The Latin American nearshoring trap

THE LATIN AMERICAN NEARSHORING TRAP

SurEconomics staff, August 2026

Did you know that of every $100 generated by a product assembled in Latin America as a result of the industrial relocation of the world's large multinationals, only $15 stays in the local economy? The remaining $85 flows back to the headquarters of these companies in the United States, China, South Korea, Japan and Germany, the powers that have moved the most production chains to Latin America.

In the auto sector in particular, investments of $68 billion linked to nearshoring were estimated for 2025 in countries such as Mexico, Salvador, the Dominican Republic, Brazil and Paraguay.

While foreign direct investment is good for the region, the large multinationals that consider Latin America a new destination for manufacturing their products see our region only as a good place to rent dilapidated zinc-roofed sheds and pay cheap labor, so as to assemble parts designed thousands of kilometers away.

The difference between real industrialization and simple assembly is stark. When Taiwan developed its technology industry, it retained 70% of the value added through patents and the development of its own microchips. By contrast, 82% of the imports feeding Latin America's nearshoring are intermediate inputs that come in, are screwed together in 12-hour shifts and go back out. Without power grids capable of handling massive industrial consumption (with an estimated regional energy deficit of 45,000 megawatts), the region risks remaining little more than the janitor of the global industrial pie.

Sources

·       Inter-American Development Bank (IDB). The nearshoring opportunity in Latin America and the Caribbean, 2025.

·       ECLAC. Foreign Direct Investment in Latin America and the Caribbean, 2025 report.

·       Financial Times. "The limits of Mexico's nearshoring boom," May 14, 2026.