Trump and Panamá
02/10/2024
Donald Trump’s relations within the American continent have been marked by a dominant approach aimed at projecting strength rather than fostering strategic agreements in politics and trade. This stance, evident in his speeches and actions, has generated tensions in the region, particularly with the imminent wave of mass deportations that could trigger a humanitarian crisis.
One of Trump’s main objectives in Latin America has been to curb China’s growing influence in the region, with a particular focus on the Panama Canal. According to the latest annual report on the canal, 72.5% of the cargo passing through it originates from or is destined for the United States, with containers, grain traffic, and energy products being the main goods transported. However, China ranks as the second most important player in the canal’s traffic, leading to an increasing Chinese presence in Panama.
Since 2017, Panama has strengthened its relationship with Beijing after severing ties with Taiwan. In 2018, Chinese President Xi Jinping visited Panama, making a clear effort to deepen commercial and strategic ties. China has sought to establish a closer connection with the canal, even proposing to relocate its embassy near this key infrastructure.
In this context, Panamanian President José Raúl Mulino has revived discussions about building a railway from Panama City to Costa Rica, a project initially evaluated by the Chinese state-owned company China Railway Design Corporation in 2019 and now set to be reviewed by the U.S. firm AECOM USA in 2024. This initiative highlights the ongoing competition between China and the United States for investment control in Latin America.
Since 2013, China has promoted the Belt and Road Initiative as a strategy to expand its global influence by developing key infrastructure projects. Panama was the first country in the region to join this initiative, followed by Uruguay, Ecuador, Venezuela, Chile, Bolivia, Costa Rica, Cuba, Peru, Argentina, and Colombia. Notable projects include the Chancay Mega Port in Peru, which began operations in November 2024, and the Eloy Alfaro International Airport in Manta, Ecuador, inaugurated in 2022 on a repurposed U.S. military base.
Even leaders who initially opposed Chinese influence, such as Argentine President Javier Milei, have recognized the importance of maintaining trade relations with China. Despite his anti-communist stance, Milei has prioritized economic ties with China due to its interest in key agricultural products such as soybeans, beef, barley, vegetable oils, and minerals.
While China has approached Latin America as a strategic investment partner, the United States has deprioritized the region in its agenda. Trump’s actions seek to restore U.S. leadership, reclaim lost markets, and reaffirm its political influence. However, his rhetoric and decisions may ultimately weaken the most crucial element in international alliances: trust.
Innovation, AI, and the Free Market: The DeepSeek Case
01/28/2025
Free market competition is one of the conditions that, from an economic theory perspective, is most often highlighted as beneficial for humanity. It ensures better welfare conditions through innovation, specialization, and reductions in production costs—in other words, better goods at lower prices. There are no buyers or sellers with sufficient power to manipulate or obstruct the “natural” course of markets or the workings of the “invisible hand.”
Politicians, in their speeches, defend the free market, but they do so funded by companies and individuals who enable their campaigns and rise to power. This leads us to believe that perhaps, those companies or groups investing in politics expect a return. The payoff could be in the form of regulations or deregulations favourable to their interests. Therefore, we can see that there are incentives within the political and economic systems to undermine the free market.
This week, the U.S. tech giants were shaken by the publication of an academic paper on a new artificial intelligence developed by the Chinese startup DeepSeek, which was founded in 2023. Wall Street reported losses: Nvidia, a manufacturer of the microchips and chips required for computing AI models, recorded a nearly 17% drop in its stock value, representing a substantial loss of approximately $600 billion in market value. Likewise, the NASDAQ (with a significant tech component) fell by nearly 3%, and the S&P 500 by 1.5%.
Why did this publication have such an impact? Because DeepSeek does more with less. With limited computational resources, the company has created a model capable of learning autonomously, without human supervision. This represents a major breakthrough in achieving human-like reasoning with technology, known as Artificial General Intelligence (AGI). This is a true milestone, as it marks the first time a detailed technical paper has been published explaining how to train a reasoning model.
DeepSeek has managed to develop two AI models with results and capabilities comparable to those of OpenAI and Meta. Moreover, the Chinese competitor offers all the functionalities of its model for free, while OpenAI has a paid version.
In an effort to curb the overwhelming Chinese competition, the United States has restricted exports of chips and microchips to maintain its leadership in the tech sector, particularly in artificial intelligence. However, they failed to consider that talent (human capital) and technological capabilities are not concentrated in one small part of the world—Silicon Valley.
The phenomenon we are witnessing with AI represents a cycle of technological innovation and creative destruction, as theorized by capitalist economist Joseph Schumpeter. According to Schumpeter, disruptive innovations are essential for economic development, as the introduction of new products, production methods, markets, and industrial organization forms are both characteristics (and consequences of the free market). This process of creative destruction is driving a new economic cycle, one that, in my opinion, is accelerating faster than we can fully grasp.
What’s interesting about today’s tech sector is that regulations and restrictions are not as effective in stifling competition. This brings us back to Schumpeter’s theories, where we can see how innovation arises endogenously—that is, as a result of entrepreneurs combining existing resources to create new products, services, or processes. However, in this case, the thesis of exogenous knowledge does not apply; here, knowledge results from the internal dynamics of the market. To stay ahead, it is necessary to achieve constant advances in artificial intelligence.
Ana.