Rapid Growth in Trade Relations
Trade between South Korea and Latin America and the Caribbean has grown by 400% since 2000. The IDB Group points out that Asian countries and the region have the opportunity to deepen their economic and trade relations by increasing the resilience of value chains. Trade between South Korea and Latin America shows excellent dynamism, with record goods trade, high levels of Korean investment in the region, and a promising potential for further growth in the future, according to a report from the Inter-American Development Bank (IDB).
Critical Investments in Central America
South Korea’s significant investments in Central America, particularly in sectors such as infrastructure, manufacturing, and energy, have played a crucial role in bolstering the economies of these nations. In Costa Rica, Korean companies have been instrumental in developing renewable energy projects, including solar and wind power plants, contributing to the country’s goal of achieving carbon neutrality. In El Salvador, South Korean firms have invested in constructing major infrastructure projects, such as highways and ports, which are vital for enhancing regional trade connectivity. However, in Guatemala, South Korean investments have strategically focused on the textile and apparel industry, leveraging the country’s strategic location and favorable trade agreements to produce goods for export to the United States and other markets. These investments strengthen trade ties between the region and South Korea and bring about tangible economic benefits, fostering greater economic integration and cooperation.
Remarkable Increase in Goods Trade
According to the report, the scale of goods trade has seen a remarkable increase, from US$10 billion in 2000 to a significant US$56.8 billion in 2023, representing a more than 400% increase. This substantial growth is a testament to the robust trade relations between South Korea and Latin America, and the Caribbean. It also serves as a clear sign of the potential for further economic cooperation. Foreign investment from Korea in the region also exceeded US$3 billion in 2023, further underlining the strength of these relations and the promising future for economic collaboration.
Bilateral Trade in Services and Agri-Food Exports
According to the latest available data, other key findings from the publication include that bilateral service trade exceeded US$11 billion in 2021. Agri-food exports from the region to South Korea, led by Brazil, have grown at an annual growth rate of 20% over the past four years. Brazil’s agri-food exports to South Korea have been diverse and robust, reflecting the country’s solid agricultural capabilities. Essential export items include soybeans, a significant protein source widely used in South Korea for animal feed and food products. Brazil also exports significant poultry and beef to South Korea, taking advantage of its position as one of the world’s largest meat producers. These exports cater to the high demand for quality protein in the South Korean market. Additionally, Brazil has been exporting coffee, a staple in South Korean cafes and households, and sugar, used in various food and beverage industries. The strong performance of these agri-food exports highlights Brazil’s role as a crucial supplier of essential food commodities to South Korea, contributing to the growing trade relationship between the two nations.
The Role of the Korea-LAC Forum
Trade between South Korea and Brazil, home to 50,000 Koreans, reached US$10 billion in 2023. The global economy’s challenges require a cooperation agenda between Latin America and Korea that prioritizes policies and regulations. “The Korea-LAC Forum has been an indispensable vehicle over the years for integrating Korea with Latin America and the Caribbean and expanding bilateral trade and investment,” said Ilan Goldfajn, President of the Inter-American Development Bank. “To facilitate and deepen these ties, today we are pleased to present to our Korean partners BID for the Americas, a program that will serve as a bridge for Korean companies to access business opportunities in the region. Based on a cutting-edge platform, our program seeks to connect companies with procurement, trade, investment, and co-financing opportunities,” added Goldfajn.
Focus on Sustainable Development and Innovation
Attendees had the opportunity to delve into various areas of development and collaboration, including sustainable agriculture to address food insecurity; public-private partnerships to promote foreign investment; agile and intelligent supply chains to increase efficiency and competitiveness in global markets; and technology, blockchain, and the digital economy to foster innovation and economic development.
A Promising Future for Economic Partnership
The remarkable growth in trade between South Korea and Latin America, and the Caribbean over the past two decades underscores the deepening economic ties and mutual benefits realized by both regions. As the Inter-American Development Bank highlighted, this relationship has flourished through significant investments in critical sectors such as infrastructure, energy, and manufacturing, driving economic development and fostering closer collaboration. With bilateral goods trade reaching unprecedented levels and investments exceeding $3 billion in 2023, the foundation for future growth is solid. The diverse agri-food exports from Brazil and the robust infrastructure projects in Central America are prime examples of the positive impact of this trade. The Korea-LAC Forum and initiatives like BID for the Americas will strengthen these ties by providing new business opportunities to engage and thrive in a rapidly evolving global economy. By prioritizing resilience in value chains, promoting sustainable development, and embracing digital transformation, both regions can overcome global challenges and capitalize on the immense potential for continued economic partnership. The cooperation between South Korea, Latin America, and the Caribbean enhances trade relations and fosters a more interconnected and prosperous future for all involved.