Since I had the privilege of serving as US Ambassador to Brazil, I have continued to work closely with governments, investors and businesses in the region in my role as chair of the managing board of the strategic advisory firm Albright Stonebridge Group. I have watched Latin America undergo a remarkable period of economic growth and democratic consolidation. Nearly 75 million people have joined the middle class over the past 15 years, and most citizens now reside in stable electoral democracies. This profound economic, political and social transition has improved the lives and prospects of millions and created a new consumer class that asks more of its leaders. They are hungry for high-quality services, as well as the latest products and technologies. In turn, this change has created countless new business opportunities for local entrepreneurs and global investors alike.

On the other hand, the recent drop in global oil and commodity prices hit many of the region’s largest economies hard, precipitating political challenges and highlighting the incompleteness of the region’s transformation. Indeed, governments risk becoming the victims of their own success. They now face the difficult and intertwined tasks of meeting raised expectations for public services and unlocking new sources of growth. One would be hard pressed to think of another issue that will play a more decisive role in the trajectory of the region and its citizens than its ability to tackle infrastructure challenges. Citizens and businesses need universal access to electricity, water and indoor plumbing, to improved reach and quality of telecommunications coverage, and to improved transportation options that will reduce the costs and time it takes to move products through the value chain.

As anyone who has spent time working or travelling in Latin America can attest, the region’s infrastructure challenges increase the degree of difficulty, cost, and risk of doing business. In 2014, São Paulo, South America’s most important industrial hub, suffered another severe drought that forced water rationing and threatened widespread power outages – exposing the need to develop more integrated and resilient water systems and reduce the power grid’s dependence on hydroelectricity. A recent Inter-American Development Bank study demonstrated that high domestic transport costs serve as a constraint to exports around the region, and can exacerbate regional disparities in economic development.[1] Meanwhile, internet users in Latin America pay much more for broadband connections than users in the OECD average, resulting in lower penetration rates, particularly in poorer rural areas. These examples (which, it should be noted, are not unique to Latin America) are illustrative of the broad set of challenges that governments will need to tackle in coming years. In all, the Inter-American Development Bank estimates that countries in the region need to roughly double their investments in infrastructure from between two and three per cent of GDP to something more like five per cent to close the region’s infrastructure gap.[2]

While these challenges are daunting, there are many reasons for continued interest, opportunity and optimism. Latin America is blessed with abundant natural resources, including some of the largest proven energy reserves in the world, from the deep-water oil and gas fields off Mexico and Brazil, to the heavy crude and oil sands of the Orinoco Belt in Venezuela, to the Vaca Muerta shale gas deposit in Argentina. However, these reserves also present significant technical challenges, and will eventually require hundreds of billions of US dollars in investments in order for them to be extracted competitively. During previous boom years, Latin American policymakers experimented with different frameworks, many of which included varying degrees of local content or restrictions on foreign participation. Now, in the face of capacity and financial challenges at state-owned companies, Mexico and Brazil have taken steps towards easing some of the barriers to investment, and look likely to continue to refine these policies to attract needed capital, technology and know-how from leading global firms.

Even as they seek to develop their traditional energy reserves, many of the region’s leaders have been quick to acknowledge the environmental and economic imperative to diversify their energy matrices. Indeed, governments from Mexico to Argentina to Cuba are setting ambitious targets for renewable energy and encouraging investors to take advantage of the region’s abundance of sun, wind and water. Brazil was among the first major economies to ratify the Paris Climate Change Agreement, a historic commitment to reduce greenhouse gas emissions that Brazil plans to fulfil largely by investing billions of US dollars in renewable energy. Not only are these investments important to ensuring a resilient and robust energy matrix, they are also a significant potential source of economic growth and jobs.

Regional trade agreements such as the Pacific Alliance and the Trans-Pacific Partnership can also create new opportunities for investment and goods to travel among many of the region’s largest economies. They can prompt governments to consider new ways to cooperate in creating integrated telecommunications, energy and logistics systems that will allow them to compete and prosper in the 21st century global economy.

While private sector participation in the delivery of some public services remains politically sensitive, governments are now showing renewed interest in solving complex infrastructure challenges through public-private-partnership models. The Colombian government passed reforms in 2012 to ease investment, and opened hundreds of new projects to private participation, resulting in tens of billions in US dollars in new infrastructure investments. Building on this positive example, Mexico, Panama, Brazil and Argentina have passed, or are considering, similar measures that will lead them to open a broad range of investment opportunities to the private sector in the coming years. In addition to providing financing, international financial institutions such as the World Bank and Inter-American Development Bank have a key role to play in providing technical expertise and helping develop stronger and more transparent institutional oversight mechanisms.

One of the promising developments of recent years has been the vigour with which prosecutors, judges and law enforcement agencies in Guatemala, Brazil, Chile, Argentina and elsewhere have pursued and prosecuted high-profile cases of corruption. These efforts are beginning to create a more transparent and competitive climate, where sophisticated global companies that must operate under the US Foreign Corrupt Practices Act and the UK Bribery Act are increasingly sought after as partners and investors. However, some scandals also serve to remind that corruption remains an unfortunate challenge in the region, as elsewhere, which has too often raised the costs of projects and prevented investors from competing on a level playing field – or deterred them from investing at all. While I am optimistic that the region will see continued significant improvement in the coming years, investors will need to remain vigilant with their compliance programmes and vetting of local partners.

In sum, addressing the challenges and seizing the tremendous opportunities in front of us will not be easy tasks. For governments, progress will require innovative approaches to project finance, ever-increasing cooperation with financial institutions, the private sector, and civil society, and taking calculated risks and the occasional unpopular decision. For investors, success will require a longer-term view and a nuanced understanding of the local operating environment and its laws, regulations and incentives, as well as sustained engagement with a wide range of local stakeholders.

Given these complexities, I would like to congratulate and thank Latin Lawyer and Hogan Lovells LLP for embarking on the important and timely publication of The Guide to Infrastructure and Energy Investment. This volume examines the many aspects involved in the complex task of modernising and revitalising infrastructure and energy systems throughout Latin America. In so doing, they have tapped an unusually talented and experienced group of practitioners to create a comprehensive and valuable guide for potential investors, legal advisors, and policy makers.

Anthony S Harrington
Albright Stonebridge Group


  1. Mauricio Mesquita Moreira, Juan S Blyde, Christian Volpe Martincus, Danielken Molina, ‘Too Far to Export: Domestic Transport Costs and Regional Export Disparities in Latin America and the Caribbean.’ Inter-American Development Bank, October 2013, available at
  2. Tomas Serebrisky Ancor Suárez-Alemán, Diego Margot, Maria Cecilia Ramirez, ‘Financing Infrastructure in Latin America and the Caribbean: How, How Much, and By Whom?’ Inter-American Development Bank, November 2015, available at

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