The world is smaller now, with our faster and cheaper flights, our telecom and internet infrastructure, energy transportation lines, online meeting tools, translation applications and most important of all, our mindsets.

Türkiye has been trading goods, services and capital throughout Europe for centuries now. Similarly, laws supporting trade between the U.S. and Türkiye go back to the beginning of the 20th century. It passed the $1 billion (TL 18.23 billion) checkpoint in trade with our most prominent Asian partner, China, right after 2000.

But has the Turkish economy realized its full potential? Can we build new markets for the products of our beloved country or new suppliers that would enable us to support our industries?

Latin America with its 700 million population is a continent of mystery for us Turks. The continent has been able to communicate with almost a single language, Spanish, from Mexico to the icy seas of the Antarctic. The countries of this beautiful continent have been handling their necessities with the help of trade and customs agreements, time zones and cultural habits of their own.

Türkiye has already established trade networks with several large economies such as Mexico, Brazil and Argentina. But this vast continent has a lot of hidden gems in its heart. Gems such as Paraguay.

Paraguay is a country in the middle of the continent surrounded not only by the largely populated states of Argentina and Brazil but also by large rivers suitable for the transportation of large vessels, rivers that connect the country with the Pacific Ocean, hence with the world.

The country had closed its borders to the rest of the world until the changeover of the dictatorial government in 1989 and has been governed by democracy ever since, more importantly in an explicit effort of integration with the rest of the world with 31 embassies and 61 consulates inside its borders. They have been maintaining foreign investment-friendly policies, especially since 2013.

Orchid effect

Located between two of the largest economies in the world, it is difficult for Paraguay's economy to compete with its closest neighbors. According to the data received from the Organisation for Economic Co-operation and Development (OECD) and the World Bank, Brazil is the 11th largest economy in the world with $1.8 trillion gross domestic product (GDP) and holds the rank of fourth in the list of countries that receive foreign investments. Argentina, on the other hand, is the 31st largest with a $483 billion GDP and one of the fastest growing economies among the G-20 countries.

Compared to Argentina and Brazil, Paraguay is a small economy with a $39 billion GDP, blossoming under the shadow of relatively larger economies of its neighbors.

Growing under the shadow of the two largest economies of Latin America has a lot of accelerating effects on growth, employment and cash flow. Although this growing model has served Paraguay for years and made the country one of the world's biggest suppliers of cattle, soy, stevia and tung oil products, recent numbers from the International Monetary Fund (IMF) show that Paraguay's economy is in a recession phase.

Sustainable growth needs liberty at some level. For example, export products of Paraguay mostly depend on energy, agriculture or livestock industries. According to the statistics gathered from the Observatory of Economic Complexity (OEC), 60% of Paraguay's export revenues depend solely on Argentina and Brazil. This kind of statistic is a sign of a risky dependency; in other words, Paraguay is in dire need of diversifying its foreign trade.

Minimum Viable Product

The population of Brazil is 214 million and Argentina is 46 million. These two geographically large countries have been integrating with foreign investments since the Great Depression in the 1930s. Although these large economies present Turkish investors with many new opportunities, they are relatively red oceans where a lot of international companies have already been operating.

The least risky option, instead of putting a lot of resources into a large and fierce market, is to start with a relatively safe environment where you can get to know the rules, consumer habits and the dynamics of the continent. Although Paraguay is a small country compared to its neighbors, geographically it is larger than Germany or Japan. Companies fixed on achieving their goals and aiming to expand throughout Latin America can start with a small market in the middle where the crime is low, there are a lot of incentives and where they can find new partners who would make it possible for them to expand their operations throughout the continent with more advantageous conditions.

MERCOSUR

Paraguay, Brazil, Argentina, Uruguay and Venezuela gathered and signed the third-most inclusive and effective free trade agreement after the European Union and the North American Free Trade Agreement (NAFTA), connecting almost 300 million people with a trade capacity of billions of dollars.

MERCOSUR, officially known as the Southern Common Market, has a brief and effective approach: If you are in one country, you are already in all the countries.

Energy Costs

The country has two of the largest hydroelectric power plants (HPP) in the world within its borders. According to the data received from the World Bank, Paraguay consumes less than 25% of its own electricity production and produces less than half of its full potential. The surplus of electricity is exported and the buyers are often the country's nearest neighbors, but Argentina and Brazil enforce stringent conditions.

The most feasible way to transport electricity is over land. The dilemma here is that there is no other way for Paraguay to transport electricity to other countries without going through Brazil or Argentina. As a result, the two neighbors buy electricity for cheap from Paraguay and sell it for more than triple the price. That leaves Paraguay with only two choices with all the energy it produces: use it domestically or sell it for a cheap price. As a result, electricity prices are 60% cheaper in Paraguay than in Türkiye, which potentially has a great deal of value to decrease production costs.