Sign up. Publications Pages Publications Pages. Search my Subject Specializations: Select Users without a subscription are not able to see the full content. Can Latin American Firms Compete? Robert Grosse and Luiz F. More In many discussions of globalization and growth, attention focuses on Asia, notably China, South Korea, and India. Authors Affiliations are at time of print publication. Print Save Cite Email Share.
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Chinese state firms are the largest financiers and builders of dams in the world, having raised over in 74 countries. These dams, and others financed by regional lenders, have displaced hundreds of thousands and have caused untold environmental harm. Another result of all this construction is that the region has become overly reliant on hydropower. In fact, data from the International Hydropower Association show that nearly two-thirds of South American electricity is generated via hydropower projects.
How Important Are Ties Between India & Latin America? - The Dialogue
Large hydropower projects are also consistently poor investments. University of Oxford economists have demonstrated that actual costs of hydropower construction average 96 percent over what initial models predicted. Yet Western lenders have long supported hydropower development in Latin America. Its most recent gambit, the Ituango Dam commonly known as Hidroituango , was an unmitigated disaster. The dam ultimately burst during construction, displacing 25, people and threatening many more downstream.
What happened to Latin America's 'missing middle'
Hidroituango highlights a key tension between the desire for rapid development and time-consuming social and environmental assessments. Rather than trying to compete with China by forgoing such evaluations themselves, though, the United States and other lenders might more usefully focus on helping make environmental and social safeguards less burdensome.
They could do so by footing the bill for meeting the community consultation requirements that might come with a World Bank project, for example, or by funding the environmental assessments that the IDB might want. Such aid could make Western-driven projects nimbler and also better investments for Latin America in the long run. And in theory, because China typically defers to local regulations where it does business, such a system could even help ensure the safety of Chinese projects by helping Latin American nations enforce their own rules.
Beyond footing the bill for impact assessments, the West could also do a lot of good by investing in higher education and public sector and professional development in Latin America. Urban planning education across the region is severely underfunded. Upgrades to planning programs will help Latin American officials and researchers endogenously craft better infrastructure development policies down the line. The reality is that there is still a lot of demand on the part of national governments for additional construction.
It would be a mistake, however, for the United States to approach this reality antagonistically. Instead of admonishing China for its growing role in the region, the United States needs to see the opportunities present for strengthening the soft side of infrastructure development and realize that pursuing them could reap vast goodwill, solidarity, and cooperation.
At the moment, Latin America lacks the safeguards and planning capacities to ensure that megaprojects have the best possible fiscal, social, and environmental outcomes. The United States, by playing a supporting role in development, could help to lay the groundwork for increased economic connectivity, regional political integration, an approach to growth mindful of and respectful to indigenous communities and the environment, and substantial reductions in poverty and inequality across the region. Trending Now Sponsored Links by Taboola.
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