At least half of last year’s increase in FDI came from America, according to UN trade officials. A little came from its government itself, some from businesses friendly with the administration, the rest from other private investors. In March 2024 the Development Finance Corporation, America’s foreign-lending agency, set up its first office on the continent in São Paulo. At a dinner for investors in a swanky steakhouse in the city, conversation glided between speculation over where the most promising industries are and where Mr Trump could next use force. Mining—already experiencing a worldwide investment boom—has been a clear beneficiary. Between January and September 2025 Latin America accounted for three-quarters of the industry’s spending on M&A. This year America has struck deals with Argentina, where lithium reserves are mostly untapped; Paraguay, a source of lithium, titanium and uranium; and Chile, the world’s largest producer of copper. It lent nearly $600m to Serra Verde, a Swiss-registered firm developing a Brazilian deposit of ionic clay, a source of rare earths. An American rare-earth miner part-owned by the federal government then acquired the company for $3bn. Others have bet on deposits ranging from gold in Peru to tantalum in Venezuela. Established giants have spent the biggest sums. The urgency of American officials to secure resources has led several of them to fast-track existing
projects, says a mining boss. In March Australia’s BHP, which runs the world’s biggest copper mine, in Chile, announced a $5bn expansion. According to an American official, more than $5bn will be spent in Chile in 2026 to get resources out of the ground in 2027 alone. Another large miner is considering reserving the proceeds of some new mines solely for American customers. Mr Trump may be provoking non-Americans into action—not least the Chinese, whose enthusiasm had cooled after the pandemic. BYD, a carmaker, is expanding operations in Brazil. In January Chile said it was considering an undersea fibre-optic cable to Hong Kong, to be built by a Chinese firm. American officials were sufficiently outraged to ban from America the Chilean politician overseeing the cable. The European Union has also strengthened economic ties. In January it signed a free-trade deal with four members of Mercosur, a South American trading bloc. Argentine and Brazilian ranchers, who produce beef more cheaply than EU farmers, will be among the winners. The agreement had been in the works for 25 years, but Mr Trump’s tariffs prodded policymakers to get it over the line. According to Bloomberg Economics, a research firm, the deal could eventually boost the Mercosur quartet’s combined GDP by 0.7%. The good times are by no means sure to last. Investors’ interest is partly based on hope that Mr Trump means to build supply chains in Latin America, as his officials claim. But Mr Trump has two and a half years left in office, a short attention span and a shorter fuse. His enthusiasm could fizzle. And if he resorts to violence again, some investors would be scared away. Despite recent progress, the region’s economies still contend with old problems. The finances of Brazil, the biggest, are weighed down by unaffordable pension costs. Argentina relies on the IMF to balance its books. And Mexico’s GDP contracted in the first quarter of 2026. Add a shortage of infrastructure, a lack of skilled workers and stifling bureaucracies, and the picture looks altogether gloomier.
Ramon Barúa Costa of Aclara Resources, a five-year-old Brazilian mining firm that has received $5m from the American government, says that, helpful as that is, he could get more by moving some operations to the United States—and also be closer to researchers and chemicals for processing. Aclara’s next ore-separating facility will be in Louisiana. A superpower’s support can be a mixed blessing. ■ For more expert analysis of the biggest stories in economics, finance and markets, sign up to Money Talks, our weekly subscriber-only newsletter. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/06/14/does-donald-trump-make- latin-america-a-good-bet
Finance & economics | Free Exchange Europe buys the future, America builds it Does that matter? A high-stakes transatlantic spat has erupted over GDP figures June 18th 2026 Europeans do NOT often holiday in America: too far and, these days, too dear. Except for the World Cup. As fans chase their sides across America this summer, they are discovering country music, ranch dressing and—most striking of all—the mass affluence of America’s suburbs. “DUDE LMAO THIS IS A GAS STATION”, marvelled one German online upon encountering Bu-cee’s, a chain of gobsmackingly large Texan rest stops. The American wealth enticing holidaymakers troubles European elites. America, once a peer, seems to be racing ahead. Mario Draghi, a revered Italian grandee, calls Europe’s stagnation an “existential challenge”. Hence the high stakes in a wonkish dispute over economic measurements.
Captaining one side is Paul Krugman, an American Nobel laureate. Leading out the other are Philippe Aghion, a French one, and Luis Garicano, a Spanish economist. The spat has the feel of an economics World Cup final. Traditional measures of divergence, favoured by Team Aghion-Garicano, say that France’s GDP per person, as a fraction of America’s, has dropped by about 15 percentage points since 1990. The rest of western Europe looks similar. This “constant PPP” measure converts the output of an economy into a common currency for a chosen “index” year using purchasing-power parity exchange rates, which value currencies according to the goods and services they can buy. It extends that figure through time with a country’s real growth rate. Team Krugman argues a better measure is “current PPP”, which applies a new ppp adjustment to each year’s GDP. Sometimes, as with America and Japan, the results are similar. But Europe’s output measured using current PPP has been flat relative to America’s for decades. Europe is eking out a draw (see chart). The befuddled are in good company. “Let me admit my total confusion,” wrote Olivier Blanchard, a former chief economist of the IMF. Mr Krugman argues that Europe’s respectable current-PPP performance reflects something counterintuitive: in theory a country can grow more slowly than a rival without getting relatively poorer. Assume that America’s technology
sector is whizzier than Europe’s (which it is). Tech would then, all else equal, push American growth ahead. But rising tech productivity pushes prices down for everyone, at home and abroad. That boosts European spending power, splitting the productivity windfall. Under some conditions, the gain could even be divided 50/50, as in the scenario Mr Krugman models. America has grown faster—as shown in its national accounts—but Europe’s spending power has kept up. Current PPP values American tech at those new, lower prices. But this does not quite secure the win for Team Krugman. His calculation relies on the improbable assumption that America will not capture most of the gain from its productivity growth the usual way—by simply selling much more at those cheaper prices. Other data do not align with Mr Krugman’s story, either. Robert Inklaar, a PPP guru at the University of Groningen, points out that if Europe was picking up ever cheaper American tech exports, the constant-/current-PPP gap would disappear when comparing consumption rather than gdp. That is because in Mr Krugman’s model only one side produces tech, but both consume it and share the benefits of low prices. Since the gap persists when you look at consumption, something else must be afoot. Team Aghion-Garicano contends that the gap between the two measures is mostly junk. On their side is Antonin Bergeaud of HEC Paris, a business school. He notes that each gauge tackles the same problem—of comparing output across both space and time—but in opposite ways. One converts nominal GDP to shared units first, then casts each country forward with its national figures for real growth. The other tracks GDP over time (using national-accounts figures) and only then converts to shared units. These approaches yield different results not because of bad data—though these are far from perfect—but because of the thorny maths of converting a wide, shifting list of prices into a clean index. Goods that are representative over time in one country may be useless for another: cheese could mean Morbier in France and Monterey Jack in America. Many French cheeses are unavailable to Americans, and vice versa, or become available in different
years. No price index can represent what consumers actually buy and also be comparable across space and time. Still, this is not back-of-the-net for Team Aghion-Garicano, either. It is true that PPPs do not cope well with comparisons through time. Yet the gap between the two measures might still carry meaning. Perhaps, for instance, high French tech prices have edged closer to cheaper American ones, and by more than has been captured in the national accounts. Then the constant-PPP measure would understate how well France has kept up. By now all but the most avid GDP-accounting fans will be ready to give up and turn on the football. At least after a World Cup match, everyone can agree who won. In the GDP debate, both sides dig in, often veering from economics into ethnography. Mr Krugman suggests a “walking around test”: if Europe is getting poor, why does it feel so pleasant? Mr Garicano proposes a “driving around test” instead. American suburbia might not have a medieval town’s charm but affluence oozes from the McMansion garages. Where could the GDP debaters see eye to eye? First, Europe is growing slower than America. Second, that is a problem: even if Europe can free-ride on America’s dynamism, as Team Krugman argues, that is no way to run an economy. Third, the AI era may be less forgiving than the last wave of tech- driven growth. The European fans road-tripping across America, jaws agape at Buc-ee’s, know who they think is ahead.■ Subscribers to The Economist can sign up to our Opinion newsletter, which brings together the best of our leaders, columns, guest essays and reader correspondence. This article was downloaded by zlibrary from https://www.economist.com//finance-and-economics/2026/06/18/europe-buys-the-future- america-builds-it
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