One Year In: How South Connection Is Rewiring South America

A shipment of lithium leaves the salt flats of northern Chile, bound for battery manufacturers in the United States. The minerals are there, the demand is there, and the trade agreement is in place. But between the salt flat and the factory floor lies a journey through roads not built for industrial freight, border crossings where paperwork still travels by hand, and regulatory systems designed by four countries that have never fully coordinated with one another. The journey costs more than it should. And a region sitting atop the world's largest lithium reserves struggles to capture the full value of what lies beneath its ground.

This is not an exceptional situation. It is the ordinary cost of doing business across South America, a continent with extraordinary assets and persistent connectivity gaps that prevent those assets from translating into shared prosperity.

The paradox is striking: South America holds abundant critical minerals, immense renewable energy resources, and a geographic position that bridges global markets. Yet intra-regional trade accounts for just 12–15% of total exports, while logistics costs consume between 18% and 35% of the final value of goods. Decades of infrastructure designed to connect national hinterlands to overseas ports, rather than countries to each other, have left a continent of neighbors surprisingly difficult to cross.

The underlying causes are well understood: underdeveloped transport corridors, fragmented regulatory frameworks, misaligned border management systems, and chronic underinvestment. What has been missing is not diagnosis, but coordinated action.

In March 2025, Governors from eleven South American nations (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, and Uruguay) gathered in Santiago and gave the IDB a direct mandate: design a regional initiative to address the shared challenges together.

Private sector partners and development institutions were also a key part of the conversation. These consultations were not a formality, but the mechanism through which the program identified where regional coordination could generate the greatest impact: which corridors mattered most, which regulatory reforms were ripe, and which investments were ready to move forward.

Internally, the program worked to harness the full breadth of the IDB Group. IDB Invest brought its expertise in private sector financing and risk mitigation instruments, helping structure deals that could attract capital to projects where public funds alone would fall short. IDB Lab contributed its focus on innovation, entrepreneurship, and the digital economy. Together, these three windows give South Connection a toolkit that no single institution could offer on its own.

Alongside this institutional dialogue, South Connection developed a program-level Stakeholder Engagement Plan to structure ongoing collaboration with civil society organizations, local communities, academia, and the private sector. Regional infrastructure projects carry significant environmental and social implications, and the program's approach reflects a clear conviction: connectivity investments that don't engage the people they affect are unlikely to deliver lasting results. Engagement that began during program preparation will continue throughout implementation, reinforcing transparency and shared ownership.

One year in, the program has moved from concept to implementation. In 2025, the IDB Group aligned 14 operations totaling approximately $1.4 billion with South Connection, spanning transport infrastructure, energy integration, digital connectivity, and trade facilitation. Monitoring mechanisms are now in place to track how aligned operations contribute to the program's development objectives. The groundwork laid in year one sets the stage for a more ambitious second year, focused on deepening the investment pipeline, mobilizing additional private capital, and moving the region's most strategic connectivity projects from planning to construction.

The Capricorn Bioceanic Corridor illustrates how South Connection builds on work already underway. The IDB had long been engaged along this 3,800-kilometer route linking Brazil’s central-west through Paraguay and northwest Argentina to Chile’s Pacific ports, supporting studies, financing infrastructure, and serving as Technical Secretariat of the Corridor’s Subnational Territories Forum. South Connection gave this existing effort a new regional framework, helping to consolidate a Master Plan that identifies more than 100 infrastructure projects and over 260 specific actions, shaped through the participation of more than 700 stakeholders across governments, the private sector, academia, and civil society.

Yet the corridor also illustrates a central truth about regional integration: roads and bridges are necessary, but not sufficient. A truck that clears the border in minutes because of good infrastructure can still lose hours (or days) to redundant inspections, misaligned customs systems, and paperwork that three agencies require in three different formats. Physical investments only deliver their full potential when accompanied by the institutional and regulatory cooperation that makes crossing a border feel like crossing a street.

This is where border modernization becomes as important as asphalt. At too many of South America's busiest crossings, a truck that has just traveled hundreds of kilometers on a newly paved road will spend the next several hours navigating a tangle of agencies that don't share data, inspections that duplicate each other, and documentation requirements that vary from one side of the border to the other. 

The recently inaugurated Peñas Blancas Integrated Border Control Center, on the Costa Rica-Nicaragua border, shows that it doesn't have to work this way. Built with IDB support, the facility unifies migration, customs, and sanitary controls under a single coordinated digital system. Compliant trucks clear the border without the driver leaving the cab or the cargo being touched. It is faster, cheaper, and more secure all at once. Convinced that this model holds lessons for South America, the IDB is bringing policymakers from across the Southern Cone and the Andean Region to Peñas Blancas in April 2026 to see it firsthand and begin the work of adapting it to their own priority crossings.

What sets South Connection apart is not any single project, but the ambition to move South America from a region of bilateral arrangements to one capable of acting collectively.

Energy makes the case clearly. South America holds some of the world's richest renewable resources, yet in 2023 over 95% of cross-border electricity exchanges were bilateral, ad hoc, and concentrated in the Southern Cone. IDB analysis suggests that optimizing existing interconnections alone could save the region nearly $2 billion a year. South Connection is backing the transmission projects and regulatory frameworks that could turn that potential into a real regional energy market.

Digital connectivity follows the same logic. Just 21% of Latin America's internet bandwidth is dedicated to intra-regional connections, leaving the region dependent on infrastructure routed through North America. South Connection is investing in fiber-optic networks, submarine cables, and internet exchange points to begin closing that gap, alongside the governance frameworks that cross-border digital services require.

A concrete milestone came in March 2026, when the Infrastructure and Logistics Observatory for South America was officially launched in Montevideo. Originally called for by the Brasília Consensus, the Observatory was built hand in hand with governments across the region and developed jointly with CAF and FONPLATA, two regional development institutions, drawing on the IDB's accumulated expertise in regional diagnostics and investment planning. It is not an external tool handed down to countries. It is a tool they helped shape and called into existence, and one they will use to map connectivity networks, identify investment priorities, and track progress toward shared integration goals. For a region that has long made consequential infrastructure decisions without a common evidence base, it marks a genuine turning point.

South Connection enters its second year with real momentum, but the harder work lies ahead. Sustaining political will across eleven countries and multiple electoral cycles, mobilizing private capital at scale, and navigating the genuine complexity of transnational infrastructure are not small challenges.

This is precisely where the IDB's value becomes most visible. As a trusted regional partner with decades of experience financing infrastructure, convening governments, and designing policy reforms across South America, the IDB brings something that no single country can offer: the technical expertise to prepare complex cross-border projects, the financial instruments to make them bankable, and the convening power to keep eleven countries aligned around a shared agenda. South Connection is the vehicle through which that capacity is being deployed at a regional scale.

But neither is the opportunity small. Global supply chains are diversifying. The clean energy transition is accelerating. And as the United States and other major economies look to secure reliable supplies of critical minerals, South America's strategic value has never been clearer. The region holds many of the assets the world needs and is finally building the connective tissue to deliver them.