South America, the fourth-largest continent, extends from the Gulf of Darién in the northwest to the Tierra del Fuego archipelago in the south.
South America has diverse agricultural products, vast mineral wealth and plentiful freshwater. It also has rich fisheries and ports on three bodies of water: the Caribbean Sea, Atlantic Ocean and Pacific Ocean. The continent’s economy is centered on the export of diverse natural resources.
Agriculture
South America extends from a broad equatorial zone in the north to a narrow sub-Arctic zone in the south. The continent can be divided into four climatic regions: tropical, temperate, arid and cold.
Tropical climates cover most of the northern part of the continent. Tropical rainy conditions occur in the Amazon River Basin, the northeastern coast and the Pacific coast of Colombia; tropical wet/dry conditions occur in areas of Brazil. Areas in the tropical rainy climate get 180–250 cm (about 70–100 in) or more rainfall per year. The tropical wet/dry climate is characterized by distinct rainy and dry seasons. Both tropical climates are fairly hot year round, averaging about 22–25 °C (72–77 °F). The warm, wet climate is perfect for two of South America’s most important exports: coffee and cacao, which is the source of cocoa, the base ingredient in chocolate.
Brazil is the world’s largest exporter of coffee, earning about 8.8 billion in US dollars in 2022. Much of South America’s crop of cacao was ravaged by a fungus in 2000, but it has made a comeback, and cacao production increased in the early 2020s. Ecuador is a major producer of cacao and is expected to overtake several African countries to become the number one producer of cacao. Other crops grown in the tropical regions include fruits, such as avocados, bananas, mangos and pineapples, as well as cashews and several other kinds of nuts.
South America’s temperate climates, which are found in the Andes mountains and throughout Chile, are home to a number of industrial crops and livestock. Corn is produced throughout the temperate climates and soybeans have become an increasingly important crop in the Pampas. Brazil is now the top exporter of both of these foods. The Pampas’ vast, high-quality pastures are also the center of South America’s huge ranching industry. Brazil is the world’s largest beef exporter and Argentina is also a major player in the beef market.
Fewer crops are grown in South America's arid and cold climate regions. Arid regions receive little rainfall and cold climates have an average annual temperature below 10°C (50°F). While these conditions are not conducive for most fruits and vegetables, grains and potatoes tend to grow well. Research has shown that people in Peru have been cultivating potatoes for thousands of years and may have been the first to harvest them. As of 2024, Peru is the leading exporter of potatoes in Latin America. Quinoa is another indigenous crop that has been cultivated in parts of South America for centuries. Exports of this grain have grown due its recent surge in popularity around the world.
The colder climate regions are also used for livestock production. Grazing animals such as alpacas, llamas, sheep and vicuñas thrive in the cold climate regions of South America. These animals are bred for their meat and their wool, which is used in high-quality textiles exported throughout the world.
Forestry and Fishing
Forestry is a major economic activity for tropical South America, especially the Amazon River Basin. Many high-value tree species, such as mahogany and rosewood, are native to the rainforest. Lumber from these trees is exported to foreign markets for use in cabinets and floors. Lower-grade woods, such as eucalyptus, have also become major exports. Although eucalyptus is not native to the area, Brazil has made major investments into growing the tree and is now the world’s largest eucalyptus producer. South America has the second-most land dedicated to tree plantations of any continent (behind only Asia).
Marine fisheries are the most important economic activity along South America’s Pacific coast. Peru and Chile are among the ten highest fish catches in the world. Peru and Chile’s abundant anchovy catches are processed into fishmeal, an ingredient used in animal feed and fertilizer. Chile is a global leader in farm-raised salmon and Ecuador is an important shrimp exporter.
Mining and Drilling
The mining industry is another one of South America’s most important economic engines. South America is a major producer of copper and lithium, both of which are used for modern technology and clean energy solutions. Chile produces 27% of the world’s copper and Peru produces 10%. Demand for copper is expected to increase, due in large part to its use in wind turbines and solar panels. Chile is also a major producer of lithium, which is a critical component in electric vehicles and batteries for cell phones, computers and other electronics. Latin America provides 35% of the world’s lithium and contains more than half of the world’s reserves. South America is also a major producer of iron ore. Brazil is one of the top iron ore producers in the world, trailing only Australia, and its production has gone up in recent years. Finally, South America has significant deposits of nickel and graphite, both of which may play an important role in the transition to cleaner energy.
South America is home to some deposits of oil and natural gas, which are drilled for energy and fuel. Venezuela has the largest oil reserves in the world and is a top oil producer. Natural gas has historically been an important commodity in Argentina and Bolivia, but production has been unstable in recent years, and South American countries are experiencing increasing competition from other countries.
Industry and Innovation
South America is home to a number of engineering marvels, most of which are connected to managing the continent’s natural resources. The Itaipu Dam, operating since 1984, spans the Paraná River at the Brazil-Paraguay border. The dam produced a record 103.1 million MWh in 2016, making it the second highest energy producing dam in the world. In 1994, the American Society of Civil Engineers selected the Itaipu Dam as one of the Seven Wonders of the Modern World.
South America’s economic growth over the last half-century has prompted its cities to expand rapidly. São Paulo, Brazil, is an industrial powerhouse and the largest city in the Southern Hemisphere, with a population of roughly 12 million in the metropolitan area and an estimated 10 million living in the surrounding areas.
São Paulo’s economic opportunities have attracted many migrants, who have often been socially marginalized and forced to live in less desirable areas. Over time, this has contributed to the growth of dense neighborhoods, called favelas, located on the hillsides of São Paulo. In São Paulo, there are more than 1,600 favelas. Historically, favelas have been removed from the city center and disconnected from basic city services, such as water, sewage and electricity. Today, many favelas have more services and are better connected to other parts of the city through public transportation. They have become hubs of unique forms of dance and music.
Lima, Peru, is the second largest desert city in the world. The Lima metropolitan area has a population of about 11 million people and accounts for about one-third of Peru’s total population. Lima is known as the Gastronomical Capital of the Americas for the number and diversity of local dishes. These dishes bring together the city’s roots as a Spanish colonial center and the influences of both international immigrants (African, Chinese, Japanese) and indigenous people (Andean).
Much like São Paulo, Lima’s large size causes infrastructure challenges. Heavy traffic congestion is an effect of Lima’s indirect street and highway network. Major infrastructure projects have been initiated to address these problems, including expanding the city’s airport and building a “ring road” around the city that will connect several highways that currently do not intersect.
ChallengesSouth Americans are facing many challenges in protecting their natural resources and ensuring they are used wisely. Like many countries throughout the world, the countries of South America face new challenges as a result of climate change.
Several of South America’s top industries—including beef production, fishing and forestry—have a negative effect on the environment and may not be sustainable. For example, increasing production has come at a cost to Brazil’s rainforest, as trees are cut down to expand grazing land for cattle. Deforestation of the rainforest has been shown to increase temperatures locally in South America and to contribute to climate change around the world. Similarly, the production of eucalyptus in Brazil has had unintended negative impacts on the ecosystem. Eucalyptus is a non-native plant that grows quickly and releases chemicals into the soil that stops other plants from growing.
Some of the changes have also raised concerns among indigenous populations. Indigenous communities in Chile are concerned that the salmon fishing industry is under-regulated. Fish farms can damage the local ecosystem through use of antibiotics, which makes it difficult for communities, like the Kawésqar, to continue traditional fishing practices that are essential to their livelihood. The fishing industry is also affected by pollution, including a proliferation of plastic in the sea, which then breaks down into microplastics that cause harm to the fish and other aquatic animals that consume them.
Drug trafficking has become a major part of South America’s informal economy, fueling an industry worth billions of dollars. One major drug produced in South America is cocaine, which is made from the coca plant that grows primarily in Bolivia, Colombia and Peru. Organized drug trafficking rings, known ascartels, transport drugs from these countries to places across the globe, often exchanging the drugs for guns. Competition among cartels contributes to violence, and cartelshave become a serious security threat to South Americangovernments, especially in Colombia. Under pressure from the United States, the Colombian government had been taking a hard stance on drug production and trafficking, and it had engaged in a program to destroy coca plants. This has threatened the livelihood of coca farmers, so the Colombian government has shifted to providing incentives to coca farmers to grow other crops.
