Investing in the economic development of Latin America is crucial for the United States to maintain its status as a global leader. To preserve its current position as a global hegemon, the United States must invest in the economic development of Latin American countries. Countries like Russia and China have been taking independent actions that challenge the United States’ regional hegemony. By supporting Latin America’s economic development, the U.S. can enhance security, stability, and prosperity in the region.

Economic growth is essential to sustainable, long-term development, creating jobs, and improving living standards. It’s essential for the overall well-being of a nation. Economic development improves the economic, political, and social well-being of its people. Although these realms are inextricably entwined and interrelated, a fundamental assumption is that economic development represents a necessary condition for the holistic development of a nation. However, many Latin American countries face constraints such as fiscal deficits, inadequate infrastructure, and weak economic institutions that hinder their growth.

Over the past 30 years, economic growth in Latin America has been volatile and inconsistent, as would be expected of open economies that rely heavily on commodity exports. Most countries throughout Latin America have become commodity exporters. When commodity prices fall, economies based on agriculture and mining see a sharp reduction in revenue from exports. This, in turn, reduces state income and often leads to curtailed funding for public expenditures, including decreased investments in infrastructure and education.

Countries without developed industrial and service sectors are highly susceptible to falling commodity prices. Consequently, those countries with less economic diversification tend to encounter steeper barriers and constraints to development. It is important to highlight that climate change, which yields extreme weather phenomena ranging from flash flooding to drought-like conditions, also impairs the development of agriculturally based countries. A combination of factors such as fiscal deficits, deficient infrastructure, weak economic institutions, single-sector-based economies, and climate change converge and jointly lead to heightened economic risks. These factors potentially lead countries to experience acute poverty and increased inequality, which often results in mass migration.

The United States holds varying levels of economic ties with Latin American nations and has bilateral trade agreements with several Latin American countries. Nonetheless, the U.S. must consider strengthening economic cooperation and investment in the region while addressing the challenges that stem from inadequate regional infrastructure and limited resources, which indirectly affect U.S. interests.

Why is investing in Latin America’s economic development important to U.S. interests?

From a realist perspective, states must pursue power to protect their interests. Economic power and economic influence can be gained from investing in the development of Latin America via economic agreements and arrangements that are favorable to U.S. interests. The United States ought to maintain its position of power in the Western Hemisphere. Investing in the economic development of Latin America would help the U.S. reaffirm itself as a regional hegemon. As such, the U.S. must not allow other nations to gain further influence in the region.

For instance, the increased economically and strategically driven actions of Russia to approach countries such as Brazil, Venezuela, and Argentina can be considered a challenge to the United States’ hegemony in Latin America. Russia, led by Vladimir Putin, has become increasingly aggressive in its efforts to intervene in Latin America’s affairs. Consequently, investing in the development of Latin America could help the U.S. protect its hegemony from actions taken by power-seeking countries such as Russia.

A more benevolent view suggests that by investing in the economic development of Latin America, the U.S. will help improve the economic prosperity of its neighbors. The U.S. stands to gain from engaging in greater economic cooperation. It can help support development projects and investments that strengthen macroeconomic performance and build sustainable, diversified economies throughout the region.

Helping to shape economic development in the Latin American region would be a win-win for the U.S. and its regional partners. This would help mitigate economic crises, reduce economic instability, and help strengthen the economic well-being of other countries. By investing in economic development, the U.S. could also help mitigate some of the spillover effects of climate change, which represent a series of security, environmental, and socioeconomic challenges for the entire region.

What does the U.S. stand to gain from such investments?

International relations scholar Michael Doyle argues that states follow ‘Realpolitik’: hence, they are self-interested and estimate relative balances of power. In this vein, Russia seeks to increase its power, while the U.S. does not wish to lose power or influence in the Latin American region. Russia and the U.S. are power-seekers and correspondingly view each other as threats and obstructions to reaching their interests. Another influential international relations scholar, John Mearsheimer, tells us that the principal goal of a great power is to become a regional hegemon and to meanwhile prevent other great powers from dominating their regions.

Accordingly, Russia, and to an extent China, have sought to influence Latin America via bilateral trade agreements, foreign direct investment, and by providing development loans to Latin American countries such as Argentina and Brazil. Thus, the U.S. must be careful to prevent power-seeking countries from increasing their respective economic ties with Latin American countries, as this diminishes the influence and power of the U.S. with its neighbors. By investing in the development of Latin America, the U.S. would re-establish itself as the region’s hegemon and principal economic player. Through investments and greater economic cooperation, the U.S. could gain more economic influence.

Because states co-exist in an economically interdependent system where an event or shock will produce ripple effects on other countries in the system, states are highly incentivized to jointly mitigate economic challenges including the prospects of financial instability, economic recessions, and rising inflation, which ultimately produce other socio-economic issues. By investing in Latin America, the U.S. stands to gain clout and leverage over other regional stakeholders. If the U.S. invests in Latin America’s economic development, it will move closer to the interests held by individuals and private groups in the region who are principally concerned with economic development and who ultimately are the drivers of state behavior and policy action.

The U.S. should invest in the economic development of Latin America as it is vital to U.S. interests and the well-being of citizens throughout the region. Although it is recognized that there will be higher costs associated with supporting economic development, the benefits of investing in such projects and initiatives outweigh the costs. By investing in Latin America, the U.S. would gain greater regional economic power, be able to improve economic and financial stability throughout the region, help build sustainable economies, mitigate the spillover effects of climate change, and promote democratic values and principles to other countries in the region while mitigating economic risks.