EU-LAC economic diplomacy: relaunching relations at the highest level
We recently published a post on the strategic path that the Spanish presidency has set out for Europe´s near future. It refers to the EU’s rapprochement with Latin America and the Caribbean through the conclusion of new alliances.
2023 has been marked by the relaunch of Euro-Latin American relations at the highest level – reflected in the holding of the III EU-CELAC Summit in Brussels on 17 and 18 July, and the Spanish presidency of the Council of the EU in the second half of the year, which has greatly promoted the strengthening of this political, economic and social meeting space between the two regions.
Against this background, Telefónica and the Fundación Carolina have focused their annual research programme on the economic dimension and future potential of the two European strategies launched towards Latin America – the Global Gateway and the EU-LAC Digital Alliance.
“Digitales, verdes y aliados: impacto económico, social y medioambiental de la iniciativa Global Gateway y la Alianza Digital UE-América Latina y el Caribe” is a research study carried out by a team of independent, accredited economists, which examines the potential of the renewed bi-regional economic and digital agenda.
Latin America and the Caribbean facing new development challenges
As the report elaborates, these two initiatives represent a magnificent opportunity for the Latin American region to overcome its development challenges – avoiding the institutional, productivity, social and environmental traps that all countries face.
With objectives aimed at: i) foster innovation and productive efficiency; ii) promoting the formalisation of the Latin American economy and labour market; iii) strengthening public institutions and productive efficiency; ii) fostering the formalisation of the Latin American economy and labour market; iii) strengthening public institutions and the consolidation of stable and predictable regulatory frameworks; and iv) moving towards better infrastructure, sustainable business, production and consumption models for future generations, the researchers develop an economic model based on how the Global Gateway initiative, together with a more ambitious bi-regional cooperation and investment agenda, can trigger remarkable multidimensional development, provided that financial resources are allocated with agility and the interaction between digital, social and environmental policies is strengthened in an appropriate, robust and modern regulatory and legal context.
Europe, a digital ally and reference. Enhancing and modernising EU-LAC cooperation and partnership
In this sense, these initiatives are linked to the challenges of the “triple transition”, which both regions must undertake to promote sustainable development, in line with the 2030 Agenda: green, digital and socio-economic. A transformation of multiple and interrelated dimensions (energy, education, finance and the environment) that must lead to more prosperous, freer, more equal, more inclusive, more supportive and, above all, fairer societies in order to renew the basic social contract on which a shared idea of social democracy is based.
All countries in the world are facing these transitions, but they particularly urge – for reasons of geopolitical convergence and affinity of values – Europe and Latin America, because their common agenda could articulate a reference model in democratic, legal, trade and climate terms.
Key areas of a green, social and sustainable EU-LAC digital partnership
With this logic, the authors argue that the bi-regional Digital Alliance proposes to favour the development of a digitalisation process in Latin America that is not only highly competitive, but also attentive to its social and environmental impact, with an ambition that goes beyond the pretension of digital gaps (although this is essential). In this way, it examines the scope of digital transformation in “frontier areas” – cybersecurity, Industry 4.0, artificial intelligence y green-tech-taking into account the investment capacity of leading companies in the technology and telecommunications sectors, but also in all sectors that are already digitalised, such as finance (banking), infrastructure, health and education.
Empirical analysis of the economic and social impact of the Global Gateway Initiative and the Digital Alliance
The study develops three scenarios of the economic and social impact of the bi-regional cooperation and investment agenda. The most cautious (“Europe Only”) is limited to projecting the impact of the investment from the €45 billion Team Europe investment already announced by European institutions, with limited impact on the region’s economic growth. However, the most optimistic scenario (“More Digital Alliance“) estimates that Latin America and the Caribbean could grow by almost an additional percentage point each year between 2024 and 2027, thanks to increased physical and technological capital, human capital upgrading, a boost in private investment, and improved policy and regulatory frameworks, if the initial Team Europe investment totals €180 billion between various sources, public and private, to drive multi-sectoral projects with greater scale and scope.
Global Gateway can thus trigger advances in the social sphere – accompanying digital empowerment actions for the future employment of citizens – as well as in the preservation of biodiversity, promoting smart cities and processes linked to electromobility, green hydrogen and clean energy supply chains.
In short, rather than setting out a prescriptive agenda, the analysis focuses on the consideration of intensifying Euro-Latin America cooperation and is a good starting point for a rigorous and informed debate on the scope of bi-regional cooperation, and the pressing need for investment in Latin America. Furthermore, it encourages dialogue between governmental actors, the private sector and civil society on inclusive and sustainable digitalisation, in an exercise of conviction that public-private partnerships can make a decisive contribution to Latin America’s development challenges.
In a future post, we will elaborate on the digital transformation as an axis towards a more productive, inclusive and sustainable Latin America and the Caribbean, as well as the economic impact scenarios of the new bi-regional cooperation and investment agenda proposed by the researchers.
