Latin America's Balancing Act

Dear all,

We welcome you to the Greater Caribbean Monitor (GCaM).

In this issue, you will find:

• Productivity Gains in Latin America

• What the World Can Learn From Panama on Immigration

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The GCaM Team

Productivity is the lifeblood of Latin America’s future. The region’s GDP growth has averaged just 1.5% since 2010—well behind Asia’s 5%—and improving productivity could help close that gap while lifting wages.

• The best example is Costa Rica, which has seen the region’s largest productivity boost over the past decade—its per capita GDP has more than doubled, surpassing $17,000.

• Almost 60% of the region’s exports are tied to volatile commodities; boosting productivity in sectors like manufacturing and services could help diversify economies and make them more globally competitive.

• Productivity could also help Latin America escape the middle-income trap, where output per worker remains stuck at just 20% of U.S. levels, according to the OECD.

Who’s Winning—and Why. Some countries are pulling ahead with smart strategies.

• Costa Rica invests 7% of its GDP in education, creating a skilled workforce that attracts tech giants like Intel.

• The Dominican Republic’s tourism boom, accounting for 17% of GDP, thrives on vocational training and infrastructure like better roads and ports, while El Salvador boosts small businesses with expanded broadband access.

• Chile’s low corruption, ranking 27th on Transparency International’s index, and stable policies attract investment, lifting its mining and service sectors.

Who’s Losing—and Why. Others are falling behind due to systemic failures.

• Brazil’s productivity growth has stagnated, hindered by an underfunded education system—only 56% of students finish secondary school—along with heavy reliance on commodities and recurring political instability.

• Venezuela, down by a staggering almost 8%, is crippled by an ongoing economic crisis marked by hyperinflation, international isolation under Maduro’s regime, and frequent blackouts stemming from severely neglected infrastructure.

• Mexico barely moves, but it's slowly slipping into declining productivity, dragged down by a massive informal sector that employs over 50% of workers. Meanwhile, Argentina’s low R&D spending—just 0.5% of GDP compared to the OECD average of 2.4%—and chronic economic volatility continue to scare off investment.

Panamanian President José Raúl Mulino has followed through—at least temporarily—on his pledge to “close the Darién,” seeking to end Panama’s role in the region’s worsening migration crisis.

Panorama. From the outset, Mulino was firm in his message: Panama and the Darién Gap should not be seen as a transit route.

• His flagship promise was to shut down migration through the treacherous jungle, fully aware of the immense challenge of controlling one of the most hostile terrains in the hemisphere.

• The Darién Gap is among the most biodiverse and inaccessible regions on Earth, featuring dense rainforests, vast swamps, fast-flowing rivers, and wild fauna.

• This lawlessness has long made the area a haven for organized crime, including drug traffickers, guerrilla fighters, and, increasingly, human smuggling networks.

Why It Matters. Between January and April 2024, Panama recorded as many as 124,000 illegal crossings through the Darién Gap. According to the country’s National Migration Service, 29,259 migrants were detected entering from the south in April alone.

• By contrast, preliminary figures for the same period in 2025 show just 73 crossings—a dramatic 99.7% decrease.

• At the same time, approximately 7,757 migrants have returned to their countries of origin so far this year, with Venezuelan nationals accounting for roughly 95% of that total.

How It Works. Panama’s border security forces have shut down roughly 4.7 kilometers of informal jungle trails and installed perimeter barriers at five major crossing points. These actions have channeled all movement through a single controlled route, where migrants are received and transported directly to Costa Rica, bypassing extended stays in Panama.

• The effort is supported by over seven naval vessels and 25 patrol units enforcing land and coastal blockades to intercept smugglers and assist vulnerable migrants.

• In March, Mulino launched a maritime “reverse route” to return migrants to Colombia, avoiding the need to traverse the jungle.

• The strategy combines tough restrictions to deter incoming migration with incentives that offer a safer return path for those opting to go back—what the administration calls a “humanitarian containment” model.

Yes, But. Despite ongoing domestic controversy over the Panama Canal, President Mulino has found political advantage in Donald Trump’s return to the White House—at least on the migration front. Trump’s hardline deportation policies and renewed emphasis on tightening the U.S. southern border have acted as a powerful external deterrent.

• While Mulino can claim success in fulfilling his promise, it is difficult to assess the true impact of his policies without factoring in the ripple effects of Trump’s immigration crackdown.

• Going forward, the Panamanian president will need to anticipate organized crime’s response and maintain pressure to avoid a resurgence in migrant flows.

What We’re Watching 🔎 . . .

Trump says US ships should have free use of Panama and Suez canals [link]

The Guardian

Donald Trump reiterated that U.S. commercial and military vessels should be allowed free passage through the Panama and Suez Canals, arguing that neither route would exist without historic U.S. intervention. Secretary of State Marco Rubio will be tasked with managing this demand.

However, Panamanian President José Raúl Mulino responded with a categorical rejection, emphasizing that tolls are regulated exclusively by the Panama Canal Authority, in accordance with the Neutrality Treaty and the Organic Law of the Canal, with no exceptions. While both countries have agreed to explore mechanisms to offset tolls for military vessels, Mulino reaffirmed Panama’s sovereignty over the interoceanic route.

Meanwhile, the Suez Canal faces a crisis due to Houthi attacks, which have forced costly commercial maritime detours.

Russia's foreign minister visits the Dominican Republic to strengthen economic and commercial ties [link]

Martín Adames, ABC News

On an official visit to Santo Domingo, Russian Foreign Minister Sergey Lavrov announced the opening of Russia’s first embassy in the Dominican Republic, describing the country as a promising partner in Moscow’s strategy to expand its economic and commercial footprint in the Caribbean.

In his meeting with Foreign Minister Roberto Álvarez, the two discussed the humanitarian and security crisis in Haiti, whose migratory impact has overwhelmed the island of Hispaniola. They also highlighted the ineffectiveness of the UN-backed multinational force, hampered by a lack of resources and personnel. Lavrov is also scheduled to meet with President Luis Abinader.

The visit, set against a backdrop of rising geopolitical tensions, underscores the Kremlin’s growing interest in strengthening its presence in the region and challenging Washington’s dominance.

India’s Modi hails ‘new energy’ in push for Latin American minerals [link]

Andres Schipani y Michael Stott, Financial Times

Under the leadership of Narendra Modi, India is seeking to secure supplies of critical minerals—primarily lithium and copper—from Latin America.

This shift has taken shape through agreements with Chilean state-owned companies such as Codelco and SQM, following President Gabriel Boric’s recent visit to New Delhi, positioning Chile as a key partner and potential primary supplier.

At the same time, India has deepened ties with the other nations of the “lithium triangle”—Argentina, Bolivia, and Chile—by signing mining exploration agreements that bolster its regional presence. With the goal of electrifying 30% of its vehicle fleet by 2030, Modi is prioritizing access to these resources to sustain India’s growth and meet the demands of over 1.4 billion people, even while acknowledging the country’s limited capacity to compete with China in the region.