Latin America’s Demographic Opportunity Plus Arévalo’s First Four Months

Latin America’s openness to migration may offset downsides of aging populations. Unlike the populations of several East Asian countries, the population of Latin America and the Caribbean is set to keep growing into the 2050s. But the region still faces looming demographic challenges. Across Latin America, newborns are dwindling and the ranks of the elderly are growing. Those changes will put pressure on the region’s healthcare, elder care, and pensions systems, and could drag down productivity and economic growth. The International Monetary Fund estimates that labor already contributes less to the region’s GDP growth than it did over the past two decades, and productive efficiencies are not filling the gaps.

Still, Latin America may be better prepared to meet the challenge of an aging population than other regions because of its relative openness to migration. The region already hosts nearly one third of the world’s displaced population, including over 85 percent of the more than 7 million Venezuelans who have left their country. Rather than shutting migrants out, several Latin American countries have sought to integrate them. Governments such as Colombia’s, Brazil’s, and Peru’s have given immigrants temporary residential status, work permits, and access to education and healthcare.

Some of the advantages of intraregional migration are already materializing. Many immigrants are young, educated, and make significant contributions [PDF] to local economies. And in countries like Bolivia and Paraguay, working age populations are still growing. If governments in the region can stave off backlash to immigration by native-born citizens and better support new arrivals, more demographic benefits of migration will come. Today, the downsides of unmanaged migration are clear to see across the region. But managed well, migration could instead help shore up labor markets and economic growth.

Arévalo’s reform agenda for Guatemala inches forward, but roadblocks are multiplying. Four months into his presidency, Guatemalan President Bernardo Arévalo has scored a handful of wins. He launched the National Commission Against Corruption that is currently investigating irregularities in over 1,400 public works contracts, announced 80 billion quetzales (~$10 billion) in infrastructure investment over the next four years, and improved Guatemala’s image abroad. Foreign investors are taking a second look at the country. Walmart recently announced a $700 million investment in Guatemala.

But the next six months will present hurdles that could make or break Arévalo’s reform agenda. The country is about to begin selecting a new set of Supreme Court of Justice and Appellate Court judges who will serve five year terms. Corruption networks have dominated the judicial selection process in the past. If they do so again, anti-democratic actors, like Attorney General Consuelo Porras, will feel emboldened to step up their stonewalling of the Arévalo government, while the courts will likely challenge any legislation the Arévalo government manages to pass. The lack of a reliable pro-government majority in congress is another roadblock. Lawmakers have wavered back and forth on whether to support Arévalo’s legislation, complaining that he is unwilling to engage in any of the usual horse-trading. A proposed anti-trust law, a core piece of Arévalo’s agenda, is mired in congress and will likely stay that way until at least August 1, when congress comes back into session.

Arévalo’s reform agenda also hinges on the United States. Biden administration officials and members of Congress defended Arévalo’s electoral victory against election deniers, supported his request for Organization of American States election observers for the upcoming judicial selection process, sent multiple high-level cabinet and State Department delegations to the country, and have assigned $170 million in development assistance to Guatemala since Arévalo’s inauguration. A second Biden term would mean more support for Guatemala. But a Donald Trump presidency would likely encourage opposition hardliners to double down on obstruction. Arévalo ambitiously promised to reform Guatemala’s corrupt system, but without a big win soon to regain momentum, he may end up making only marginal changes.

This publication is part of the Diamonstein-Spielvogel Project on the Future of Democracy.