José Manuel García-Margallo, Spanish Foreign Minister, on growing opportunities in Latin American markets

Latin America is a region on the rise. Politically stable, economically prosperous and with a strong vision, countries like Chile, Mexico, Colombia and Peru are growing at enviable rates, setting themselves apart from the regions’ previous era, which came to be called “the lost decade”. While the continent keeps testing integration formulas, including the Community of Latin American and Caribbean States (Comunidad de Estados Latinoamericanos y Caribeños, CELAC), Union of South American Nations (Unión de Naciones Suramericanas, UNASUR) and, more recently, the Pacific Alliance – which comes to reaffirm its voice on the world stage – it faces major challenges, including poverty, social inequality, safety and environmental issues. Nonetheless, the region’s strength, dynamism and increased integration into global trade make it one of the most promising growth areas in the world.

In the 1990s, the region’s potential led Spanish companies to firmly commit to Latin American markets. For us, it was a priority destination, even ahead of Europe and the US. Spain became the second-largest investor in the region with an investment of more than €150bn. Banking, energy and telecommunications accounted for almost 70% of total investments by Spanish companies. This commitment paved the way for investment in other industries and services and encouraged the arrival of foreign capital, as well as connected Latin America with global trade, thus stimulating a new corporate culture. Since that time, Spanish investments have made a very big contribution to the region's economic and social development.

Although the recent financial crisis decreased the flows of Spanish investment abroad, our commitment to Latin America is strong and oriented to the future. Its economic performance calls for the continuation of our businesses in the region, and even for an increase in our activity. Brazil, Mexico, Argentina and Chile have traditionally been the preferred destinations of our investments, although we are now also witnessing significant growth in Peru and Colombia. Another factor to consider is regional integration. A company installed in one of these countries will have access to an integrated market of the many countries with which they have signed free trade agreements. By contrast, political instability, legal uncertainty, interventionism and protectionism are perceived as the main risk factors that could discourage investment – as has recently happened in certain countries in the region.

Our challenge is to ensure progress and for this to take place it is a prerequisite to maintain favourable policies, adequate and predictable regulatory frameworks, and reliable dispute resolution systems. The development of so-called multi-Latin companies suggests that, increasingly, this is a round-trip. We find numerous competitive firms that are operating with cutting-edge technology. Twenty-three of these companies are among the 100 largest firms in emerging markets. Spain is the gateway to Europe and, indeed, some of these companies are already taking advantage of our country as a platform to enter the EU market.

We perceive the need for Latin American economies to foster the development of their small and medium-sized enterprises (SMEs), as they create 90% of all business and 70% of employment. This is a huge challenge, as SMEs are suffering from the economic crisis. That is the reason why the Cadiz Summit largely centred on this issue. At the summit, we adopted the Iberian-American Letter for micro, small and medium enterprises, which reflects the commitment of all governments in the region to promote the competitiveness and quality of SMEs, and to facilitate their establishment.

Another key element is human capital. The contribution of the Latin American people who came to Spain in search of better opportunities was decisive in developing aspects of our social and economic life. Today, Latin America is going through a period of expansion. Latin educational systems will take time to train the number of professionals they need to cope with the current growth rates. Spanish professionals and training centres can help overcome this gap in the years ahead.