Beyond Profits: The Strategic and Social Benefits of Near Shoring with Latin America

Nearshoring with Latin America offers a strategic opportunity for the U.S. to enhance its economic competitiveness, secure supply chains, and promote regional security. By fostering economic growth, reducing migration pressures, undermining organized crime, and strengthening political alliances, nearshoring contributes to a safer, more stable, and prosperous hemisphere. It creates a win-win scenario where the U.S., Latin America, and the wider region benefit economically and geopolitically:

1. Sustainable Economic Benefits for the U.S. and Latin America

Cost Efficiency and Supply Chain Sustainability and Resilience

• Proximity and reduced shipping costs: Nearshoring brings production closer to the U.S., which reduces transportation time and costs compared to far-flung locations like China or Southeast Asia. This is especially critical for industries like manufacturing, textiles, and electronics.

• Supply chain diversification and risk reduction: The COVID-19 pandemic highlighted vulnerabilities in global supply chains. Nearshoring to Latin America reduces dependence on Asia and allows for quicker responses to disruptions, improving supply chain resilience. Geographic proximity also facilitates more efficient coordination and communication between companies.

Strengthening Sustainable Regional Economies

• Job creation and investment in Latin America: Nearshoring encourages U.S. companies to invest in infrastructure, technology, and workforce development in Latin American countries. This helps boost local economies by creating jobs and reducing poverty, which in turn reduces migration pressures on the U.S. and contributes to regional stability.

• Trade growth: By moving production closer to the U.S., Latin American countries increase their exports to the U.S., fostering trade relationships that benefit both regions. The U.S. can take advantage of trade agreements like the United States-Mexico-Canada Agreement (USMCA) and other bilateral deals to encourage nearshoring.

Economic Competitiveness for the U.S.

• Labor cost advantages: Labor costs in many Latin American countries are lower than in the U.S., which can make nearshoring an attractive option for American businesses. Countries like Mexico, Colombia, and Brazil offer competitive labor markets for manufacturing, helping U.S. companies maintain cost efficiency.

• Technological growth and innovation: Nearshoring can spur collaboration between U.S. and Latin American firms in high-tech sectors like software development, electronics, and artificial intelligence. This creates opportunities for innovation and the growth of new industries across the Americas.

2. Security Benefits for the Entire Region

Enhanced Economic Stability and Social Development

• Reducing poverty and inequality: By creating jobs and boosting local economies in Latin American countries, nearshoring helps reduce poverty and social inequality. When people have economic opportunities at home, they are less likely to engage in illicit activities such as drug trafficking or migrate irregularly to the U.S. in search of better prospects.

• Social stability: Economic growth and job creation reduce the conditions that lead to social unrest, crime, and corruption. By stabilizing the economies of Latin American countries through nearshoring, the U.S. indirectly contributes to regional social stability and security.

Addressing Migration Pressures

• Reducing migration drivers: Economic instability, lack of jobs, and violence are key drivers of migration from Latin America to the U.S. Nearshoring helps address these root causes by promoting economic development in the region, reducing the need for people to migrate northward. This creates a more secure and stable region overall.

• Collaborative migration management: Nearshoring could help strengthen partnerships between the U.S. and Latin American countries, allowing for better coordination on migration policies and border security. By addressing economic disparities, these countries can work together to manage migration flows more effectively.

Countering Organized Crime and Corruption

• Undermining organized crime: Economic development reduces the influence of criminal organizations that often thrive in impoverished areas with few job opportunities. By bringing formal employment and legal economic activity through nearshoring, Latin American governments can better combat organized crime, including drug trafficking and human trafficking.

• Improving governance and rule of law: Nearshoring often requires countries to improve their legal and regulatory frameworks to attract foreign investment. This can lead to better governance, stronger rule of law, and more transparent institutions, all of which contribute to regional security.

Strengthening Political Alliances and Regional Cooperation

• Geopolitical stability: By fostering economic interdependence, nearshoring strengthens political ties between the U.S. and Latin America. This enhances regional cooperation on security, counterterrorism, anti-drug initiatives, and addressing environmental challenges like climate change.

• Reducing foreign influence: By increasing trade and investment with Latin America, the U.S. reduces the economic and political influence of foreign powers like China or Russia in the region. This promotes a stable and democratic political landscape that aligns more closely with U.S. interests.

3. Environmental and Climate Security

• Sustainable development: Nearshoring can be tied to initiatives that promote sustainable development in Latin America. By investing in green technologies and renewable energy in manufacturing processes, the U.S. and Latin America can work together to combat climate change, which poses long-term security threats to the region, such as natural disasters, food insecurity, and displacement.

• Reduced carbon footprint: Nearshoring lowers the environmental impact of long-distance shipping, which reduces carbon emissions and helps the U.S. and Latin America meet climate goals.

Corporations and businesses play a vital role in shaping the economic future and ensuring the safety of the entire American continent. Now more than ever, it is imperative for them to embrace nearshoring as a strategy that not only strengthens their own operations but also contributes to the geopolitical stability of both the United States and Latin America. By shifting production closer to home, businesses can reduce supply chain vulnerabilities, promote sustainable economic growth, and support the development of strong, stable economies in our neighboring countries.

The opportunity is clear: through responsible nearshoring, we can create a more secure and prosperous future for the entire region, while addressing the shared challenges we face. The time to act is now.