Historically the United Kingdom had very strong commercial links with Latin America, as a major source of finance for investment and as a leading trade partner, but this episode of British history came to a close well before the scope of this study begins. Indeed, the main trend of post-war commercial relations has been to erode further linkages between the two areas, consigning Latin America to the periphery of UK economic interests. This chapter examines the main trends in British–Latin American commercial relations, the reasons for the limited and declining importance of these relations and possible future developments. For analytical purposes, trade, investment and aid will be dealt with separately, but it should be remembered that in practice they are very closely interwoven.

Trade

Exports

As a destination for UK exports Latin America has declined steadily in relative terms since 1950. In 1986 the Latin American market accounted for only 1.4 per cent of UK exports, down from 7.1 per cent in 1950 and 4.5 per cent in i960 (see Table 6.1). Indeed, throughout this period Latin America has been one of the least important regional markets for UK goods. To put the position in perspective, the total value of UK exports to Latin America in 1987 was £1.19 billion, slightly less than the £1.22 billion of exports to Norway and only marginally more than the £1.09 billion of exports to India.

The decline in the relative importance of Latin America as a market for UK goods has been more or less matched by a decline in the importance of the UK as a source of goods for Latin America.