There are few presidents in the world today with more radically different economic models than Argentina’s Javier Milei and Brazil’s Luiz Inacio Lula da Silva.

Milei is desperate to gut public spending, sell off state-run companies and slash regulations. Lula, meanwhile, hounds his aides to ramp up spending, revitalize state companies to drive industrial policy and strengthen regulations to protect workers and the environment.

That the two men lead neighboring countries — rival commodity powerhouses, long-time trade partners, allies and, of course, mortal enemies on the soccer field — makes the ideological clash all the more stark. Tensions have flared again and again. Milei has a habit of calling Lula a “communist.” Lula in turn sticks Milei in his bucket of “primitive” nationalists. Their top diplomats are then sent to patch things up.

But the huge divide remains clear in the pretty distinct crowd each leader attracts. Brazil’s former President Jair Bolsonaro, Hungary’s Viktor Orban and Elon Musk have all supported Milei, while Lula this week is hosting Emmanuel Macron in the Amazon and Brasilia, after holding more than one meeting with both Joe Biden and Olaf Scholz since his 2022 reelection. He also has China’s Xi Jinping in his corner.

So the question hanging over their countries and the broader developing world is: Which administration and which economic vision will prove more successful? The two leaders, of course, inherited far different economies. Brazil grew above expectations last year with inflation below 5%. Argentina is sputtering toward yet another recession with 276% inflation.

This makes rendering judgment difficult. And yet in a region that has seen power swing wildly from the political left to the right and back to the left over the past decade, the outcome will be scrutinized by government insiders, pundits and especially skittish investors who are waiting to see if Milei’s drastic reforms can turn Argentina into a more attractive option than Brazil. U.S. and China are also watching closely, given that both South American nations may play growing roles in their intensifying competition for food, energy resources and economic dominance in the coming years.

“Javier Milei has the potential of showing himself as a Latin American leader who is aligned with a new, more conservative right-wing vision that was crystallized in his speech at the World Economic Forum,” said Juan Cruz Diaz, managing director at the Cefeidas Group, a political risk consultancy. “Lula has been there, you know him. He may not be 100% aligned to some investors’ views, but they don’t see a situation in which they find some instability or lack of sustainability.”

Late in 2022, global investors had big expectations for Lula, the leftist who led Brazil during the boom-times of the early 2000s and who was poised to embrace a pragmatic platform once taking office. But even amid better-than-expected economic performance last year, they began to sour on Latin America’s largest nation.

A riotous insurrection seeking to overturn Lula’s victory in January 2023 fueled fears of political instability and was followed by an accounting scandal that sent the country’s retail giant into a tailspin. Then Lula’s battle with the central bank over high interest rates was the last straw that sent investors seeking refuge in faster-growing India and nearshoring-champion Mexico.

Argentina was hardly an option for much of last year, as inflation spiraled into the triple-digits and ramped up pressure on the already-limping economy. But Milei’s promises of “shock therapy” austerity and deep reforms caught investor attention, especially after he surged to an unexpected victory. Stocks soared when he won the November election.

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