the budget, multilateral assistance, and increased dynamism of exports to the United States markets, as well as the possibility of attracting new foreign direct investment.

Signed during a period of renewed openness to foreign investment in sectors like critical minerals, this trade agreement between the United States and El Salvador couldn’t have arrived at a better time.

Signed after El Salvador ended a nationwide moratorium on metallic mining in 2024, the deal lifts barriers for U.S. companies seeking to capitalize on El Salvador’s mining potential, while the country’s full dollarization presents an added layer of stability by minimizing exchange-rate risk.

Sarah Phillips, northern Latin America manager at McLarty Associates, told the Dialogue:

“By eliminating tariffs, the agreement increases the competitiveness of Salvadoran exports vs. other agreement members, such as Nicaragua.”

Senior Policy Analyst Samuel George details how the pact positions El Salvador as a reliable investment destination:

“The deal stands to benefit El Salvador by lowering costs for importers in the United States, introducing greater predictability and transparency around customs procedures, and modernizing import licensing requirements.”

Trade agreement supports sectors like infrastructure, mining, and more

U.S. allies like El Salvador will benefit from stronger trade cooperation in key areas, such as critical minerals and sectors identified by the United States government as priorities in its national security strategy, including telecommunications and infrastructure.

Importantly, sectors such as critical minerals development are also seen by President Nayib Bukele’s government as urgent economic needs for the Central American nation.

Beyond granting immediate benefits to exporters as summarized by Dialogue’s Samuel George, the trade agreement between the United States and El Salvador:

• Eliminates tariffs of up to 10% on goods such as textiles and apparel
• Restores duty-free access under the CAFTA-DR trade agreement
• Boosts competitiveness of El Salvador’s maquila industry relative to competitor countries
• Updates sanitary and phytosanitary regulations
• Promotes digitalization of customs processes

Exports gain an opportunity for improvement, FDI stands to increase

Industry experts said the deal also affords the opportunity for greater improvements for exporters and capital inflows into the small Central American nation.

“This is meaningful because over 30% of Salvadoran exports go to the United States, so any improvement in access can have macroeconomic impacts,” said Victoria Chonn Ching, a fellow at the Atlantic Council.

Among the sectors that could stand to benefit the most from the United States and El Salvador trade agreement are telecommunications, infrastructure, critical minerals development, and advanced manufacturing.

Mining attracts U.S. investors but creates environmental liabilities

However, metallic mining is perhaps the sector with highest near-term potential for growth.

With local reserves lying idle for the last seven years due to President Bukele’s moratorium on the sector, foreign mining companies — particularly from the United States — now have a chance to reinvigorate an entire industry.

Mining returns to El Salvador amid economic reopening. Gustavo Flores-Macias, dean of the University of Maryland School of Public Policy and Dialogue visiting fellow, told the Dialogue:

“There are significant reserves, but…the requirement of public-private partnership and outright state ownership of resources complicates matters.”

Gustavo also highlighted other difficulties associated with mining development in El Salvador. They include:

• Skill worker shortages
• Deficiencies in energy and transport infrastructure
• Undefined regulatory frameworks
• Strict environmental regulations
• Community opposition

The biggest challenge: Environmental protection and social opposition

Social opposition to reopening the mining sector could hamper El Salvador’s ability to capitalize on new investments coming as a result of the trade agreement between the United States and El Salvador.

A poll conducted by the Institute for Politics and Democracy in El Salvador (IUDOP) and cited by Rose J. Spalding, associate professor in DePaul University’s Environmental Studies Program, provides insights into American attitudes toward mining development:

• 59% believe mining development is “inappropriate.”
• 23% believe it’s “appropriate.”
• The remainder were uncertain

“In terms of climate risk, El Salvador is in a very vulnerable place,” Rose said.

Community tensions over mining expansion will play a central role in determining how foreign investors approach the opportunity.

Not only will miners have to contend with domestic communities downriver affected by accidents or pollution, but El Salvador also promised to clean up the Lempa River as part of a $1 billion debt swap approved in 2024. This debt deal obligates El Salvador to fund prevention and cleanup operations along the Lempa River for the next 20 years.

Prospects for growth tempered by geopolitical and social realities

While industrial sectors like mining represent key pillars of President Bukele’s strategy to court foreign investment, El Salvador’s business climate still ranks below regional standards in several areas that affect its competitiveness, such as:

• Small domestic consumer market
• High informal labor market
• Lack of skilled human capital
• Perceived lack of regulatory certainty

Ms. Phillips told the Dialogue that despite improvements afforded by the United States trade agreement, El Salvador still faces headwinds associated with structural challenges.

Containing costs and environmental liabilities associated with sectors like mining will be essential if El Salvador hopes to maintain an appetite for foreign investment while keeping growth stable.

Ms. Ching pointed out that FDI alone will not be enough to sustain growth if El Salvador cannot properly manage environmental debt left by sectors such as mining.

Both investors and policymakers will be looking to El Salvador’s government to continue building upon the momentum created by ratifying the United States trade agreement. Only by embracing transparency, improving administrative capacities, and developing stable regulation will El Salvador become a truly competitive player in the region.