Trade between Mexico and Ecuador remains limited compared to Mexico’s commercial exchanges with other Latin American nations. However, both countries have continued to engage in economic interactions, albeit with fluctuations over the years. During Andrés Manuel López Obrador’s administration, efforts were made to establish a free trade agreement to facilitate commerce, reduce tariffs, and promote investment. Unfortunately, the negotiations stalled, and under the administration of Claudia Sheinbaum, no significant progress has been made to revive them. This uncertainty has created challenges in the Ecuador-Mexico Trade Relationship, particularly for industries that rely on stable trade agreements.

A crucial aspect of diplomatic relations between nations is promoting cooperation and integration, particularly in trade and economic matters. This is especially true for countries within the Latin American region, as stronger trade relations can lead to mutual economic growth, job creation, and diversification of export markets. However, following the diplomatic rupture between Mexico and Ecuador announced by the government of Andrés Manuel López Obrador in 2024, efforts to enhance economic ties were put on hold. The breakdown in diplomatic relations has further complicated trade negotiations, leaving many business sectors uncertain about the future of the Ecuador-Mexico Trade Relationship.

On Monday, Ecuador announced imposing a 27% tariff on Mexican products due to the absence of a Free Trade Agreement with Mexico. This move is expected to impact various Mexican industries that rely on exports to Ecuador. The tariff could make it more expensive for Ecuadorian importers to purchase Mexican goods, potentially reducing trade volumes and affecting businesses that depend on this bilateral commerce. As trade tensions continue, businesses and policymakers must evaluate ways to stabilize the Ecuador-Mexico Trade Relationship to prevent further economic disruptions.

Trade Balance Between Mexico and Ecuador

According to data from Banxico, in 2023, Mexico’s exports to Ecuador reached $595 million, while imports from Ecuador amounted to $228 million. This resulted in a trade surplus of $368 million in Mexico’s favor, highlighting Mexico’s stronger export position in the bilateral trade relationship. Over time, fluctuations have been observed in trade between the two nations, with varying levels of export activity depending on economic conditions, exchange rates, and policy changes.

In 2023, Ecuador’s share of Mexico’s total exports was just 0.1%, a relatively minor figure compared to Mexico’s other trade partners in Latin America. Meanwhile, Ecuador’s contribution to Mexico’s total imports was even smaller, accounting for only 0.038% that year. These figures suggest that while trade exists between the two nations, it remains minor in scale and has significant room for expansion, especially if trade agreements are formalized in the future.

In November 2024, Mexico’s international sales to Ecuador totaled $37.6 million, while its international purchases from Ecuador amounted to $48.1 million, resulting in a trade deficit of $10.5 million. This short-term shift in trade balance may be attributed to Ecuadorian exports increasing due to specific product demand or seasonal factors. These fluctuations underscore the need for a more structured Ecuador-Mexico Trade Relationship that promotes long-term stability and growth.

What Does Ecuador Export to Mexico and Vice Versa?

Understanding what each country exports can help illustrate the trade dynamics between Mexico and Ecuador. According to Data México, in November 2024, the primary product exported from Mexico to Ecuador was medicines, whether mixed or unmixed, formulated for therapeutic or prophylactic use, valued at $5.06 million. Pharmaceutical products play a critical role in Mexico’s exports to Ecuador, as Mexico has a well-developed pharmaceutical industry with a strong presence in Latin America.

Other significant Mexican exports to Ecuador include industrial machinery, automotive parts, and processed food products. These items reflect Mexico’s diverse manufacturing capabilities and role as a supplier of industrial and consumer goods to Ecuadorian businesses and consumers. Mexico City ($12.7 million), the State of Mexico ($8.26 million), and Jalisco ($3.95 million) were the leading regions in terms of exports to Ecuador, highlighting the industrial and economic centers that drive trade.

On the other hand, Ecuador’s exports to Mexico primarily consist of agricultural and seafood products. Ecuador is well known for its banana and shrimp exports, representing a significant portion of what Ecuador sells to Mexico. Other key Ecuadorian exports to Mexico include cocoa, coffee, and flowers, which are highly valued in the Mexican market. The strong demand for these products underscores the role of Ecuadorian agriculture and aquaculture in fueling bilateral trade.

Ecuador’s exports to Mexico include raw materials such as wood and textiles, which Mexican industries utilize for further processing and manufacturing. The exchange of these goods benefits both economies, as Mexico gains access to high-quality raw materials while Ecuador benefits from a stable export market. However, the lack of a free trade agreement continues to pose challenges, as tariffs and trade barriers can limit the full potential of these exchanges. Strengthening the Ecuador-Mexico Trade Relationship through a formalized agreement could alleviate some of these issues and lead to more predictable trade flows.

Ecuador’s Participation in Mexico’s Foreign Direct Investment (FDI)

Beyond trade, foreign direct investment plays a crucial role in the economic ties between Mexico and Ecuador. Between January and September 2024, Ecuador’s Foreign Direct Investment (FDI) in Mexico amounted to $5.63 million, distributed between intercompany accounts ($4.89 million) and new investments ($742,000). Although these figures are relatively small, they indicate a steady flow of investment activity between the two nations.

According to data from Mexico’s Ministry of Economy, from January 1999 to September 2024, Mexico received $137 million in FDI from Ecuador. This investment was allocated to new investments ($107 million), intercompany accounts ($19 million), and reinvestment of profits ($11.1 million). The presence of Ecuadorian investment in Mexico demonstrates a level of economic cooperation that extends beyond trade, with companies from Ecuador seeking business opportunities in various sectors of the Mexican economy.

While Ecuador’s exports to Mexico mainly focus on agricultural goods, seafood, and raw materials, Ecuadorian businesses have also explored investment opportunities in Mexico’s service and manufacturing industries. However, given the modest investment figures, there is potential for further growth if trade barriers are reduced and diplomatic relations improve. Increased FDI could serve as another pillar in strengthening the Ecuador-Mexico Trade Relationship, fostering deeper economic ties between the two countries.

Remittances Between Mexico and Ecuador

Another critical aspect of economic relations between the two countries is the flow of remittances. In the third quarter of 2024, Mexico received $13.6 million in remittances from Ecuador, while Ecuador received $4.65 million in remittances from Mexico. These remittances reflect the movement of people between the two nations, as migrant workers contribute to the economies of their respective home countries by sending money back to their families.

Although remittance flows between Mexico and Ecuador are not as large as those between Mexico and the United States, they still play a vital role in supporting households and local economies. The remittances received in Ecuador help sustain businesses, education, and healthcare expenses for many families, while the funds sent to Mexico support similar economic activities.

Conclusion

While Mexico’s and Ecuador’s trade relationship is relatively small compared to other Latin American nations, it remains an important aspect of economic cooperation between the two countries. Ecuador exports primarily agricultural and seafood products to Mexico, while Mexico exports pharmaceuticals, industrial machinery, and automotive parts to Ecuador. Despite trade fluctuations and diplomatic challenges, both nations have opportunities to expand their commercial ties.

If a free trade agreement is eventually established, it could pave the way for increased trade volumes, reduced tariffs, and more significant investment flows between Mexico and Ecuador. For now, businesses on both sides must navigate existing trade barriers while seeking opportunities to strengthen the Ecuador-Mexico Trade Relationship in the future.

Ministers Meet to Revive Negotiations

The Peruvian Ministry of Foreign Trade and Tourism (Mincetur) announced that Peru and El Salvador have decided to resume free trade agreement negotiations following a high-level meeting between ministers from both countries.

In an official statement, Mincetur confirmed that this decision was made during discussions between Peru’s Minister of Foreign Trade and Tourism, Desilú León Chempén, and El Salvador’s Minister of Economy, María Luisa Hayem Brevé.

Strengthening Bilateral Trade

“The goods trade between Peru and El Salvador has grown recently. We are confident that this negotiation will further enhance these trade flows, diversify our exports, and create new opportunities for investment and employment for our citizens,” Minister León stated.

According to Mincetur, El Salvador represents “a strategic market for Peru in Central America, with a growing economy and an increasing demand for value-added products.” The ministry emphasized that the proposed free trade agreement negotiations between Peru and El Salvador would open new opportunities for Peruvian exporters by granting them preferential access to a country where Peru “shares a vision of integration and economic development.”

Benefits for Small and Medium-Sized Enterprises (SMEs)

Minister León elaborated that “with this agreement, we aim to establish a stable and predictable regulatory framework that will enable our economic operators, particularly small and medium-sized enterprises (SMEs), to capitalize on the potential of our trade relations fully.” She highlighted that lowering tariffs and facilitating trade would allow more Peruvian businesses to export competitively, expand their market reach, and contribute to job creation and investment growth.

El Salvador’s Commitment to the Agreement

For her part, Minister Hayem of El Salvador emphasized that reviving free trade agreement negotiations between Peru and El Salvador—which initially began in 2010—presents a crucial opportunity to increase and diversify trade flows of goods and services between the two nations. “This agreement will strengthen bilateral trade by facilitating greater access to Peruvian and Salvadoran products and services in each other’s markets, fostering sustained growth and creating new business opportunities for our enterprises,” Hayem stated.

Official Declaration and Future Steps

Following their meeting, both ministers issued a joint declaration reaffirming their governments’ commitment to advancing negotiations decisively and finalizing an agreement that will drive economic growth in both countries. They expressed optimism about the prospects of a strengthened commercial relationship benefiting businesses and consumers.

Trade Growth and Economic Impact

Between January and November 2024, Peruvian exports to El Salvador surged by 43.8% compared to the previous year, reaching $65 million. The trade expansion saw remarkable diversification, encompassing 404 product categories and involving 183 exporting companies. Notable exports included chemical products, agricultural goods, and metallurgical products.

Conversely, imports from El Salvador to Peru amounted to $19 million over the same period, distributed across 134 product categories. Key imports included sugar, lubricating oils, long steel products, and wastepaper or cardboard.

Strategic Importance of the Agreement

The resumption of free trade agreement negotiations between Peru and El Salvador signals a strategic move for both nations as they seek to strengthen economic ties and create a more dynamic and mutually beneficial trade environment. The agreement aims to promote sustainable economic growth and ensure broader participation in the regional and global economy by addressing key trade barriers and establishing preferential terms.

Optimism from Business Leaders and Trade Analysts

Peruvian business leaders and trade analysts have expressed optimism regarding the agreement’s potential to attract investment, improve market efficiency, and enhance competitiveness for companies in both nations. Similarly, Salvadoran business representatives have welcomed the initiative, emphasizing its opportunities for increased exports, more significant business expansion, and stronger commercial collaboration with Peru.

Next Steps in the Negotiation Process

With negotiations back on track, both governments must outline a clear roadmap for completing the agreement soon. Trade experts anticipate that the deal will include provisions on tariff reductions, investment protections, trade facilitation measures, and cooperation mechanisms that will foster deeper integration between the two economies.

As discussions progress, stakeholders from both countries will closely monitor the developments, hoping for a successful conclusion to unlock new economic opportunities, stimulate trade, and reinforce the long-term economic partnership between Peru and El Salvador.

Conclusion

The free trade agreement negotiations between Peru and El Salvador represent a crucial opportunity for both nations to strengthen their economic ties, enhance trade flows, and promote long-term growth. By fostering a stable and predictable trade environment, this agreement has the potential to generate significant benefits for exporters, investors, and consumers in both countries. Reducing trade barriers, increasing market access, and establishing clear regulatory frameworks will improve the competitiveness of businesses and create new jobs and investment opportunities. Furthermore, provisions supporting small and medium-sized enterprises (SMEs) will ensure broader participation in international trade, empowering local industries and fostering economic resilience.

As the free trade agreement negotiations between Peru and El Salvador advance, both governments must address key areas such as tariff reductions, investment protections, and trade facilitation measures to create a more efficient and balanced trading relationship. Given the strong growth in bilateral trade and the rising demand for diverse products in both markets, this agreement is expected to accelerate economic integration and position both countries as stronger players in the regional and global economy. The successful completion of the free trade agreement negotiations between Peru and El Salvador will strengthen diplomatic relations and set a precedent for future trade agreements within Latin America.

Foreign Direct Investment Will Promote the Development of Sustainable and Technologically Advanced Projects in the Region

The Central American real estate sector is gearing up for a year of transformation in 2025, driven by three key factors: sustained tourism growth, the influx of foreign investment, and implementing government policies favorable to the sector’s development.

Danny Quirós, Market Research Director at Newmark Central America, the world’s leading commercial real estate consultancy, highlights the crucial role that Foreign Direct Investment (FDI) will play in this transformation.

“FDI will be a key catalyst for Central American real estate sector development in 2025. Foreign capital will finance major commercial, hospitality, and residential infrastructure projects and facilitate the transfer of advanced technology and knowledge. International investors are introducing modern construction methods and technologies that optimize processes and contribute to creating greener and more efficient projects,” explains Quirós.

Additionally, investments in tourism infrastructure—such as luxury hotels and vacation rental developments—will attract more tourists. This will stimulate the local economy and increase the demand for tourism-related real estate, including rental properties and second homes.

Dynamism in the Industrial Sector

Quirós predicts that the region will continue to establish itself as a strategic hub for advanced manufacturing and logistics operations in the industrial sector.

“Advanced manufacturing has a promising future, especially in automotive, medical devices, and electronics industries. Companies are optimizing their supply chains, and the region is becoming a crucial center for producing medical and automotive components,” he notes.

The expert points out that the rise of e-commerce is reshaping logistics infrastructure needs. “The demand for e-commerce and logistics centers is evolving rapidly. Advances in automation and artificial intelligence drive investments in technologically equipped industrial properties, with developers adapting their designs to include sustainable and innovative features.”

“In Costa Rica, the submarkets of Alajuela, Cartago, and the southern part of San José, as well as the northwest of the Greater Metropolitan Area (GAM), remain attractive for industrial development. Panama is experiencing significant growth in the Eastern and Reverted Areas, with promising prospects in the Northern Periphery. In Guatemala, Villa Nueva and Escuintla are consolidating as natural growth hubs,” Quirós details.

Transformation in Retail

Regarding the retail sector, Quirós highlights a significant shift toward more sophisticated shopping experiences.

“Retail spaces are undergoing a fundamental transformation, integrating hybrid experiences that blend physical and digital elements. Shopping malls are evolving into experiential destinations where consumers can socialize, enjoy entertainment, and participate in community events.”

“We are also seeing growth in pop-up store models, which offer brands flexibility to test new markets without long-term commitments. Integrating Artificial Intelligence (AI) and data analytics enables more personalized experiences, tailoring offers and recommendations based on consumer behavior,” he adds.

Evolution of the Office Market

Regarding the office market, Quirós notes, “The current availability rate reflects a market that remains favorable for tenants. Although there is a continuous absorption of space, the occupancy pace has not outpaced the introduction of new supply, a pattern likely to persist throughout 2025.”

“Prices will remain stable, influenced by a significant stock of second-generation offices that offer more flexible leasing conditions. Flexible workspaces have established themselves as an agile solution for both startups and large corporations looking to optimize operational costs and enhance productivity,” Quirós explains.

In Costa Rica, the west of San José, Sabana, and Heredia continue to offer the best opportunities for office development. In Panama, the Reverted Areas and Santa María present the most favorable conditions for business growth. In Guatemala, Zone 10, Zone 9, and peripheral areas such as Cayalá will be the submarkets with the greatest development opportunities in the short term.

Although the trend toward hybrid work is expected to continue declining, as observed throughout 2024, this shift should not impact users’ preference for environments that promote flexibility and efficiency. Companies will continue to assess ways to maximize productivity and retain talent, with flexible spaces remaining an effective solution to these needs.

In Guatemala, the growth of the services sector, particularly in business process outsourcing (BPO) and technology, will continue to drive demand for office and commercial spaces, providing local developers unique opportunities to plan projects that meet the sector’s increasing needs.

Sustainability and Technology

Looking to the future, Quirós emphasizes the crucial role of sustainability and technology in the Central American real estate sector.

“Developers increasingly focus on eco-friendly designs, using sustainable materials and renewable energy sources. Energy efficiency and carbon footprint reduction are priorities for multinational tenants, enhancing the appeal of properties and lowering operational costs.”

Real estate developments are beginning to integrate solutions such as home automation, smart building management systems (BMS), and digital platforms that enable enhanced supervision and efficiency. These advances facilitate the creation of more comfortable, secure, and efficient living and working environments.

Moreover, local authorities and international organizations are trying to incentivize these practices through subsidies and regulations that support investment in green technologies. As awareness and accessibility to these technologies grow, more countries in the region will adopt them at a faster pace.

Additionally, developers leverage AI to analyze user data and preferences, designing buildings that maximize functionality and energy efficiency, making projects more attractive and sustainable for occupants. AI also introduces tools that enhance user experiences, from apps that streamline service management to real-time space customization platforms.

“The integration of Artificial Intelligence is revolutionizing the Central American real estate sector, enabling the creation of more adaptive and optimized spaces. From automating operational processes to supply chain management, AI reduces project cycles and costs while improving the end-user experience,” Quirós concludes.

Evaluating the Colón Free Zone as a Logistics Hub

Paraguay seeks access to the Central American market by strategically positioning itself within key regional trade networks. One of the main initiatives under consideration is leveraging Panama’s Colón Free Zone (Zolicol) as a pivotal distribution hub for Paraguayan exports to Central America. This approach aims to optimize trade routes, reduce logistical costs, and ensure more efficient supply chain operations for critical exports such as beef, soybeans, and pharmaceuticals.

Recognizing the importance of this opportunity, Paraguay’s Deputy Minister of Industry, Marco Riquelme, recently visited Zolicol to assess its infrastructure and operational capabilities. His visit formed part of a broader diplomatic and commercial mission led by Paraguayan President Santiago Peña and Minister of Industry and Commerce Javier Giménez. The mission’s primary objective was to explore investment opportunities and reinforce Paraguay’s position as an emerging business hub in South America.

During his visit, Riquelme met with key stakeholders at Zolicol to evaluate its logistics infrastructure and determine how Paraguay could benefit from its well-established trade mechanisms. The Colón Free Zone is the largest free trade zone in the Western Hemisphere. It is a key transshipment hub, facilitating trade between Latin America, North America, Europe, and Asia. By integrating into this network, Paraguay seeks more efficient access to the Central American market, increasing its competitive edge in the region’s agricultural and industrial sectors.

Strengthening Industrial Development and Bilateral Cooperation

A crucial aspect of Riquelme’s discussions with Zolicol representatives revolved around knowledge transfer and industrial collaboration. The Deputy Minister engaged in high-level talks with Zolicol’s management, led by Luisa Napolitano, to explore the possibility of establishing formal cooperation agreements. Given Paraguay’s ongoing efforts to enhance its industrial development through industrial parks and special economic zones, the country sees Panama’s well-established free trade framework as a valuable model to replicate.

Through collaboration with Panama, Paraguay could gain insights into the successful management and operation of free trade zones, which would be instrumental in improving its trade infrastructure. Paraguay is keen on attracting foreign investment in its industrial sector, and the establishment of well-structured free zones could significantly boost the country’s manufacturing and export capacities. Paraguay seeks access to the Central American market by fostering closer ties with Panama while strengthening its internal economic development initiatives.

Additionally, the discussions with Zolicol representatives touched on the potential integration of digital trade facilitation tools to streamline customs procedures and enhance the efficiency of trade flows. This would further solidify Paraguay’s ambitions to become a more competitive player in regional and global markets.

Strategic Market Expansion in Latin America

Beyond just Panama, Paraguayan officials are looking at the broader Latin American trade landscape. During the visit, one of the key points of discussion was the potential use of Zolicol as a launchpad for Paraguayan exports destined for countries such as Costa Rica, Honduras, Peru, and Ecuador. These markets represent significant opportunities for Paraguayan agricultural, pharmaceutical, and industrial goods, and utilizing Zolicol as a re-exportation center could provide a cost-effective and efficient way to access them.

Zolicol officials highlighted that Paraguay’s interest in establishing trade operations within the free zone aligns with the broader vision of strengthening intra-regional commerce. If Paraguay successfully integrates into this trade network, it could significantly improve its export logistics, making its products more competitive in Central America and the Caribbean.

For Paraguayan businesses, having a reliable logistical base in Zolicol could mean shorter delivery times, reduced transportation costs, and better access to global shipping routes. The ability to store and distribute goods from Panama would allow Paraguayan exporters to respond more effectively to market demands in Central America, thereby enhancing trade resilience and economic sustainability.

Diversifying Exports and Attracting Foreign Investment

As Paraguay seeks access to the Central American market, it is simultaneously working to diversify its export destinations and reduce its dependency on traditional trade partners. The country’s economy relies heavily on agricultural exports, and by tapping into new markets, Paraguay can ensure long-term economic growth and stability.

One primary goal of leveraging Zolicol is to attract foreign investment in Paraguay’s agro-industrial and pharmaceutical sectors. Paraguayan producers could forge stronger trade relationships with Central American and Caribbean nations by establishing a distribution presence in Panama, increasing demand for Paraguayan goods. Moreover, foreign investors seeking to capitalize on Paraguay’s growing industrial sector could benefit from improved logistics and market access.

The Paraguayan government has pursued policies to boost industrialization and strengthen global supply chain integration. Paraguay is positioning itself as a key player in Latin American trade through targeted investments in infrastructure, trade facilitation, and industrial policy reforms. Exploring Zolicol as a logistics hub aligns with this broader strategy, allowing Paraguayan businesses to scale up their international operations.

Ultimately, Paraguay seeks access to the Central American market to expand its export footprint and establish itself as a competitive and reliable supplier of high-quality agricultural and pharmaceutical products. By deepening its engagement with regional trade hubs such as Zolicol, Paraguay is laying the foundation for sustainable economic growth and long-term trade success.

These Recommendations Emerged at the Development Bank of Latin America and the Caribbean (CAF) International Forum

Opportunities Are Seen in the Country, but Legal and Physical Security Are Necessary to Move Forward

During the Latin America and the Caribbean 2025 International Economic Forum, organized by CAF, business leaders from various industries and countries gathered to discuss the region’s challenges and seek a path to economic development that can break the cycle of stagnation.

Ecuador’s Investment Challenges

Ecuador stands out as one of the countries facing the most severe economic problems, mainly due to a lack of investment—especially foreign investment. In response, several foreign business leaders shared insights on steps that could be taken to improve the situation and attract new investment to Ecuador.

Political Stability and Strategic Sector Development

Nuria Vilanova, president of the Business Council Alliance for Ibero-America (Ceapi), which brings together 320 business leaders, pointed out that since Ecuador is currently in an election period, the country’s future remains uncertain. The current presidency was only a short-term mandate—to complete the previous administration’s term.

Suppose the new government commits to advancing the development of strategic sectors such as infrastructure, energy, mining, and education. In that case, Vilanova believes that new investment in Ecuador could significantly increase, ushering in a period of economic progress.

The Role of Dollarization and Security Concerns

From a European perspective, Ecuador’s dollarization provides a strong sense of economic stability. However, tackling the country’s security crisis is essential:

“Unfortunately, violence is a scourge spreading across the region and the world. The key is to have governments led by individuals fully committed to fighting it,” Vilanova stated.

She added that if a favorable scenario emerges, companies in sectors such as infrastructure, water, energy, education, IT, and technology could consider new investment in Ecuador as a viable opportunity.

Ceapi’s Engagement with Ecuador’s Government

Vilanova’s company, Atrevia, operates in Ecuador and 14 other countries. As part of Ceapi, she has discussed investment opportunities with the current Ecuadorian government.

“We work for Ibero-America. We deeply believe in our region and in what businesses can contribute. That is why we maintain dialogue with various presidents and governments. We have had the opportunity to organize events with President Daniel Noboa and investors interested in Ecuador, both in Spain and New York. He has been very clear about Ecuador being a land of opportunity despite the severe violence the country is facing,” she added.

The Importance of Local Investor Confidence

Roque Benavides, former president of the National Confederation of Private Business Institutions of Peru, noted that foreign investors are more likely to invest in a country where local investors are confident.

“I believe in the American saying: ‘Put your money where your mouth is.’ If Ecuadorians do not believe in their own country, it won’t be easy to convince foreign investors to come. The way forward is for political leaders to foster confidence in domestic investment, which will, in turn, encourage new investment in Ecuador,” Benavides said.

Mining: A Sector with Potential but Challenges

Regarding sectors with potential in Ecuador, Benavides highlighted mining, an industry in which he has extensive experience.

“In the mining sector—where we have invested in Ecuador in the past and had a negative experience—it is crucial to build a strong mining tradition, which the country has yet to develop. The game’s rules must be clear from operational, environmental, and social standpoints. This is directly tied to a country’s political, legal, and economic stability,” Benavides explained.

He recalled that his mining project in Ecuador was halted in the late 1970s due to conflicts between Ecuador and Peru. However, he takes pride in later contributing to business integration following the peace agreement between the two countries.

“Things in Ecuador have changed significantly. You have an extraordinary country, a true gem. Environmental protection must be a priority,” he added.

Economic Freedom: A Key Factor for Growth

Carlos Díaz-Rosillo, director of the Adam Smith Center for Economic Freedom at Florida International University, stressed that economic freedom is essential for a country’s economic growth.

“This does not mean that there should be no regulations or that the government should have no role in overseeing the economy. Rather, regulation should be sensible and serious—without suffocating economic activity,” he explained.

“Without economic freedom, attracting investors who truly bet on a country is extremely difficult. A country that overregulates its economy in a way that stifles businesses will see those businesses move elsewhere. With the rise of nearshoring, there are many opportunities for Latin America. However, even local businesspeople will relocate if they find better conditions elsewhere. They will go there if they can invest in Peru or Colombia, where they are offered better incentives and conditions. Countries that impose excessive regulations will see domestic and foreign investors hesitate to commit to new investment in Ecuador,” Díaz-Rosillo warned.

Nearshoring and Geopolitical Opportunities

When discussing how Latin American countries can take advantage of shifting global geopolitical conditions, Díaz-Rosillo emphasized that this is a prime opportunity for investments that previously flowed into China to return to Latin America.

However, for governments to capitalize on this shift, they must provide guarantees and favorable conditions for investors—primarily legal and physical security to ensure workers can commute safely. Additionally, macroeconomic and political stability and adequate infrastructure are essential to fostering economic activity.

“Today, Ecuador has many opportunities in the energy sector. It is a country with vast oil reserves and significant energy resources, yet it faces enormous unmet needs,” Díaz-Rosillo pointed out.

Ecuador’s Improving Investment Climate

Ecuador’s Minister of Economy and Finance, Juan Carlos Vega, also participated in the forum. He noted that business leaders’ perception of Ecuador is improving—a sentiment reflected in the country’s declining risk rating, which has dropped below the 1,000-point threshold.

“If we transition to a four-year government term, investor confidence will naturally increase, particularly in energy investment and green transition areas. Ecuador has many opportunities to enter a path of sustained growth and development, creating a positive economic cycle that generates jobs and new opportunities. This will further encourage new investment in Ecuador,” Vega stated.

Emerging Investment Opportunities in Ecuador

Regarding industries that have expressed interest in Ecuador, Vega highlighted:

• Artificial intelligence as an emerging sector
• Energy transition and environmental conservation
• Responsible mining and oil extraction

He emphasized the importance of social and environmental responsibility in these industries.

A Call for National Consensus

However, Vega acknowledged that progress must first be based on fundamental agreements among Ecuadorians.

“Regardless of ideological differences, we must all recognize that it is in our collective best interest for the country to progress. Everyone benefits from job creation and investment opportunities, as these ultimately drive growth across all sectors,” he concluded.

The neighboring country remains Argentina’s leading trading partner, a key relationship with both challenges and opportunities. The economic ties between Brazil and Argentina extend beyond simple trade exchanges; they represent a dynamic and evolving partnership that has played a fundamental role in shaping South America’s economic landscape.

Brazil and Argentina share much more than a football rivalry; from the automotive trade to wheat and services, their economic ties have forged a crucial relationship for both nations. Spanning currency impacts and global challenges, this bond transcends borders and directly affects the economies of both countries. What role does Brazil play in Argentine trade, and what challenges does this historic exchange face?

A Historic and Enduring Trade Relationship

For more than three decades, Brazil has remained Argentina’s leading trading partner, with bilateral trade standing out on a global scale. This deep-rooted connection has historical foundations: Argentina was the first country to recognize Brazil’s independence, and since then, both nations have built a path of cooperation that reached a significant milestone with the creation of Mercosur in 1991. This regional bloc strengthened trade and established policies such as the common external tariff, fostering a more integrated market. The importance of this trading bloc extends beyond the two countries, promoting economic stability and facilitating smoother trade with Paraguay and Uruguay, Mercosur’s other members.

Over the years, Brazil and Argentina have sought to deepen economic ties through trade agreements, collaborative industrial policies, and joint investment ventures. The two economies are highly interdependent, meaning that economic fluctuations in one country have direct and immediate repercussions on the other. This interconnectedness is particularly evident in sectors such as manufacturing and agribusiness, where both countries rely on a steady flow of imports and exports to maintain stability.

Automotive, Wheat, and More

In 2024, Brazil accounted for 17% of Argentina’s exports and 23% of the country’s imports, standing out as a stable partner in bilateral trade. The automotive sector leads exports to the neighboring country, representing 35.6% of bilateral trade in 2024. The industry benefits from the Automotive Agreement between the two nations, which allows for a more balanced and strategic flow of vehicles and auto parts across borders.

Wheat also holds a prominent position, with 53% of Argentina’s wheat exports going to Brazil, solidifying it as a crucial partner for the national agribusiness sector. Products such as dairy, wine, pears, and vegetables also find a key market in Brazil, which remains one of the largest consumers of Argentine agricultural goods. Despite increasing competition from Russia in wheat exports, Argentina maintains a firm foothold due to established trade relationships and logistical advantages.

In addition, Brazil imports significant volumes of Argentine chemical products, plastics, and industrial machinery, further underscoring the multifaceted nature of their trade relationship. The flow of goods between the two nations is essential for industries on both sides, supporting jobs and economic activity in key sectors.

Services and Investments: A Crucial Bridge

The relationship is not limited to tangible goods; Brazil is the second most important destination for Argentine service exports, generating revenues exceeding $1.9 billion in 2023, according to provided data. The services sector includes software development, engineering, business consulting, and tourism, which have steadily grown.

In terms of investment, the neighboring country ranks fourth as a source of foreign direct investment in Argentina, with a stock exceeding $13.5 billion as of the second half of 2024. Brazilian companies have a strong presence in Argentina, with investments spanning energy, banking, retail, and manufacturing industries. Major Brazilian firms, including Petrobras, Itaú Unibanco, and BRF, have established significant operations in Argentina, contributing to job creation and economic growth.

Conversely, Argentine businesses invest mainly in Brazil’s food production, steel, and petrochemicals. The reciprocal nature of investment underscores the interwoven economies of Brazil and Argentina, highlighting the importance of maintaining a cooperative and strategic approach to economic policy.

Competitiveness and Changing Challenges

However, the current economic landscape presents challenges. The depreciation of the Brazilian real in 2024, along with moderating inflation in Brazil, strengthened the country’s price competitiveness, while the appreciation of the Argentine peso made national exports more difficult, adjusting to the observed economic context. These currency fluctuations impact the trade balance, influencing export competitiveness and import costs.

This scenario also affects sectors such as wheat, where competition with Russia has intensified. Although Argentina remains the leading supplier, the increase in Brazilian imports of Russian wheat highlights a shifting market dynamic. This trend underscores the need for Argentina to explore ways to maintain its competitive edge, potentially through enhanced trade agreements, logistical improvements, or strategic pricing adjustments.

Competition in Key Markets

The economic rivalry between the two countries is nothing new. While Argentina leads in the export of soybean meal and oil, Brazil stands out in soybeans, beef, and corn. This competition intensifies in key markets such as the European Union, China, and India, where exchange rate advantages can tip the balance in favor of one country over the other. For example, Brazil’s dominant position in beef exports to China challenges Argentine producers, who must navigate trade barriers and cost differentials to remain competitive.

Cooperation is also crucial in addition to competition. Brazil and Argentina have frequently joined forces in international trade negotiations, advocating for Mercosur’s interests and seeking better market access for South American products. Their ability to balance competition with collaboration will be key to navigating global trade dynamics in the coming years.

Future Prospects for Brazil and Argentina

Brazil and Argentina’s economic relationship will evolve in response to global economic shifts, political changes, and technological advancements. The two nations must work together to address shared challenges, such as improving infrastructure, enhancing trade facilitation, and increasing productivity in key industries.

The continued development of Mercosur will also play a crucial role in shaping future trade dynamics. By strengthening regional integration, Brazil and Argentina can enhance their global competitiveness and create new opportunities for economic growth. Moreover, bilateral efforts to modernize trade policies, streamline customs procedures, and expand digital trade initiatives could further boost economic collaboration.

Despite the challenges, Brazil and Argentina remain fundamentally linked by geography, history, and economic necessity. By fostering a relationship built on mutual benefit, both nations can continue to thrive and contribute to the broader prosperity of South America.