Fortifying the Guatemala-Taiwan Partnership for Development

Commentary by Ryan C. Berg and Henry Ziemer

Published March 24, 2026

Introduction

Guatemala, with a population of nearly 19 million people in the heart of Central America, is the most important country in the world that maintains official diplomatic recognition of Taiwan. As the United States pivots its focus to the Western Hemisphere, and with it a strategy of warding off Chinese influence close to the U.S. homeland, countries such as Guatemala will assume an even greater level of importance in U.S. strategy. While the United States' pivot to the Western Hemisphere has been welcomed by many countries in the region as long overdue, the geopolitical environment remains challenging. Some tools of assistance, such as the U.S. Agency for International Development (USAID), have been curtailed; fortunately for Guatemala, a majority of USAID's remaining foreign assistance funding for Latin America and the Caribbean (LAC) is spent in the country.

Nevertheless, despite strong economic growth, Guatemala has tremendous development needs, and the country's continued relations with Taiwan could be a function of how well Guatemala's aid partners, along with Taiwan, assist the country in meeting those development needs. In this context, the CSIS Americas Program recently spent a week on field research in Guatemala, conducting semi-structured interviews with dozens of experts, private sector participants, members of civil society, and embassy stakeholders. These insights gleaned from on-the-ground engagement in Guatemala inform the analysis and recommendations in this commentary.

Guatemala's Development Challenges

Guatemala's economy is the largest in Central America, and the country boasts a robust and dynamic private sector. Its real GDP grew by nearly 4 percent in 2025, higher than both neighboring El Salvador and Mexico. However, the country's economy faces a number of structural growth headwinds, most notably with respect to physical infrastructure. Despite having Atlantic and Pacific ports, trans-isthmian trade is bottlenecked by the Interoceanic Highway (CA-9), which for most of its length is limited to just two lanes. A lack of maintenance and expansion of this thoroughfare means traffic moves from coast to coast at the sluggish pace of an average of 15 kilometers an hour in some places. The ports themselves are currently being assessed by the U.S. Army Corps of Engineers for potential expansion, which would allow Guatemala to bolster its export potential, as well as cut down on the waiting times for ships to dock, which currently average at around 90 days.

Just 56 percent of Guatemalans live in urban areas, compared to a regional average of around 81 percent for LAC as a whole. Nevertheless, the search for economic opportunities could bring a wave of internal migration to cities in the coming decade. Already, Guatemala City is experiencing the consequences of increased urbanization, resulting in high levels of traffic congestion as well as exacerbating issues related to crime and extortion. Smaller regional cities such as Quetzaltenango, Cobán, and Puerto Barrios could be poised to grow quickly as well, further stressing local transportation and residential infrastructure.

Energy generation is another challenge that impedes the country's competitiveness in more advanced manufacturing and higher rungs of the value chain. Interviews with both Guatemalan and Taiwanese private sector representatives revealed power costs to be an impediment to Guatemala's ability to attract investment through industrial parks. Currently, this means Guatemalan manufacturing remains limited to more basic rungs of the value chain, such as final assembly of finished parts imported from elsewhere. With more stable and cost-effective baseload power generation, Guatemala could begin to move into direct manufacturing of certain components. Taiwan could be of assistance here, as the country looks to climb the ladder of semiconductors and microelectronics. These technologies will take time, but Guatemala seeks to position itself for future investments in assembly, testing, and packaging, which could bear fruit over the medium-term.

At the international level, despite continuing to receive a sizable portion of the remaining U.S. development assistance, the United States has not engaged as closely with Guatemala as the country had hoped. President Bernardo Arévalo has thus far managed to avoid diplomatic clashes with the Trump administration, but he has not received the type of praise reserved for leaders such as El Salvador's Nayib Bukele or Argentina's Javier Milei. Guatemala's absence from the March 7 "Shield of the Americas" Summit was taken by some as an indication that, while not on bad terms with the United States, Guatemala was missing out on opportunities for closer collaboration. However, Guatemala was 1 of the 18 Western Hemisphere governments to join the Americas Counter Cartel Coalition, suggesting a pathway may remain to increased collaboration in the security domain.

Finally, despite a lack of diplomatic recognition, the People's Republic of China (PRC) is still making inroads in Guatemala. Interviewees identified the China-Guatemala Chamber of Cooperation and Commerce as providing a foothold for PRC commercial influence, and China's exports to Guatemala have more than doubled from $2.4 billion in 2019 to $5 billion in 2024. As with other countries in LAC, Chinese electric vehicles and consumer technologies have flooded into Guatemala as the PRC continues to search for new markets. Thus far, the Arévalo administration has given no public reasons to believe a diplomatic switch is in the offing, but China could seize upon presidential elections in 2027 to try its hand at flipping another ally of Taiwan.

Taiwan's Development Assistance

One of the most valuable tools at Taiwan's disposal for preserving its relationship with Guatemala is development cooperation. Taiwan and Guatemala have decades of experience working together in this sector on projects ranging from job training and agricultural security to larger-scale infrastructure investments. Indeed, today, Taiwan's cooperation with Guatemala continues to straddle both traditional development initiatives and infrastructure, such as supporting the Inter-American Development Bank's project to widen the CA-9 highway to four lanes.

Taiwan has also carved out important areas of comparative advantage for its development assistance, especially in healthcare and agriculture. In the health sector, Taiwan has again coupled investment in hard infrastructure with skills-based training and human capital development initiatives. In 2023, then-President Tsai Ing-wen inaugurated a $22 million hospital project that Taiwan helped develop in Chimaltenango. Most recently, Taiwan's assistance aims to expand Guatemala's maternal and neonatal care initiatives, including the training of doctors and nurses, as well as transferring technologies like ultrasound machines to improve access to care, especially for rural communities. The CSIS Americas team interviewed Guatemalan health professionals working in and managing the health sector.

Another area where Taiwan has also been able to leverage its technological advantages to great effect is in agriculture. Taiwan's climate shares similar features with Guatemala's, making the former able to share agricultural practices and even some types of fruits, vegetables, and other raw materials, such as bamboo, with the latter. Furthermore, Taiwan has worked with organizations such as the International Regional Organization for Plant and Animal Health (known by its Spanish acronym OIRSA) to combine satellite imaging, drones, and trained canine units to scan for Fusarium wilt, otherwise known as Panama disease, in banana crops. Bananas represent Guatemala's single largest export, valued at over $1.5 billion in 2024, but the disease's spread throughout the Western Hemisphere is raising major concerns over the industry's future trajectory-and potentially devastating future losses. Taiwan's ability to facilitate the transfer of advanced technologies and geospatial intelligence obtained by its Formosat-8 constellation has proven vital for monitoring banana crops more expeditiously than any human team could. The CSIS Americas team was able to interview authorities from OIRSA about this cooperation and visited a site just outside Guatemala City, where more information on the agricultural sector and cooperation on bamboo transformation is conducted.

Also unique to Taiwan's approach to development assistance is its government-to-government nature. Whereas many other international organizations, from USAID to the European Union, have pursued localization strategies emphasizing coordination with civil society and nongovernmental organizations to implement programs in-country, Taiwan primarily works with the government of Guatemala directly to identify key projects and lines of effort. This has both advantages and drawbacks for Taiwan-Guatemala development cooperation. Direct government-to-government development cooperation means Taipei can be responsive to immediate needs and identify complementarities with existing Guatemalan social assistance programs. It also guarantees high-level visibility into Taiwan's capacities and current projects. However, multiple interviewees stressed rapid turnover in government, both at the presidential level, but also of ministers and vice ministers, as an obstacle to long-term project implementation, as new appointees often seek to make their mark by readjusting priorities, putting their own stamp on, or launching new initiatives which may bear little resemblance to what their predecessors had emphasized.

Policy Recommendations

Guatemala and Taiwan have a strong foundation to build upon, but tighter cooperation is necessary to meet the former's development and infrastructure needs, while staving off China's increasingly bold efforts to isolate the latter diplomatically. Taiwan's International Cooperation and Development Fund (TaiwanICDF) should play a leading role in these efforts, but many will require enlisting other elements of the Taiwanese government and identifying new ways to work with Taiwan's international allies.

Innovative Solutions for Information Sharing

As the researchers discovered on the trip, Taiwan's diplomatic status can present challenges to engaging with potential development partners and like-minded nations within Guatemala, for fear of upsetting relations with China. The researchers met with representatives from the European Union, Canadian, and Spanish missions in Guatemala. All three expressed a lack of insight into Taiwan's development strategy in Guatemala, and a lack of awareness as to Taiwan's current projects and future projects.

Innovative engagement may be one way to solve the lack of formal coordination. A group of nations calling themselves the G13, comprised mostly of European, Asian, and American development partners, already exists to coordinate development assistance and hold periodic informational meetings. If Taiwan is unable to attend these meetings due to diplomatic sensitivities of some of the partners, one of the most frequent participants should assume the role of "friend of Taiwan" by serving as an informal representative of TaiwanICDF at these meetings. Such a role would ensure a modicum of coordination is possible between TaiwanICDF and other nations' development agencies, and also ensure that the G13 can avoid duplication of efforts with Taiwan.

Taiwan's Healthcare Advantage

In Guatemala, the healthcare system is under-resourced and under considerable strain, especially in rural areas. The researchers discovered that Taiwan is one of the few development partners making efforts in Guatemala's public health and health strengthening space. This includes strengthening the current system and building facilities in rural areas. Many other partners in the G13 have abandoned their efforts in this space. Taiwan has a long history of successful health strengthening efforts in other formal allies as well, most notably its successful digitization initiatives in Paraguay. A global leader in technology and medical systems, Taiwan is leading digitization efforts in Paraguay. Almost 90 percent of the country's health records are online, with an increasing number of patient interactions taking place online as well. The partnership is now in Phase Two. In Guatemala, interviewees mentioned similar efforts at digitization could combat waste, fraud, and abuse in the healthcare system and speed patient care.

Development to Complement Private Sector Trade

The researchers heard myriad stories about the need to increase bilateral trade between Guatemala and Taiwan. The two maintain a free trade agreement, but business chambers and associations relayed that commercial exchange has not increased dramatically between Guatemala and Taiwan. Sometimes, trade shows and delegations fail to produce tangible investment outcomes. TaiwanICDF should consider development projects that enhance the private sector's ability to increase trade flows and deliver more formal sector employment in Guatemala.

For instance, Guatemala's shrimp industry hopes to backfill some of that lost by Honduras upon switching official diplomatic recognition to China. Given that Honduras once sent about 40 percent of its shrimp exports to Taiwan, valued at over $100 million, there is room for Guatemala to grow these exports. However, particularities about Taiwan's shrimp market, local cuisine, and taste require Guatemala's shrimp industry to make adjustments before larger export volumes can occur. TaiwanICDF could invest in targeted training programs specifically aimed at facilitating greater bilateral trade between Guatemala and Taiwan.

Beyond tailored training programs, TaiwanICDF should consider bringing the private sector into some of its projects to achieve scale unachievable by TaiwanICDF alone. Some examples include the building of an industrial park outside Guatemala City and potential assistance with water desalination programs, which could feed water into tech industries known to be water-intensive. Getting these elements right would unlock Guatemala's ability to play a role in the assembly of solar panels or semiconductors under the government's new program called La Ruta del Chip ("the route of the chip").

Vocational Training Sponsored by TaiwanICDF

CSIS Americas Program researchers spoke to Guatemalan beneficiaries of educational exchanges with Taiwan. Many spoke highly of their experiences and the skills they gained. What was clear, however, was that the educational exchanges were typically university programs, not focused on vocational training. Another means to foment more trade between Guatemala and Taiwan would involve TaiwanICDF sponsoring vocational education exchanges. For example, researchers learned of plans by the Taiwan Electronics Manufacturing Association to nearshore some elements of electronics supply chains to Central America, and the Invest Guatemala program is a preferred partner of Taiwan's Central American Trade Office. However, this initiative would require vocational training on the use of certain types of manufacturing equipment. Another project encompassed plans to build a metallurgy hub for screws, components, nuts, and bolts on larger manufactured items. Taiwan is prepared to donate old machines used to cast molds and dyes no longer in use on the island, and no longer cost-competitive. These industries require specialist training before supply chains can move to Guatemala.

Partners for Infrastructure

The most common theme throughout the week of field research in Guatemala was the country's feeble and insufficient infrastructure. Too few ports to service the country's import and export goals, congested and half-built roads, and a main airport in need of upgrades. Given China's narrative regarding large infrastructure projects, it is important that TaiwanICDF be seen as playing a role in meeting Guatemala's considerable infrastructure needs. While this may be beyond TaiwanICDF's financial purview alone, the agency should seek to partner with organizations such as the Inter-American Development Bank or the Central American Bank of Economic Integration, to which it is a main donor, to increase infrastructure partnerships. In addition, the U.S. International Development Finance Corporation should consider a role in these efforts, given that the U.S. Army Corps of Engineers already has an agreement in place to perform feasibility studies for Guatemala's port expansion plans.

Improving development cooperation between Guatemala and Taiwan is not just a matter of delivering better outcomes for the Guatemalan people; it is a geopolitical priority for Taipei to retain one of its most vital allies. For the United States as well, building a stronger trilateral partnership between Taipei, Washington, and Guatemala City will be crucial for achieving a more stable, secure, and prosperous Western Hemisphere.

Ryan C. Berg is director of the Americas Program and head of the Future of Venezuela Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Henry Ziemer is an associate fellow with the Americas Program at CSIS.

Programs & Projects

Image

Report by Christopher Hernandez-Roy, Andrea Casique, and Natalia Hidalgo - April 1, 2025

Image

Digital Report by Ryan C. Berg and Rubi Bledsoe - August 31, 2023