Logjam.

Hindsight is 20-20, as they say. A few years from now, lots of people will look back at the stack of stalled trade deals on the desk of the U.S. Congress and say, "Wow, what were they thinking?" Only a decade ago, the idea of lowering trade barriers was considered a bit radical, political heresy and the province of supply-sider economists. Not any more.

Free trade turns out to have been remarkably well-timed for some countries. Peru's exports are surging. Brazil's, too. Countries of all sizes in-between are signing deals and looking for ways to beef up infrastructure to deal with it all. The monolithic conclusion that countries lose when they engage in free trade is hugely mistaken.

Economists often refer to a fancy theory known as Ricardo's law of comparative advantage. Short version is: Countries should compete where they are truly competitive, not struggle in sectors where no natural advantage will ever exist. If you live on top of a coal mine, better get digging. If you eventually learn how to export coal-mining expertise and equipment, so much the better.

While the politicians deal with buffering the shock of all this change (as well they should), companies have rushed forward. And not just big U.S. multinationals, but companies of all sizes in the hemisphere are making money like never before. Our annual ranking of the Top 500 Companies in Latin America, in this issue, tells the story. Look, too, at our exclusive conversations with CEOs at some of the biggest companies in the world, including HP, DHL, Embraer and Braskem.

Companies have figured out Ricardo's law. One need only look at the huge run-up in global stock markets of recent months to see the surge in action. Big Latin American conglomerates are, for the first time, really knocking hard on the door in developed markets, while foreign multinationals dot the capitals of even small countries looking for able bodies and able minds. Time to get digging.

--Greg Brown

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