By Sarah K. Yun
Until the 1990s, Korea had little economic, political, or cultural ties with Latin America. Since then, relations between Korea and Latin America have improved significantly. On the other hand, the relations have not been developed in a comprehensive multi-dimensional manner.
The economic relationship has been the most dynamic and salient aspect of Korea-Latin America relations over the past decade due to the natural complement between their respective markets. Latin America is a major source of natural resources, raw materials, and manufacturing, which are important to Korea’s manufacturing and high-technology industries. Latin American countries, such as Brazil, are an attractive export market for South Korean consumer products, such as computers, TVs, and cars. Furthermore, given increased competition from China and other Asian economies for the African and Southeast Asian mineral market, Latin America may provide a secure natural resource bedrock for Korea.
Recognizing the advantage, Korea has been engaging in trade diplomacy with Latin America with an emphasis on establishing an architecture built around free trade agreements. Korea’s first FTA in 2003 was with Chile, and it recently concluded an agreement with Peru. At the same time, Korea is interested in reaching an agreement with MERCOSUR in South America.
According to a recent Inter-American Development Bank report, principally authored by Mauricio Mesquita Moreira, trade between Korea and Latin America has grown at an annual average of 16.1% over the past two decades. Latin American countries are also beginning to recognize economic opportunities with Korea and diversification beyond North America and China.
Political and cultural relationships, on the other hand, have been secondary to economic engagement. It was not until around 1996 when diplomatic ties began to form between the two regions, signaled by Korean presidential visits to Latin America. Cultural ties have also been limited, and unlike in Asia, the Korean Wave has not yet crested in Latin America.
Regarding development aid, Korea’s official development aid (ODA) to Latin America in 2009 was less than a fifth of the ODA committed to Asia. Furthermore, only 5.9% of the cumulative total of loan commitments made by Korea between 1987 and 2009 were given to Latin America. In an environment where Korea is just beginning to establish partnerships in the region, ODA and other cooperative programs can be used as an avenue to increase awareness and presence of Korea in Latin America. In other words, Korea’s engagement via soft power and cultural diplomacy can create a multi-faceted and dynamic bilateral relationship. Consequently, Korea can create opportunities to capture the attention of Latin American governments and businesses.
Korea can be the pivot point between the developed and the developing countries such as the U.S. and Latin America. In this regard, there are potential opportunities for U.S.-Korea collaboration in the region. The U.S. and Korea can boost public policy and development cooperation by assisting in areas that face challenges in Latin America such as educational institutions and technological development. Korea can also benefit from partnering with the U.S, who has had a long-time presence in Latin America.
There are clear potential advantages for a deeper relationship between Latin America and Korea. Latin America would benefit from increased interaction with Korea to counterbalance economic and political forces from China and North America. On the other hand, Latin America is a promising market for Korea for its large consumer market and natural resources. In order to build a stronger foundation and synergy, the next step should be for both regions to engage in developmental projects and cultural diplomacy, as well as improve the existing architecture of trade and transactions. A balanced and multi-faceted economic, political and cultural strategy could lead to a successful and comprehensive relationship between Korea and Latin America.
Sarah K. Yun is the Director of Public Affairs and Regional Issues for the Korea Economic Institute. The views expressed here are her own.
Photo from Janice Waltzer’s photostream on flickr Creative Commons.