Overlooked Trends Transforming Latin America and Caribbean Economies

1) Nearshoring is broadening beyond Mexico new winners and new constraints

What’s happening: Companies shifting supply chains closer to North America are looking past Mexico to countries such as Colombia, Brazil, Chile, Costa Rica and Uruguay attracted by labor pools, logistics upgrades and targeted incentives. This is producing greenfield manufacturing investment in electronics, food processing and light industry.

Why it matters: Nearshoring can raise manufacturing employment and technology transfer in mid-sized economies, but benefits are uneven success depends on reliable power, skilled labor, logistics and the cost/risk balance versus Mexico and Asia.

Watch for: Infrastructure bottlenecks (ports, energy), competition for skilled workers, and policy gaps that could slow projects.

2) Fast payments and digital finance are quietly re-wiring domestic economies

What’s happening: Instant payment systems and mobile wallets (e.g., Brazil’s Pix and similar platforms) are expanding transaction volumes and financial access fast payments are now a dominant share of digital transactions in parts of the region. That shift is lowering transaction costs, speeding business cash flow, and enabling new digital SMEServices.

Why it matters: Faster, cheaper payments increase the viability of micro-firms, make payroll and supplier payments easier, and underpin e-commerce growth but they also force banks and regulators to adapt (fraud prevention, interoperability, cross-border rules).

Watch for: Regulatory changes, cross-border payment integration, and fintech competition that could accelerate inclusion or create new systemic risks.

3) Clean-energy investment is scaling fast and shifting industrial economics

What’s happening: Investment into solar, wind and other non-conventional renewables has jumped in 2024-25 (notably in Chile, Colombia, Costa Rica and Brazil). Major corporations and national champions are underwriting utility-scale projects; private and sovereign projects now target industrial users as well as utilities.

Why it matters: Cheaper, local renewables lower industrial electricity costs and make energy-intensive manufacturing (including green hydrogen) more competitive in export markets. This opens pathways to new industrial clusters (green metals, green chemicals).

Watch for: Grid upgrades, storage deployment, permitting and community opposition these are often the gating constraints.

4) Green hydrogen real projects, real caveats

What’s happening: Dozens (hundreds by some counts) of green hydrogen projects have been proposed across the region; large proposals (including a multi-billion dollar project in Chile) are moving into environmental permitting and investment decision phases. Governments are offering incentives and export-orientation frameworks.

Why it matters: If realized, exported hydrogen/ammonia could re-shape energy exports away from fossil fuels. But the timeline and economics remain uncertain: projects require large investments, desalination and ports, and face long permitting cycles.

Watch for: How many proposals clear final investment decisions (FID) versus those that remain plans; local water, social and permitting constraints.

5) Nature-based markets and commodity upgrading 

What’s happening: There’s growing activity in carbon credits, sustainable commodity certification, and traceable supply chains (coffee, cocoa, timber, beef). Buyers in global markets increasingly pay premiums for verified sustainability.

Why it matters: Properly structured payments for ecosystem services and certified commodity chains can raise rural incomes and fund landscape restoration but effectiveness depends on verification capacity, benefit sharing and avoiding green washing.

Watch for: Standard convergence, local monitoring capacity, and integration of smallholders into higher-value chains.

6) Creative & digital services exports cultural capital turned into foreign revenue

What’s happening: Music, film, gaming, and remote creative services from LAC are scaling with streaming, remote work platforms and content pipelines. Countries with strong cultural exports are monetizing IP and services to global audiences.

Why it matters: Creative industries require low capital and generate high value per worker; they offer a divergent development path that complements manufacturing and tourism.

Watch for: Policy support for IP, export promotion, and workforce training in digital production.

7) Agra-tech and precision agriculture are gaining practical traction

What’s happening: Start-ups and larger agribusinesses are deploying sensors, satellite analytics and inputs optimized for climate variability reducing input costs and increasing yields in cash crops and horticulture. Public–private pilots are showing measurable productivity gains in select crops.

Why it matters: Improved yields and value-added processing reduce import dependence and create export quality products, while also improving resilience to climate shocks.

Watch for: Financing models for smallholders, data governance, and scaling pilot projects to national coverage.

8) Remittances and diaspora capital are shifting from consumption to investment

What’s happening: Traditional remittances remain large, but there is a growing channeling of diaspora capital into small business, housing and fintech platforms that enable local credit or equity investments.

This is more visible in countries with large diaspora populations.

Why it matters: When remittances fund productive investment rather than just consumption, they boost local job creation but it requires instruments (crowdfunding, diaspora bonds) and trustworthy local intermediaries.

Watch for: Regulatory frameworks that allow diaspora investment while protecting savers.

9) Tourism is diversifying experiential, off-season and higher-value segments

What’s happening: After the pandemic rebound, countries in the Caribbean and Andean region are pushing niche tourism (eco-tourism, wellness, adventure) and promoting longer stays and remote-work visas. This shifts revenues away from concentrated short-burst arrivals.

Why it matters: Diversified tourism reduces seasonality and makes local supply chains (food, transport, guides) more stable; it also demands different workforce skills.

Watch for: How destinations balance growth with environmental carrying capacity.

10) Policy reaction matters industrial policy returns with a new face

What’s happening: Governments are increasingly using targeted incentives, tax breaks and export-oriented industrial policy (energy hubs, technology parks, hydrogen zones) to attract investment. Multilateral institutions are reorienting financing toward structural transformation.

Why it matters: Smart, transparent industrial policy can unlock clustered investment; poor design raises risks of rent-seeking, stranded assets and wasted fiscal resources.

Watch for: Procurement transparency, evaluation metrics, and alignment with climate/skills goals.

Final practical checklist (for investors & policymakers)

Validate: confirm grid reliability, permitting timelines, and community consent before committing capital (especially for green hydrogen and renewables).

Localize skills: invest early in technical training tied to target sectors (manufacturing, renewables, digital creative).

Use payments momentum: leverage fast payments to expand SME finance and supplier networks.

Pilot & scale: run small agricultural and creative economy pilots with clear scaling pathways and financing lines.

Measure carefully: require actionable social and environmental KPIs (not promises).

Where this analysis comes from (key sources)

OECD and regional economic surveys on LAC growth and structural constraints; regional energy investment and IEA/IEA-style tracking of renewables; reporting on nearshoring and corporate investment; project-level reporting on green hydrogen proposals; and central bank/World Bank analysis on digital payments and fintech adoption.