On April 26, 2022, Rep. Mark Green (R-TN-7) introduced the Western Hemisphere Nearshoring Act (H.R. 7579), a bipartisan bill that aims to accelerate economic development in Latin America through nearshoring. Using nearshoring to help Latin America and the Caribbean will also safeguard the interests of the U.S. Moving supply chains to Latin America, from China, will give many countries more sustainability. Decreasing dependency on China by establishing partnerships in the Western Hemisphere will bring a wide range of benefits, including poverty reduction in the region. By cosponsoring and advocating for the bill, U.S. legislators in both houses can support both the U.S. economy and the reduction of poverty in Latin America and the Caribbean.
The Benefits of Nearshoring
- Promotes economic stability and growth in Latin America and the Caribbean.
- Reduces migration to other countries from Latin America and the Caribbean.
- Reduces overdependence on China as a supply chain.
- Greater “peace, security and democracy” in the region.
By importing goods from nearby countries instead of China, U.S. companies have a cheaper choice for international sourcing. This would help create jobs and rebuild the struggling economy in Latin America and the Caribbean, considering that the number of individuals enduring extreme poverty in the region increased to 86 million in 2021. Nearshoring would not only address the economic downturn but would also address job scarcity post-pandemic.
This nearshoring opportunity will benefit the region’s economy and everyday workers. Prospective deals could uplift multiple countries in the region and promote stability and growth. By helping its neighbors reverse poverty trends, the U.S. can also prevent dangerous journeys of migration by providing a solution in the home countries of potential migrants.
Poverty from the Source
U.S. companies would provide significant economic opportunities by using nearshoring to help Latin America and the Caribbean with benefits reaching rural and urban areas. One can understand poverty in Latin America and the Caribbean better by viewing the lack of job opportunities — the region has an unemployment rate of about 10% in 2021.
Whether it is rural people moving to urban cities where job opportunities are scarce or a lack of opportunity in rural areas themselves, private sector companies making deals in Latin America and the Caribbean would tackle the issue from its source. In the 2000 publication “Options for rural poverty reduction in Latin America and the Caribbean,” Rubén G. Echeverría from the Sustainable Development Department of the Inter-American Development Bank (IDB) confirmed that economic growth and GDP increases will help reduce extreme poverty in Latin America and the Caribbean.
The IDB has outlined and supported private sector companies that have provided better wages in rural areas. Urban-based centers for economic development and nearshoring would provide the city with jobs for those from rural areas or those with a lack of higher education.
Long-term Capability
In October 2021, the U.S. Chamber’s Association of American Chambers of Commerce in Latin America and the Caribbean (AACCLA) held the 2021 Virtual Forecast on Latin America and the Caribbean Conference. Discussions included considering nearshoring to help Latin America and the Caribbean’s economic recovery from the pandemic.
During the conference, “panelists shared insights on how to create a resilient and sustainable global supply chain, the opportunities to revitalize certain nations and the role foreign policy plays in supporting the Latin American and Caribbean economies.”
The Panamanian government sees nearshoring as a strong economic development solution for Panama as “60% of the world’s commerce goes through the Panama Canal.” Furthermore, “more than 170 multinational companies” have bases in Panama, making Panama the ideal nation for nearshoring.
By providing proof that nearshoring can have positive effects on Latin America and the Caribbean, U.S. lawmakers have a great platform to support the U.S. economy while helping Latin America by providing economic opportunity and a way out of poverty.
– Karen Krosky
Photo: Flickr