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Strong safeguards and regional coordination can turn South–South cooperation into the engine Latin America needs for real development gains
Latin America can turn South–South cooperation into an engine of results—well-designed finance, joint procurement, and Indo-Pacific linkages—provided governance safeguards, local capacity, and transparent metrics guide every decision. The global context offers no relief. Climate shocks, excessive debt, digital divides, food insecurity, and an uneven post-pandemic recovery intersect. Progress on the 2030 Agenda is slow while financing needs continue to grow. In Latin America, the pressure is greater, with limited fiscal space, high informality, and insufficient regional integration.
Concurrently, the regional political landscape is marked by intense ideological polarisation. Successive waves of left- and right-leaning governments, reinforced by recent electoral shifts in several South American countries, have produced divergent foreign-policy priorities and, in some cases, mutually exclusive integration projects. This volatility makes it difficult to consolidate long-term regional arrangements: initiatives such as the Community of Latin American and Caribbean States (CELAC), the Pacific Alliance, Mercosur, and others often advance unevenly, stall when governments change, or end up overshadowed by the bilateral agendas that individual States pursue with extra-regional partners.
Successive waves of left- and right-leaning governments, reinforced by recent electoral shifts in several South American countries, have produced divergent foreign-policy priorities and, in some cases, mutually exclusive integration projects.
Despite the challenging context, the region offers considerable proof that this approach can work. Debt-for-conservation swaps in Belize and Ecuador align debt relief with environmental outcomes when governance is strong and verification is independent. The Mesoamerica Health Initiative—an alliance among the Inter-American Development Bank (IDB), national governments, and donors—has demonstrated that results-based financing, combined with external audits, improves health indicators across several countries. Mexico shares practical solutions such as the Mexico Schools Programme, which has improved educational quality in over 150 schools across 18 countries, and the Sembrando Vida programme, which promotes food self-sufficiency and reforestation in communities in Mexico, Honduras, Guatemala, and El Salvador. None of these experiences has been perfect, yet they point to a clear lesson: ownership, transparency, and service sustainability determine whether programmes endure or succeed.
Taken together, Latin America faces four interlinked challenges: fiscal and debt constraints, weak and uneven regional integration, fragmented and volatile institutions, and limited subnational capacity to prepare bankable projects.
In this context, South-South cooperation and triangular cooperation become essential strategies for mobilising resources, knowledge, and technology to develop policies that tangibly enhance people's lives. Institutions across the region face fragmentation within and between governments, policy swings after electoral cycles, uneven regulatory frameworks, and irregular capacities to plan and execute investments. Many subnational authorities lack teams to prepare bankable projects; procurement processes are slow and costly, and impact arrives late.
South-South cooperation and triangular cooperation become essential strategies for mobilising resources, knowledge, and technology to develop policies that tangibly enhance people's lives.
Even so, real opportunities exist. Several Latin American countries, such as Ecuador, Chile, Colombia, Brazil, and Mexico, are shifting from simple, one-time donations or isolated aid to more organised funding systems. These new approaches provide easier access to blended tools (mixing public and private money to reduce risks), debt swaps (forgiving some debt in exchange for actions such as protecting the environment), impact investments (putting money into projects that aim for both profit and positive social or environmental changes), and special funding programmes within the United Nations (UN). This shift from merely analysing problems to implementing solutions fosters growth and the expansion of effective practices. Nevertheless, progress may differ by country and often requires larger systemic changes to achieve the best results.
To overcome the fragmentation and capacity gaps described above, three moves can rapidly turn cooperation into on-ground projects. The first prepares initiatives jointly at the regional level with shared checklists, simple contracts, and clear metrics, which lowers transaction costs and speeds approvals. The second aggregates purchases to harness economies of scale and ensure maintenance. The third reduces exchange-rate risk through local-currency financing and public guarantees to crowd in private and diaspora capital. The tools already exist. South-South Galaxy compiles hundreds of adaptable solutions, and the United Nations Office for South-South Cooperation (UNOSSC) Solutions Lab provides applied research, incubation, and hands-on support to take ideas from pilots to programmes.
When well-designed, South–South cooperation corrects the limitations of traditional development finance. For example, according to the United Nations Conference on Trade and Development (UNCTAD), “South–South cooperation can also assist LDCs in mobilizing and managing development finance by adopting concerted strategies at regional and subregional levels to bolster access to development finance and to develop common negotiating positions to raise funding and renegotiate debt.” Additionally, it reduces fragmentation, avoids rigid conditionalities that overlook local realities, and fosters national and community ownership. Demand-driven programmes, direct access for capable subnational entities, early community participation, and basic local-content rules make investments last.
The first prepares initiatives jointly at the regional level with shared checklists, simple contracts, and clear metrics, which lowers transaction costs and speeds approvals.
Finally, according to the United Nations General Assembly (UNGA), “triangular cooperation complements and adds value to South-South cooperation by enabling requesting developing countries to source and access more, and a broader range of, resources, expertise and capacities, that they identify as needed in order to achieve their national development goals and internationally agreed sustainable development goals.”
Risks exist and should be managed from the start. Debt can rise if returns do not materialise, opacity can invite undue rents, concentration with a few suppliers creates vulnerabilities, and moving fast without safeguards can harm people and ecosystems. The response involves public, easy-to-read project dashboards, open tenders with digital traceability, limits on foreign-exchange exposure, independent evaluations, and environmental safeguards. It also helps forge consensus on intellectual property terms that allow local maintenance and adaptation, define exit options, and diversify suppliers from day one.
Given fiscal and debt constraints, regional development banks—IDB, Development Bank of Latin America and the Caribbean (CAF), Central American Bank for Economic Integration (CABEI), and Plata Basin Financial Development (FONPLATA)—can move from simple project loans to risk-sharing platforms, offering partial guarantees, local-currency loans, and first-loss tranches that lower financing costs and reduce exposure to exchange-rate shocks. Philanthropy can take the first risk with seed capital, technical assistance, and independent impact evaluations, as in the Mesoamerica Health Initiative. Well-structured public–private partnerships, such as road concessions in Chile or renewable-energy auctions in Brazil and Mexico, help secure long-term operations and maintenance so that assets do not deteriorate once they begin delivering services.
Used together, these instruments allow South–South and triangular cooperation to move from small pilots to scalable portfolios aligned with national priorities. They indicate predictability and integrity, which are crucial for mobilising domestic pension funds, regional investors, and partners from the Indo-Pacific who seek clear rules and credible counterparts.
Trade tensions and logistical disruptions are real. The most sensible response is to build regional value chains. South–South cooperation helps align open technical standards that avoid closed dependencies, promotes green corridors with interoperable single-window systems, and coordinates strategic reserves of critical equipment. This is not a case for autarky; it is a case for resilience—diversifying inputs with higher value added while deepening productive capacities across the region.
The most sensible response is to build regional value chains. South–South cooperation helps align open technical standards that avoid closed dependencies, promotes green corridors with interoperable single-window systems, and coordinates strategic reserves of critical equipment.
The first immediate step is a regional financing window for strategic projects with first-loss protection, local-currency guarantees, and options for debt swaps tied to independently verified targets. The second is a regional unit for project preparation and joint procurement that offers standardised templates and a catalogue of solutions for different contingencies. The third is a knowledge bridge that connects needs to operating platforms such as South-South Galaxy and the Solutions Lab, and relies on a public dashboard tracking pipelines, contracts, deliveries, and results.
Latin America already engages the Indo-Pacific through Asia-Pacific Economic Cooperation (APEC), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the Pacific Alliance, a new free trade agreement with Singapore now in force, and new logistics corridors along the Pacific coast. These platforms enable the scaling of value chains, align standards, promote digital cooperation, and open financing and investment channels throughout the region.
Co-design opportunities with Indo-Pacific partners are immediate and span at least three fronts. In climate and energy, it is useful to link Asian demand for lithium and copper with robust social and environmental standards in Latin America and to accelerate green hydrogen, electric mobility, and energy-efficiency retrofits. In health, it helps to expand pooled public procurement, strengthen surveillance of climate-sensitive diseases, streamline regulatory cooperation, and develop regional manufacturing of essential inputs. In knowledge and technology, the priority lies in technology transfer, capacity building, and digital solutions with clear plans for maintenance and training.
Dedicated windows for subnational governments recognise that many adaptation investments are designed and operated locally, which prevents sidelining those governments.
None of this works without integrity. Credible green taxonomies, solid measurement systems, reporting, and verification, open data, and contractual traceability reduce opacity and ensure that progress is real, verifiable, and comparable. Performance-linked disbursements, debt sustainability, and disaster-contingency clauses, along with foreign-exchange risk management, ensure sound financing. Dedicated windows for subnational governments recognise that many adaptation investments are designed and operated locally, which prevents sidelining those governments.
In Mexico, there is often a question posed about who will defend the people now. The answer is to organise their own tools. South–South cooperation is not charity among peers; it is disciplined execution among equals. If the region embeds safeguards in contracts, prepares pipelines jointly, aggregates demand to gain scale, and leverages Indo-Pacific partnerships as a multiplier, it can move far more quickly from rhetoric—so characteristic of Latin America—to action. In a world of growing uncertainty, South–South cooperation offers a principled and practical pathway—anchored in local capacity, measured by results, and built to last.
José Joel Peña Llanes is an Associate Professor at the National Autonomous University of Mexico (UNAM).
The views expressed above belong to the author(s). ORF research and analyses now available on Telegram! Click here to access our curated content — blogs, longforms and interviews.
Dr. José Joel Peña Llanes is a full-time professor at the Faculty of Higher Studies (FES) Acatlán of the National Autonomous University of Mexico (UNAM). ...
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