LAC Region— Adopting a Single | Regional Market Economy like the EU
While unable to attend the UNFCCC Climate Week in Panama City, did get to tune in from the incredible high level take aways of the dynamic, strategic team of the European Union’s, Climate-KIC.
Four Regional Climate Weeks were held by the United Nations to accelerate and advance the green transition. Latin America and the Caribbean’s was held in Panama City this past October.
LACCW 2023 was organized into four systems-based tracks, each focusing on specific themes:
- Energy systems and industry | Cities, urban and rural settlements | infrastructure and transport | Land, ocean, food and water.
There were many interesting take-aways shared but a few in particular stuck out to me:
- Indigenous communities and indigenous wisdom can inform and enable climate solutions (see original post by Climate-KIC, Project Manager, Fabio Samuel Diaz Caballero)
- Multilateral development banks and public sector funds like IDB, CAF, and World Bank are leveraging the capital towards making the climate transition and transformation possible
- A call for more intentional collaborations that are action driven with “implementation, experiments, results, learnings, replication/scaling of initiatives” (see original post/takeaways from Climate-KIC, Climate Innovation Director, Christian Daube)
The one very concerning piece which seemed to be observed by Climate-KIC across the board has been…
the lack of a common regional agenda and lack of private sector cooperation in climate.
Why is this problematic?
Clean tech, circular economy solutions, urban tech, and blue tech will never be able to achieve scale, impact, or even bring in foreign direct investment, without regional cooperation.
If investors cannot count on regional impact or scale, they will not be interested in the LAC market. If no coordinated efforts are being created to implement coordinated regionalism, clean energy markets will be fragmented. Regulation will have friction. Markets will be small. Transformation will be stalled. Additionally, complex social and political challenges may create further polarity creating risk.
This may reduce venture capital, foreign direct investment, trade, talent pool, & entrepreneurship.
Solutions Ahead
With an entrepreneurial, system thinking, solutions oriented cap along with great empathy for climate change and this important transformation, one thing came to mind — The European Union’s biggest milestone.
The European Union’s Single Market Economy
In considering solutions, I recalled the European Union’s single market economy. Among the most celebrated EU achievements of all time, this regional market has been tremendous in removing obstacles in trade goods and services across EU Member States. Creating it to be nearly frictionless. It has made it easier for companies of all sizes to raise capital, encourage workers to work in EU Countries, boost cooperation, and guarantee a “free movement of people.” Which has also benefited yields for goods and services.
It has helped build strong regional relationships, allies, and shared incentives for cooperating meaningfully. Across thematic issues, it can be argued there’s distinctions of progress which are worth examining. Yet over all as a bloc for its leading function, the regional market operates with great natural force.
Latin American Attempts at the Economic Union
There have been attempts in economic unions and trade blocs in Latin America ranging from the Pacific Alliance (Chile, Colombia, Mexico, and Peru), and Mercosur (Southern Common Market — Argentina, Brazil, Paraguay, and Uruguay) (Council on Foreign Relations, 2022). Yet they all continue to not hold the same impact or opportunities the EU Single Market Economy could have in Latin America.
Some of the barriers include:
- differences in economic development, industrial comptenecies and economic models
- differences in political institutions and governance
- legal and regulatory barriers
- conflicting trade agreements with different priorities and interests of potential member states
- geopolitical tensions
- cultural and language diversity
- lack of common currencies
- economic crisis impacting Latin American countries differently
Source: Why Latin America Lost at Globalization and how it can win now — https://www.cfr.org/article/why-latin-america-lost-globalization-and-how-it-can-win-now
Optimism for coordinated Regionalism in Latin America & Caribbean —
Creating boundless regional cooperation, frictionless borders for trade will not be easy. Yet, there is much that can be learned from the European Union. Lot of consensus building has enabled it to unfold as the strongest and the model economic union. Thus, the presence and support of the EU in Latin America should be considered unique, momentous, and a great opportunity to reflect on regional cooperation/effectiveness.
The European Union has been incredibly committed to Latin America’s green transition and transformation, that with time this better globalization model can provide the regional readiness in Latam. It has the capacity to restructure trade, create new buy-in, and most importantly help mitigate the impacts of climate change among many other social-economic pressing challenges. Latin America and the Caribbean has the capacity be regionally ready for regional excellence. May time, political will, experimentation and full regional trade blocs propel the region’s regional readiness.
