Reindustrialization of Latin America

After major depressions comes strong economic growth. After the pandemic, it seems that in 2022 we will have global and regional growth above average. At the beginning of the pandemic, car production lines were turned off, along with production of processing iron, aluminum, copper, plastics and packaging. But the 2020 crisis did not happen as generally expected: demand rose sharply in various sectors. Industrial products, for example, received much higher-than-expected orders from the consumer, pharmaceutical, civil construction and agribusiness industries. This imbalance in the production chains led the global industry to manage a crisis that did not come from the sales side, but from the supply side. Prices rose and now reducing the shortage of productive elements has become an urgent priority. Initially it was thought that the shortage would be fleeting, and that with the normalization after the pandemic, everything would go back to normal. But in most global companies, this is no longer the forecast. This imbalance was caused by an unusual reason: suppliers concentrated in a few countries, early withdrawal from production, and a lack of supply options. That is why the ones who adapted best this time were neither the biggest nor the fastest.

The attention of strategic investors suddenly turned to Latin America. Despite all the news and the reputation of the region, suddenly the results are not so bad, and the indicators of productivity and rapid adaptability show its resilience. Stock exchanges, IPOs, startups, and reported mergers and acquisitions show this trend. Countries like Peru, Chile, Paraguay and Uruguay despite the insecurity that the news may transmit. Argentina appears well referenced in agribusiness and energy. Brazil and Mexico, two engines in the region, are receiving several of these investments. Large companies will anchor regional development, but in terms of innovation, employability and sustainability, medium-sized companies will be the ones that will make the difference. In this aspect the policies of industrialization and recovery of growth come into play. During the last 30 years, Latin American nations deindustrialized the continent early. In the name of globalization, currency stability, and modernity, the central banks abandoned the floating of their currencies to face inflation, and established interest rate policies much higher than international ones. In addition, on account of these actions, they postponed relevant reforms. Sustainability is here to stay and is part of regional vocations, being an indisputable preference of global consumers. Regional integration has enormous potential for synergy in logistics, energy, services and sustainability. Employability, together with quality of life, is in the direct promotion of small and medium-sized enterprises, where new agendas are expected, such as corporativism (not only in products, but mainly in services) and in the stimulation of innovation and entrepreneurship. Reindustrialization will have new characteristics: greater innovation, digitization and insertion in the production chains, including small and medium-sized companies in the best sustainability practices.

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