Is a transcontinental highway the key to unlocking trade in Latin America?

In a quiet, wild region of Paraguay known as the Chaco, construction workers are slowly patching together a straight line of asphalt and railroad tracks that will ultimately run over 2,300 miles from the Atlantic to the Pacific, slashing through Brazil, Paraguay, Argentina, and Chile. Proponents hope the road and railway line, known as the Bi-Oceanic Corridor and planned to be completed by late 2026 or early 2027, will cut down the time it takes goods to travel to Asia by two and a half weeks. The Inter-American Development Bank provided a $200 million loan for a particularly difficult and critical part of the project’s infrastructure in Paraguay as part of its new “South Connection” plan. Using digital and transit infrastructure, as well as regulatory integration, the plan aims to link South American countries and correct the continent’s severe lack of trade routes, which have led to it having a fraction of the trade enjoyed by Europe or Asia. The philosophy of South Connection is that deeper regional integration — roads, ports, energy grids, and digital networks — boosts growth and attracts investment. While the push now is to tackle persistent challenges such as high trade costs, weak logistics, and slow economic growth, it also comes at a time when many governments in the region are friendly to private investment and business interests. Last year, the bank financed 14 projects worth $1.43 billion under South Connection, about half of that from private investment. Aside from the $200 million for the Bi-Oceanic Corridor, it will put $100 million this year into a logistics infrastructure program for the regional integration of a border area between Bolivia, Paraguay, and Chile. The bank has a small core team for the coordination of South Connection in the region, but there could be some staff changes to assist with the investment. Morgan Doyle, the general manager of the Southern Cone Regional Country Department at IDB, told Devex that there are plans "substantially increase our private sector staff over time … and there will be some reallocation to specifically to address these projects, but fundamentally it's going to be addressed within the scope of the existing expertise that we have in the field.” While ambitious and wide-reaching, South Connection will mean a vast redesign of Latin America’s trade routes, border regulations, and digitalization — one that will intrude on protected areas, wildlife reserves, and Indigenous communities. Some are concerned about the environmental and social impact its infrastructure projects could have, despite completed environmental assessment impact reports. The Bi-Oceanic Corridor specifically will run straight through the Chaco region, a vast, sparsely populated, dry forest part of the continent. It will bring transport and jobs to regions that have until now been largely off the grid — including threatened forests and the Ayoreo people, one of only a few uncontacted Indigenous tribes left in the world. Fast track Supporters argue the corridor could reshape trade routes for landlocked economies. For Paraguay, which relies heavily on river transport to reach global markets, the route promises direct access to Pacific ports and faster connections to Asia’s supply chains. IDB has positioned the corridor as a development tool rather than simply a transportation project. Officials say improved connectivity could attract new investment to historically isolated regions such as the Chaco, where infrastructure gaps have long limited economic growth. “The objective is to increase competitiveness and attract investment by addressing high trade costs, low regional integration, the limited participation of services in exports, and regulatory fragmentation,” Anabel González, vice president for countries and regional integration at IDB, told Devex. Critics worry that new roads could accelerate deforestation, land speculation, and agricultural expansion. The route cuts through ecosystems that host jaguars, giant anteaters, and fragile dry forests, while parts of the wider corridor intersect with Indigenous territories and protected landscapes. Development banks, including IDB, say environmental safeguards and consultation requirements are built into project financing. “One of the benefits of having us involved is having a very rigorous framework for environmental social issues,” said Doyle. There are also social and environmental concerns. "It's gonna majorly change the landscape,” Cecilia Vuyk, a development officer at the United Nations Development Programme country office in Paraguay, told Devex. “One of the main challenges the region has is to be able to move the commerce … in the region more rapidly. The Bi-Oceanic road is definitely going to help to do that.” However, she added, “it's also gonna have a social impact and an environmental impact that has to be seen, that has to be put on the table.” She pointed to the potential for trafficking of women and children — something UNDP is working on with local governments. Passport to the private sector The goal of the project is to bring in private investment. But private partners often shy away from regional projects because they can sink or swim depending on constantly shifting national regulations and politics. IDB says it is helping to facilitate those shifts, but did not go into detail on how. “[South Connection] addresses development challenges that go beyond any single administration,” said González. “The role of the IDB is to continue supporting countries through political transitions so that these important development projects can move forward.” Doyle told Devex that IDB has had an “ongoing commitment to the project, and we see a great deal of interest on the part of the governments.” “We think that it's a win‑win,” he added. “Everyone sees the benefit, the obvious upsides to integration, be it energy, telecommunications in the future, be it just commerce, and so we think that there's a real commitment.” IDB officials say they are trying to address what economists call the region’s “soft infrastructure” gaps: slow customs procedures, inconsistent regulations, and weak digital systems that make moving goods across borders costly and unpredictable. Part of the strategy focuses on digitizing trade documentation and harmonizing border procedures between participating countries. In practice, that could mean shared customs platforms, electronic permits, and interoperable logistics systems designed to reduce waiting times at border crossings. For companies moving cargo across South America, these bottlenecks often matter as much as physical roads. Trucks can sit for hours or days waiting for inspections or paperwork approvals. Still, the scale of coordination required is enormous. Governments must agree not only on infrastructure priorities but also on shared standards for customs, data exchange, and transportation regulation — integration that has historically proven difficult in Latin America. “Regional collaboration is effective,” Ambika Samarthya-Howard, managing director of the Solutions Insight Lab, told Devex on the sidelines of the IDB's annual meetings. “But every single country is exporting a different kind of product and has different ecosystems.”