The perception Korea once held of Latin America—of lazy workers and inefficient governments—has drastically changed today. From an entire floor dedicated to South Korean music, cuisine and clothes at a mall in Peru, to the first Korean Cultural Center in Argentina, to the United States Ambassador to Costa Rica singing and dancing to Psy’s Gangnam style, South Korea’s presence and influence in Latin America is growing. The small Asian nation has quietly but successfully flooded Latin American markets.
However, this engagement has not been mutual—Latin American governments have yet to realize that they could lose out if they do not reciprocate.
The question then is not how or when this happened, but rather why many Latin American countries have remained unenthusiastic about South Korea, a country that only 30 years ago was torn by civil war and poverty-stricken. A Korea Economic Institute of America report highlights what could attract Latin America to engage more proactively with the country, including South Korea’s capacity to counterbalance China’s hegemony. South Korea does not want to be the third Asian player in Latin America, after Xi and Abe.
Trade and commerce are effective instruments for engagement. Free trade agreements are a tool for strengthening relations between countries and regions, and this is something Chinese state capitalism knows well: after China’s accession to the World Trade Organization (WTO) in 2001, it has become the second-largest trading nation in terms of exports and imports. To date, the People’s Republic of China has free trade agreements in effect with Peru, Chile and Costa Rica, and has been negotiating with Colombia since 2012.
South Korea has free trade agreements with Chile and Peru, has concluded negotiations with Colombia and is currently negotiating an agreement with Mexico. In 2004, South Korea proposed to begin negotiations for a preferential trade agreement with MERCOSUR—for whom Korea is the 13th largest export destination—and the country also started considering a free trade agreement with Central America in 2010.
The tables seem to be turning for South Korea in the region. One need only think of companies like Samsung, which leads the mobile phone market in the region with a 24.2 percent market share, or Hyundai, which exports most of its 30,000 commercial vehicles per year to emerging markets in Africa and Latin America. For the skeptics, let the numbers speak for themselves: Korean and Latin American bilateral trade reached $54 billion in 2011. On a larger scale, trade between Asia and Latin America reached a high point of $500 billion in 2014, and is expected to be no less than $750 billion by 2020.
What can Latin America gain from South Korea, and vice versa? Not surprisingly, a lot. Korea offers many lessons in the policymaking sphere and is eager to share its experiences: the Knowledge Sharing Program, for example, focuses on economic development. In addition, South Korea is a country with capital and technology, but with scarce resources. Latin America, on the other hand, is an energy resource-rich region that lacks capital and technology—the regions complement each other well.
According to UCLA’s Rita Barbieri, Korea, propelled by its strong economic performance, is now viewing energy security as a national security goal. Latin America has an immense opportunity to help the Republic of Korea reach this goal.
Above all, Latin American leaders need to remember that “Asia” is not synonymous with “China,” and should not be afraid of diversifying their sources of investment. The world is more interconnected than ever before, most surely in an irreversible manner. Regions with the most integration and participation in supply chains are more likely to reap the greatest economic growth and development. As of now, Latin America has South Korea engaged, and though the Latin American response has not been as enthusiastic as it should be, no one can deny that Latin America is comfortably surfing on the hallyu—or Korean wave—and enjoying it. Stay on the wave, Latin America, but learn to swim, too.