March 21, 2008
Fidel's Legacy
Fidel Castro came to power in Cuba early in 1959. It's the understatement of the past half century to say the rest of the world has passed Cuba by:
. . . While poor compared to the United States, Cuba in 1958 had a per capita GDP of $3,170 according to the OECD. (Canada's was $8,947.). But Cuba outranked all other Latin American countries except four: Argentina, Chile, Uruguay and Venezuela.
Tellingly, in 1958, the island nation's per person wealth was higher than any East Asian country or colony, save Japan, which barely beat Cuba at only $3,290. Hong Kong had a per capita GDP of $2,924, Singapore's was $2,294, the Philippines' was $1,447, Taiwan's per person GDP stood at $1,387 and South Korea's was $1,112.
Thus in 1958, Cuba was almost as rich as Japan, one and half times as wealthy as Singapore, richer than Hong Kong, and three times as prosperous as South Korea.
Fifty years later, Cuba is one of the poorest countries in Latin America. . . . [Source: Calgary Herald]
That's what staying true to the "revolution" will do for you.
Posted by John at 10:17 PM | Comments (0) | TrackBackMarch 20, 2008
Remittances to Mexico Drop at a Record Pace
Another sign of significant weakness in the U.S. Hispanic market: in January, remittances to Mexico from the United States fell by the fastest rate, down 5.9%, since the Mexican central bank started tracking such figures in 1985. [Source: Reuters]
Posted by John at 10:10 PM | Comments (0) | TrackBackMarch 8, 2008
NAFTA and Unemployment in Ohio
Don Boudreaux has the numbers; unemployment in Ohio was 6.5% and falling at the time NAFTA took effect on January 1, 1994. The state's unemployment rate hit a low of 3.9% by February 2001, and is currently 5.8%.
In other words, it's hardly evidence of tremendous harm done by freer trade between the U.S., Mexico, and Canada.
Posted by John at 11:43 PM | Comments (0) | TrackBackYes, We Can . . . Expect Some Better Facts on NAFTA
Philip Levy makes the case, in an essay in The American I recommend you read in full:
Posted by John at 11:35 PM | Comments (0) | TrackBack. . .what about the factory workers in Ohio? Are they just imagining those lost jobs? Of course not. Manufacturing employment in the United States did hit a peak and then begin a steady decline. The problem is that the peak was in 1979, 15 years before NAFTA came into force. The long-term decline of American manufacturing jobs has much more to do with technological change than with trade. We’re producing more stuff with fewer workers.
But is there any harm if someone decides to run the same old Washington textbook campaign, take a few shortcuts of reasoning, and hold NAFTA responsible for the pain of displaced workers? There is. It offers false hope. It leads beleaguered citizens to think that a U.S. withdrawal from NAFTA would make their lives better, when it would almost certainly make their lives worse.
Can we demand better analysis and a more responsible approach from our aspiring political leaders? Yes, we can.
February 20, 2008
Castro Goes, But Cuba's Weak Demographic Future Remains
Fidel Castro is out of power--nominally, anyway--and Cuba is in leadership transition. Whoever leads the country over the next few years, regardless of their political philosophy or executive abilities, will have to confront a very poor demographic outlook. In case you missed it, we pointed to an extraordinarily interesting study of Cuba's demographic future, an outlook which which will challenge the most able leadership, much less a collection of cronies.
Posted by John at 6:25 AM | Comments (0) | TrackBackFebruary 4, 2008
Sinking Teeth in Mexico
Reuters reports that Mexico is attracting an increasing number of U.S. citizens seeking cheaper dental care:
Posted by John at 11:22 AM | Comments (0) | TrackBack. . . U.S. dental treatment costs up to four times as much as in Mexico, making it tough for uninsured Americans to treat common problems such as abscessed teeth or pay for dentures.
A dental crown in the United States costs upward of $600 per tooth, compared to $190 or less in Mexico.
Aspiring Mexican dentists are moving to border cities in droves and are luring American patients away from farther flung discount destinations such as Hungary and Thailand. . . .
January 24, 2008
Why the Miami Chamber of Commerce Owes Hugo Chavez One
The New York Times reports on the substantial relocation of many middle- and upper-income Venezuelans to Miami since Hugo Chavez came to power:
Posted by John at 11:12 PM | Comments (0) | TrackBackAccording to census data, the Venezuelan community in the United States has grown more than 94 percent this decade, from 91,507 in 2000, the year after Mr. Chávez took office, to 177,866 in 2006. Much of that rise has occurred in South Florida, making the Venezuelan community one of the fastest growing Latino subpopulations in the region this decade. In many ways, the Venezuelan influx is reminiscent of the Cuban migration spurred by Fidel Castro’s overthrow of Fulgencio Batista in 1959 and his imposition of a socialist state. . . .
Sinking their roots into the South Florida soil, Venezuelans have shifted their money into American banks, married and divorced, opened businesses, become active in local politics, and seen their children graduate from American schools. . . .
The growing Venezuelan population has been a windfall for Miami banks, as many Venezuelans bring their money here. Ken Thomas, a banking analyst in Miami, said the amount of that capital flight was unclear, although he said it was “clearly in the billions.”
December 9, 2007
Encouraging the Medellin Makeover
Now that Congress has confirmed a free trade agreement with Panama, it's time to get a similar agreement in place with Colombia. The country has undergone a startling makeover over the last decade or so, and Amity Shlaes sees the change particularly embodied in Medellin:
Medellin came into prominence in the 1980s, when Escobar made it the continent's cocaine capital. In his time and after, gang members ruled. Six Medellin policemen a day turned up dead. The overall death rate was 350 per 100,000, or 10 times that of the most dangerous U.S. cities, such as Baltimore. Kidnapping and gang wars devastated all other activity, such as the textile industry, or the construction of roads and sewers.
Locals who lived in the hillside shacks of the Santo Domingo section might want to walk to a job in the valley. But to do that they had to spend two hours picking their way down a rubble-strewn incline.
President Bill Clinton and lawmakers from both parties began to alter this picture when they passed a law to fund Colombia's demilitarization. Colombians did their part by electing Uribe president in 2002. Uribe demobilized tens of thousands of gangsters, persuading them to hand in their guns, confess to crimes and gave them stipends to begin civilian lives.
Medellin contributed by choosing a reforming mayor, a mathematician with a doctorate from the University of Wisconsin named Sergio Fajardo. Fajardo worked hour by hour with police to recapture the city. He built libraries to show that gangs weren't the only ones who could help communities. Fajardo also found an ingenious way to transport the stranded hillside citizens -- by ski lift. Today gondolas carrying eight passengers each sway up and down the hill on a wire -- a commuter hypotenuse that changes the urban profile.
Fajardo says funding the concrete-and-wire Metrocable wasn't so hard: ``It's remarkable how much money there is to spend when you don't keep it for yourself and your friends.''
The result of it all is that murders in Medellin dropped. At 29 per 100,000, the city's homicide rate is lower than Baltimore's. New peace allowed legitimate businesses, such as fresh flowers and textiles, to expand in Medellin. . . .
We need to affirm this change by getting a trade agreement in place with Colombia. As Shlaes rightly observes, this makeover is a work in progress and a permanent state of affairs.
Posted by John at 12:36 PM | Comments (0) | TrackBackDecember 5, 2007
The Christmas Which Keeps on Giving for Peru and the U.S.
Congress has overwhelming given its blessing to a free trade pact with Peru, which should gives further credence to optimistic forecasts of the country's future economic direction. Investor's Business Daily celebrates this milestone:
. . . Right off, 85% of U.S. goods will enter Peru duty-free; the rest of the tariffs go in 10 years. Peruvians will now snap up U.S. products at more affordable prices, raising their standard of living.
They have been waiting for this a long time. Peru has put in so many "internal free-trade" reforms to prepare for this pact that its economy is already one of the world's fastest-growing. Real growth clocked in at 8% in 2006, pushing its GDP to $77 billion. Purchasing power was up 10%, meaning Peru's buyers are ready to spend.
The pact also provides a new legal framework for settling business disputes, allows companies to hire the talent they want, and ensures that U.S. and Peruvian companies get treated on the same legal basis. Companies that benefit most are small ones that create jobs, not those that can hire fancy lawyers to guard their rights.
Hailing the treaty, the U.S. Small Business Administration says 38% of U.S. trade with Peru is already done by 5,000 such businesses (vs. 29% for the world as a whole).
For Peru, foreign investment will pour in. If the pact is as successful as the one signed with Mexico in 1994, trade between the two nations will quadruple from $9 billion within a decade.
In short, it's Christmas all around, with the free trade zone of the Americas stretching ever farther across the hemisphere's Pacific coast. It is a trade alliance that will bring confidence and prosperity as surely as it will provide an alternative to populist tyranny. . . .
This agreement is not just an early Christmas for 2007, but a gift which will keep on giving to both ecoonomies for the foreseeable future.
Posted by John at 9:07 AM | Comments (0) | TrackBackNovember 26, 2007
In the Developing World, "Lifestyle Diseases" Dwarf Other Healthcare Problems
A perverse indicator of rising global incomes and declining poverty rates is the rapidly rising incidence of chronic diseases such as heart disease, strokes, and type 2 diabetes. These "lifestyle diseases" now comprise the greatest share--over 60%--of death and disability worldwide. The science journal Nature reports:
Posted by John at 6:32 AM | Comments (0) | TrackBack. . . Some 80% of chronic-disease deaths occur in low- and middle-income countries. They account for 44% of premature deaths worldwide. The number of deaths from these diseases is double the number of deaths that result from a combination of infectious diseases (including HIV/AIDS, tuberculosis and malaria), maternal and perinatal conditions, and nutritional deficiencies.
Over the coming decades the burden from CNCDs [chronic non-communicable diseases] is projected to rise particularly fast in the developing world. Without concerted action some 388 million people worldwide will die of one or more CNCDs in the next 10 years. With concerted action, we can avert at least 36 million premature deaths by 2015. Some 17 million of these prevented deaths would be among people under the age of 70 . . .
The King of Spain Becomes a Ringtone Star
King Juan Carlos's outburst directed at Venezuelan leader Hugo Chavez has become a ringtone smash in Spain. Half a million people have downloaded the insult, generating roughly $2 million in revenue to date. [Source: BBC]
Posted by John at 6:12 AM | Comments (0) | TrackBackNovember 24, 2007
Mexican Workers Most Engaged By Their Jobs
In a Towers Perrin survey of workers around the world, Mexicans come out on top in terms of feeling engaged with their jobs. Over half of Mexican workers surveyed felt "engaged" by their jobs, while just 16% felt either "disenchanted" or "disengaged".
Globally, 21% of workers felt occupationally "engaged", while 38% are "disenchanted" or "disengaged". In the United States, the results were 29% and 28%, respectively. You can read more at IndustryWeek.
Posted by John at 9:11 AM | Comments (0) | TrackBackNovember 17, 2007
Golden Years for Latin America
The American's Duncan Currie chronicles what has been a remarkable past several years for Latin America:
In many ways, the past half-decade has been a remarkably encouraging period for Latin America, both politically and economically. Most governments have upheld the institutions of democracy and embraced responsible fiscal policies. “Economic management has really never been better,” says Peter Hakim, president of the Inter-American Dialogue. “Democratic politics is really very healthy in Latin America. This is a good period for the region.” . . .
“In some ways, Latin America has never had it better,” former Clinton administration official Eric Farnsworth said in a speech last month. “Economic growth across the region is at historic highs, particularly in nations that export natural resources and primary products in agriculture, energy, and mining. Even the so-called populists speak in the language of fiscal restraint, low inflation, and attracting foreign investment,” said Farnsworth, who now serves as vice president of the Council of the Americas. “Democracy across the region requires nurturing but it is largely secure, and human rights have never been more respected.” . . .
Curriie argues that for a Congressional refjection of a free trade pact with Colombia would be a terrifble signal and a colossal blunder. He's right.
Posted by John at 6:34 AM | Comments (0) | TrackBackNovember 13, 2007
What Hugo Chavez Has in Common With Jesus Christ
A lot, at least according to St. Hugo:
Posted by John at 2:14 PM | Comments (0) | TrackBackVenezuelan President Hugo Chavez, back in Caracas after a diplomatic spat with the King of Spain, has likened his situation to the persecution of Jesus Christ.
Mr. Chavez, who was told by King Juan Carlos to "shut up" at a summit in Chile, said if he were to keep quiet "the stones of the people of Latin America would cry out", paraphrasing words used by Christ in Jerusalem shortly before his crucifixion.
The Venezuelan information ministry later issued press releases detailing the relevant passages in the Bible to ensure the message was clear. . . .
[Source: Telegraph (UK)]
November 12, 2007
The Deep Roots of Mexican Migration
Álvaro Vargas Llosa visits with the grandson of Emiliano Zapata and sees the deep roots of Mexican migration in a revolution turned corrupt and in the history of a family:
. . . What has been the consequence of a century of collectivization of the land? In the 1990s, when trade policies became more liberal, Mexico's rural population found itself caught up in an extremely inefficient system that was undercapitalized, making it very difficult for Mexican peasants to compete with the outside world. When the government finally allowed the villagers to sell the ejidos, something they had been prevented from doing since 1917, many of them put their land on the market and left for Mexico's cities. When the urban areas did not offer improved conditions, they migrated to the United States. "If my grandfather came back," ponders Emiliano, "he would die of sadness." . . .
Mexico's official history has always maintained that Zapata fought for a socialist revolution. He did not. Zapata was many things -- a womanizer, a drinker, an occasional bandit. Some of his ideas were muddled, but he was no socialist. As the son of small-property owners -- they lived in an adobe house whose ruins I visited in Anenecuilco -- Zapata genuinely wanted his people to own their land. He mistrusted the state: He even refused to sit in the presidential chair when, in 1914, he and Pancho Villa entered Mexico City, seemingly on the verge of total victory in their revolution.
There is an ironic little coda to the story of the grandson, the landless Zapatista: A few years ago, some of his children tried to enter the United States in search of a better future -- a topic Emiliano was reluctant to discuss. . . .
Read the complete commentary here.
Posted by John at 2:44 AM | Comments (0) | TrackBackA Time for Diplomatic Niceities, A Time to Tell It Like It Is
Spain's King Juan Carlos, to his credit, knows the difference:
Posted by John at 2:29 AM | Comments (0) | TrackBackThe king of Spain told Hugo Chávez, the Venezuelan president, to "shut up" over the weekend in the Chilean capital after Chávez repeatedly called a former Spanish prime minister a "fascist," ending a regional leaders' summit meeting in high tension.
Chávez, who called President George W. Bush the "devil" on the floor of the United Nations last year, provoked the exchange Saturday with harsh words for former Prime Minister José María Aznar, who has in the past criticized Chávez.
Aznar, who was a close ally of Bush as prime minister, "is a fascist," Chávez said in a speech at the Ibero-American summit meeting in Santiago.
"Fascists are not human," Chávez said. "A snake is more human."
Spain's current prime minister, José Luis Rodríguez Zapatero, a Socialist, responded during his own allotted time by urging Chávez to be more diplomatic in his words and respect other leaders.
"Aznar was democratically elected by the Spanish people and was a legitimate representative of the Spanish people," Zapatero said, eliciting applause from the leaders there. "President Hugo Chávez , I think there is an essential principle to dialogue, and that is, to respect and be respected, we should be careful not to fall into insults."
Zapatero also noted the ideological differences he himself had with his conservative predecessor.
Chávez repeatedly tried to interrupt, but his microphone was off. The Spanish king, Juan Carlos I, who was seated next to Zapatero, angrily turned to Chávez and said, "Why don't you shut up?" . . .
November 6, 2007
Peru Rises
Andres Oppenheimer sees Peru as Latin's American's next rising economic star. Peru has been regularly growing at 6 percent a year for the past several years, the poverty rate has dropped 10 percentage points since 2001, inflation is less than 3%, and exports have grown by 24% annually since 2001. Foreign investors have noticed Peru's increasing attractiveness, as foreign direct investment has risen to $3.5 billion last year, dramatically higher than 2000's $810 million.
Not all is sunny and bright, as Oppenheimer notes, but there's reason for continued optimism:
Posted by John at 6:15 AM | Comments (0) | TrackBackPeru has a long way to go, especially when it comes to competing in the global economy. Just Wednesday, the World Economic Forum's new ranking of the world's most competitive economies ranked Peru 86th among 121 countries, down eight places from its spot last year.
But people who are optimistic about Peru in the long run may be right. García has had the wisdom to continue the sound economic policies of his predecessor, Alejandro Toledo, who despite his low popularity set the stage for long-term economic growth and a reduction of poverty.
This is no small achievement in Latin America, a region long characterized by boom and bust cycles where many presidents love to proclaim themselves founding fathers of supposedly new and ''revolutionary'' economic models -- like we are now seeing in Venezuela, Bolivia and Ecuador -- that help them gain absolute powers, but most often at the cost of destroying their countries' economies and increasing poverty in the long run.
Chile, and most recently Brazil, have opened a new chapter in Latin America's modern history: They are leftist-ruled countries that pursue responsible economic policies, attracting investments and creating the base for long-term growth. Peru is a welcome addition, and it may indeed become a star economy in the not-so-distant future.
August 27, 2007
Latin America's Flourishing Middle Class
The Economist examines the dramatically increasing numbers in Latin America's middle class, and the causes for the trend:
These trends are furthest advanced in Chile . . . But they are most dramatic in Brazil and Mexico, which between them account for more than half of Latin America's 560m people. In Brazil between 2000 and 2005 the number of households with an annual income of $5,900 to $22,000 grew by half, from 14.5m to 22.3m, while those receiving less than $3,000 a year fell sharply to just 1.3m . . . In Mexico, according to Alejandro Hope of GEA, a consultancy in Mexico City, the number of families with a monthly income of between $600 and $1,600 has increased from 5.7m in 1996 to 10.7m in 2006. . . .
In Latin America as a whole, according to calculations by Banco Santander, a Spanish bank, some 15m households ceased to be poor between 2002 and 2006. If the trend continues, by 2010 a small majority in the region will have joined the middle class, with annual incomes above $12,090 in purchasing-power-parity terms . . . In Mexico some 15m out of 27m households could have middle-class incomes by 2012, reckons Mr Hope.
You can read the article in full here.
Posted by John at 5:33 AM | Comments (0) | TrackBackAugust 24, 2007
More on Ireland's Rise as an Example for Latin America
My friend John Daly emailed me with some great feedback on my post on Ireland's rise as an example for Latin America:
From my reading, my interviews with people who work and invest in Ireland, and from my experience in Ireland, I would agree with Oppenheimer that Latin America--especially Mexico--should look at Ireland as an example. Certainly land reform and opening credit markets have worked brilliantly. The key, however, is education. I wrote about this last December while I visited Mexico.
One thing Oppenheimer failed to mention, though, was the move by Ireland to drop from their Constitution the notion of a unified Ireland in the 1990s. Once that was stated, the sectarian violence ended and commerce began.
We should also realize that Ireland's economy has also benefited from a perfect economic storm--which may not happen for Latin America. For the Irish, the wealthy retired German pensioner, looking for growth in their retirement funds, has heaped what appears to be an un-ending supply of capital into Ireland's educated and technologically based economy. It's one of the reasons why the Irish are getting fat while also owning some of the most expensive hotel real estate in--sit down you Anglophiles--London. My question to you, John, is this: Is there an equivalent of the German pensioners for Latin America?
A good book for your readers is The Pope's Children: Ireland's New Elite by David McWilliams, a fabulous book that profiles the new Ireland as David Brooks' Bobos in Paradise profiled America's new elite in the late 1990s. If your readers are interested in business opportunities in Ireland, they should visit the website for the US-Ireland Alliance and reach my good friend Trina Vargo, the organization's president.
Also, here's an interesting fact if you like to compare golf to business: the two reigning champs of the U.S. Open and the British Open are an Irishmen (Padraic Harrington) and an Argentinean (Angel Cabrera). Can golf be a leading economic indicator?
In answer to John's question regarding what the Latin American equivalent to Ireland's German investors, I responded as follows:
In a sense, I think Oppenheimer has a good answer for your question about the German pensioners: many Latin American countries, through their currently large resource-related revenues in oil, gas, minerals, etc., already have their own “German pensioners”. Further, investment in emerging markets on a global basis is much more prevalent today than it was 20 years ago, so Latin America has sources of capital from around the world which are much deeper than what Ireland had access to during its ascent.
Incidentally, I've spoken with Trina Vargo and she's a very helpful and knowledgeable source for anyone in the U.S. doing business in Ireland.
Posted by John at 5:47 AM | Comments (0) | TrackBackAugust 18, 2007
The Past vs. the Present in Trade
Michael Barone sees today's debates over free trade agreements with Colombia, South Korea, Peru, and Panama as a clash of the "looking backward" crowd vs. the interests of the future:
You can sum up the reason why most congressional Democrats are voting against FTAs in six letters: AFL-CIO. The AFL-CIO did a splendid job raising money and turning out voters for Democrats in 2006. Their efforts were highly sophisticated and they may very well have made the difference in Democrats gaining their majorities. And the AFL-CIO is dead set against free trade. It was unhappy with the Clinton administration when it pushed through the NAFTA with Mexico in 1993 and predicted big job losses, and is not phased by the fact that the United States has produced nearly 30 million new jobs net since that time.
This is a classic example of interests of the past trumping interests of the future. Nearly half of all union members today are public employees, almost none of whom are likely to be replaced by workers abroad. But the union movement is still in mourning for the hundreds of thousands of jobs in auto factories, steel mills and other industries that disappeared in the recession of 1979-1982. The denunciations of NAFTA and the votes against CAFTA and the pending FTAs are protests against what happened in Detroit, Cleveland and Pittsburgh a quarter century ago. . . .
In other words, the cow is out of the barn.
You can read Barone's complete commentary here.
Posted by John at 10:12 AM | Comments (0) | TrackBackAugust 5, 2007
If Ireland Can Do It, So Can Latin America
Andres Oppenheimer looks at a recent report from the Bank of Ireland which finds that the Irish are among the world's wealthiest people, and on average the richest in Europe. This is the same Ireland which was one of Europe's poorest countries less than two decades ago.
Latin American countries can achieve similar results, says Oppenheimer, if they follow Ireland's example in economic reform and investment:
When I visited Ireland in 2003, virtually everybody told me that while the European support funds helped mitigate some of the hardships that came along with the country's drastic economic opening, they weren't the most important factor.
Rather, Ireland's success is largely due to a combination of a 1987 temporary truce between labor unions and business owners; the elimination of bureaucratic hurdles that discouraged foreign investments; an across-the-board amnesty for tax evaders; a reduction of corporate taxes aimed at encouraging investments; a strong emphasis on science, technology and engineering in its universities; and the successive governments' determination to stay the course despite mounting social tensions at the start of the economic opening. . . .
Read Oppenheimer's complete commentary here.
Posted by John at 11:05 AM
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July 19, 2007
If the Democrats in Congress Were Truly Interested in the Labor Standards of our Trading Partners . . .
. . . they would press for a free trade agreements with Colombia instead what they are actually doing: pandering to their trade union base at home. Having a free trade agreement in place gives you the basis on which to press for changes in labor standards in other countries, as Robert Rogowsky and Eric Chyn explain in a commentary for The American:
. . . The 15 partners in U.S. trade agreements have made notable efforts to realize these rights [International Labor Organization standards]. In Morocco, for instance, a comprehensive new labor law went into effect in 2004 to combat child labor, reduce the work week, periodically review the minimum wage, improve worker health and safety, address gender equity in the workplace, promote employment of the disabled, guarantee rights of association, and prohibit employers from taking actions against workers because they are union members. Similarly, the Costa Rican government is taking steps to create a better environment for workers. The government has issued new administrative guidelines to deal with anti-union activities and increased the Ministry of Labor budget by 25 percent between 2002 and 2005, strengthening enforcement and labor official training efforts. Thirty-seven new labor court judges have also been appointed to address a backlog of labor cases in the judicial system.
These developments highlight only some of the results of established U.S. trade policies on labor standards in developing countries. It is true that the recent exposure of labor standards violations in Jordan, a U.S. free trade partner, shows that trade commitments are not a panacea. Active enforcement and monitoring efforts complement trade agreement labor measures. Nonetheless, the economic incentive to trade duty-free with the United States is a profound one, and those interested in raising global labor standards have used previous U.S. trade preference agreements to create change rather effectively for a long time. Meanwhile, current talks between Congress and the White House also give reasonable hope that U.S. trade policy will continue to promote labor development.
As Rogowsky and Chyn point out, the worldwide supply of labor available to the global economy has tripled to about 3 billion since 1980, driven in large part by China and Russia's opening to globalization. Giving Colombia, a country of 45 million people, the finger on a free trade agreement is hardly going to counter this megatrend in labor and its attendant effect on wage rates. Further, it's a terrible way to treat a country which has made extraordinary progress in reforming it economy and making the country attractive for foreign investment.
Posted by John at 3:39 AM | Comments (0) | TrackBackJuly 2, 2007
Spain Being "Latinized"
That's the observation of one Spaniard quoted in a Houston Chronicle story on the significant rise in immigrants from Latin America to Spain. The number of Latin American immigrants has quadrupled in four years to 1.8 million, a large number for a country with a population of 40 million.
Posted by John at 7:28 AM | Comments (0) | TrackBackJuly 1, 2007
Implications of a Plunging Fertility Rate in Mexico
In the fifteen years between 1990 and 2005, fertility rates in Mexico dropped from 3.3 children per female to 2.1, according to the World Bank. This rate of fertility is significant in that it represents the breakeven point for stable population in the developed world. Robert M. Dunn, Jr., writing at The American, observes that this trend means that Mexico will have an aging population trend all its own in coming years, as the proportion of young to old falls:
. . . As labor markets in Mexico tighten and wage rates rise, far fewer Mexican youngsters will be interested in coming to the United States. Since our baby boomers will be retiring at the same time, we could face a severe labor shortage.
Mexican immigration to the U.S. is already slowing, thanks in part to a cooling in housing starts and a concomitant slackening in demand for construction labor.
Posted by John at 4:09 AM | Comments (0) | TrackBackJune 5, 2007
While Poland May Be Healing, Cuba is Still in a Coma
In 1989, Polish railway worker Jan Grzebski went into a coma following a accident on this job. At the time, Communist strongman Wojciech Jaruzelski was in charge and the economy was in shambles.
Miraculously, Grzebski just came out of his coma; his homeland is now a democracy with a liberalized economy, boasts GDP growth of better than 7%, and has plans to erect a statue of President Ronald Reagan.
While happy to be alive and grateful to his wife whose care is credited with his recovery, Grzebski is still in a daze:
"When I went into a coma there was only tea and vinegar in the shops, meat was rationed and huge petrol lines were everywhere," Grzebski told TVN24, describing his recollections of the communist system's economic collapse.
"Now I see people on the streets with cell phones and there are so many goods in the shops it makes my head spin."
Sadly, anyone coming out of a 19 year coma in Cuba doesn't see much of a difference in the place, as Bella Thomas writes in Prospect, yet visitors (and filmmakers) from the West continue to romanticize the "revolution":
. . . [The Cuban people] are far poorer than their eastern European counterparts were in 1989: the average wage, at $20 a month, can barely feed a single person for a couple of weeks. You cannot spend any length of time in Havana without noticing the lack of food for the majority of Cubans. The mother of a friend, an old lady who lived in one tiny rotting room in a former brothel with her son, gets by selling matchboxes to her neighbours, having stolen them from the factory where she worked. Another acquaintance keeps pigs on her balcony and sells pork to a few locals. The luckier ones sell cigars or taxi rides to foreigners. An elite work in hotels.
Healthcare and education are supposed to be the redeeming graces of the regime, but this is questionable. There are a large number of doctors, but, according to most Cubans I know, many have left the country and the health system is in a ragged state—-apart from those hospitals reserved for foreigners—-and people often have to pay a bribe to get treated. Michael Moore, the American film director, who has recently been praising the system should take note of the real life stories beneath the statistics. I went into a couple of hospitals for locals on my latest visit. In the first, my friend told me not to say a word in case my accent was noticed, as foreigners are not allowed in these places. I was appalled by the hygiene and amazed at the antiquity of the building and some of the equipment. I was told that the vast majority of Cuban hospitals, apart from two in Havana, were built before the revolution. Which revolution, I wondered; this one seemed to date from the 1900s.
On another occasion, I saw a man in a white coat with a stethoscope around his neck hurrying along the boulevard of Vedado, in west Havana. We struck up a conversation. He was on his way to the hospital around the corner. I asked him if he would take me there. He was charming and intelligent, and had that ease of communication that many Cubans possess: he wasn't at all taken aback by an unknown woman in dark glasses asking to accompany him to work. The doctor told me that I shouldn't be too shocked; the hospital was being "refurbished." The building certainly was in a state of filth and decrepitude. This was not a place one would want to be ill in.
There are success stories, such as the biotechnology industry, but these are exceptions. Most Cubans know this. Most also know that liberalisation is vitally needed, but they are cautious about speaking openly, partly because they have too much else to think about (such as how to get food), partly because living under a dictatorship generates extraordinary levels of patience, and partly because questioning the regime can lose you your job or even land you in prison. . .
Thomas suggests that were the U.S. to end its embargo, the resulting flood of capital into the country would make the Castro regime sicko. Maybe then the average person in Cuba would receive the same healthcare which enabled Jan Grzebski to wake up and see the eleven grandchildren born to his four children while he was in a coma.
Posted by John at 4:46 AM | Comments (0) | TrackBackMay 18, 2007
Loving Peter Drucker in Bogotá
Currently, the largest number of Google searches for "Peter Drucker" are occurring in Bogotá, Colombia. Medellín is number two.
Just one indication, says BusinessWeek in a very interesting overview, of the fundamental change occurring in Colombia.
Posted by John at 9:29 PM | Comments (0) | TrackBackMay 2, 2007
Guess Whose Rate of Investment in the United States is Growing the Fastest?
It's investment from Latin America, which is growing faster than traditional large sources such as Britain or Japan. The International Herald Tribune reports on how this investment is getting so substantial that it is reaching America's heartland:
Direct foreign investment in the United States from Mexico, Central America and South America rose from a tiny base of $8 billion in 1995 to $13.5 billion by 2000 but then jumped more sharply to $30 billion in 2005, according to the U.S. Commerce Department's Bureau of Economic Analysis.
Posted by John at 8:48 AM | Comments (0) | TrackBackAnalysts and government officials who track foreign investment say that number is continuing to rise rapidly. One recent example of that growth is Cemex's $14 billion deal to buy the Rinker Group, an Australian construction supply company with large operations throughout the United States.
Bush administration officials say they welcome the trend. "An open investment climate on our side," Franklin Lavin, under secretary of Commerce for international trade, said during an interview, "helps keep open the investment climate on the other side."
To be sure, Latin American investment still pales next to direct investment from big foreign investment sources like Britain or Japan. But it is growing at a faster rate than investment coming from most other regions. . . .
. . . the surge [of investment] has now gone way beyond heavily Latino cities like Miami and Los Angeles, with Latin American companies producing, selling and providing satellite-delivered communications, graphics software, sweets, tiles and even guns.
The Brazilian company Embraer, which builds commuter jets, is servicing airplanes in Nashville, Tennessee. ARPL Tecnologia Industrial, a Peruvian company, recently started work on a $140 million cement plant in Arizona. As Latin American executives see it, their spread through the United States is a natural extension of their search for markets. . . .
April 17, 2007
Living Large in Venezuela . . .
. . . on oil profits, of course. Our 1999 technology bubble looks tame by comparison, as Alexandra Starr, writing in The American Scholar, reports:
. . . My aunt, a Caracas radio personality, told me that a surgeon who advertises on her show had expanded his office twice in the previous five months and still could not accommodate all of the women who poured into his office demanding that their breasts be enlarged to C-cup size.
The booming economy may make elective surgery and luxury vehicles affordable for the upper-middle class, but the Venezuelans who are amassing the immense fortunes are the Boliburguesa, or the members of President Chávez’s inner circle. (The name refers to the president’s leftist Bolivarian revolution and the bourgeoisie.) Boliburgueses had constructed mega-mansions in the most storied Caracas neighborhoods and bought spanking new jets. A journalist friend who shadowed one of Chávez’s closest allies was chauffeured around in a bulletproof BMW, flanked by Korean bodyguards who can allegedly brain a would-be assailant with a butter knife at a distance of 20 meters. "It was like something out of Goldfinger," my colleague said, still somewhat incredulous. Just as bizarre was his description of a Caracas sushi restaurant that had been enthusiastically recommended: rare tuna could be served—for an exorbitant fee—on the belly of a woman in the buff. . . .
[Thanks to FP Passport for the pointer.]
Posted by John at 4:00 AM | Comments (0) | TrackBackApril 12, 2007
Rangeling Free Trade Agreements in Latin America
Alvaro Vargas Llosa exposes the silliness going on regarding getting free trade agreements with Peru, Columbia, and Panama ratified:
There was a time when the United States seemed to bully Latin Americans into opening their doors to U.S. capitalism. The United Fruit Co., in the eyes of many Latin Americans, was the symbol of that era. What a colossal irony that, at the beginning of the 21st century, one of Latin America’s problems is persuading American politicians to ratify free trade agreements (FTAs) that would boost U.S. exports to the region. . .
Posted by John at 7:32 PM | Comments (0) | TrackBackThe politicians want stronger labor and environmental provisions written into the FTAs. But what they are actually asking for is absurd. They want trade pacts with Latin American countries to guarantee enforcement of standards set by the U.N.’s International Labor Organization (ILO) that are in conflict with U.S. labor regulations. There are only two possibilities here: either the Democrats are asking the U.S. government to make Latin Americans enforce laws that the United States thinks are bad and will not apply at home, or they are punishing Latin Americans for U.S. laws that they dislike and would like to change. . .
. . . Currently, most countries awaiting ratification of their respective FTAs are able to export most of their products to the U.S. tariff–free, thanks to preferential concessions that work in one direction. This means that American exports to Peru face an average tariff of 12 Percent, while Peruvian exports to the U.S. face no tariff. So what the Democrats, in effect, are saying to American exporters is this: we will continue to penalize you because we think Latin Americans should have labor standards that almost no one wants enforced in the U.S.!
According to a recent report by Business Roundtable, one in five American jobs is related to exports and imports. If Rangel and Co. think their tactics will delay globalization, they are seriously deluded. In the 1970s, developing nations were the source of 15 percent of total imports into rich nations. The proportion today is 40 percent—and growing. You can either adapt, as ordinary Americans have done—-the reason this economy continues to be strong and unemployment low—-or move to another planet. . . .
March 18, 2007
Growing Remittances to Latin America Imply Rising U.S. Hispanic Incomes
Remittances to Latin America continue to grow at double digit rates:
Migrant workers sent back more than $62.3bn to their families in Latin America and the Caribbean last year, a rise of 14 per cent on 2005.
The figures, to be released this weekend at the annual conference of the Inter-American Development Bank, confirm that remittances have become one of the region’s most important sources of foreign exchange. For the fourth successive year they will exceed the combined flows of foreign direct investment and overseas aid into the region.
Mexico (with a total of $23bn), Brazil ($7bn) and Colombia ($4bn) receive most remittances, but the flows are especially beneficial for the poorer and more marginal countries of Central America and the Caribbean, where they account for more than 10 per cent of GDP in many cases.
Don Terry, head of the Multilateral Investment Fund, the IDB agency that monitors the flows, argues that as 8m-10m families “would be below the poverty line” without the remittances. . . .
These rates of growth in remittances back home could not occur without rising incomes among Hispanics in the United States.
Posted by John at 11:17 AM | Comments (0) | TrackBackMarch 11, 2007
Challenges to Mexico's "Third Chance"
Ken Edmonds, a freelance journalist and economist who has lived in Mexico since 1980, observes that Mexico now confronts the third chance it has had in recent decades to join the ranks of the world’s rapidly growing emerging economies. The first two times were misses: in the 1970s when oil prices headed skyward, and in the late 1980s and early 1990s, when Mexico joined NAFTA and many businesses were privatized. Corruption, mismanagement, and limited political reform blunted the first two opportunities.
Under Calderón, writes Edmonds in El Universal, the challenge is largely political:
. . . Ten years of cautious management have tamed inflation and restored the macro-economy to a level that gives Mexico an investment-grade credit rating. Oil prices are higher than they’ve ever been. Growth, while not spectacular, is consistent. Foreign investment is high. So, what´s keeping Mexico from that burst of economic growth that took hold in India and China? There are still a few stars that have yet to align. Drug gangs are so powerful in Mexico that the government had to send in the army to deal with it. While President Felipe Calderón gets high marks for the move, even he admits that there´s a long way to go before that problem is solved. Corruption is still pervasive, from the streets to the justice department and to billion-peso infrastructure projects. Estimates of the cost of corruption in Mexico range from eight to 12 percent of Gross Domestic Product, far too high for a nation aspiring to high growth rates. While oil prices remain high, reserves are quickly declining. Economic nationalism, fears of privatizing the energy sector, and a goodly dose of corruption have kept this sector performing way below potential. Reforms to the electoral system, the tax system, the judiciary, the education system, energy, and a gamut of other areas stalled during the administration of Vicente Fox. Whether you blame Fox or his enemies, this impasse has been expensive, demoralizing and harmful to development. Political divisions are another hurdle. Can Calderón find a way to achieve real reform despite having a minority of legislators in Congress? At this point, there´s more hope than confidence. And so, Mexico remains parked on the cusp of achieving First World Status. This time, even the optimists are more cautious, and maybe that´s the best indicator of all.
March 3, 2007
CAFTA Halts "Ten Years of Lethargy" in the Salvadoran Economy
Posted by John at 8:29 AM | Comments (0) | TrackBackSalvadoran President Tony Saca said small and medium-size businesses are now exporting goods to the U.S., generating more jobs. Meanwhile, more U.S. companies are looking into investing in Central America.
CAFTA "helped break 10 years of lethargy that was dragging down our economy," Saca said. . . .
March 1, 2007
What Lou Dobbs and Hugo Chavez Have in Common
The Miami Herald’s Andres Oppenheimer writes that free pacts between the United States and Latin American are “passing the test with high marks”. Strange bedfellows bound together in their opposition to free trade, such as Lou Dobbs and Hugo Chavez, but U.S. Department of Commerce statistics Oppenheimer conveys speak otherwise. Chavez, he notes, is particularly hypocritical in his opposition to trade with the U.S., as Venezuela’s oil comes to this country duty free.
A New Guest Worker Program Introduced
This country has a “porous” southern border, concerns over border crime and security, abuse of migrants, and many of its citizens look down on its immigrants from the south. Many of these migrants are seeking work in the agriculture, construction, service industries. To help solve this problem, the government is introducing a guest worker program.
The country is not the United States, but Mexico. This plan was unveiled ahead of President Bush’s visit to Mexico several days from now, presumably to set an example.
Posted by John at 6:20 AM | Comments (0) | TrackBackFebruary 26, 2007
Early Positive Results for CAFTA
The Wall Street Journal’s Mary Anastasia O’Grady writes that the early returns on CAFTA are positive:
Posted by John at 6:30 AM | Comments (0) | TrackBack. . . Today, dollarized El Salvador is the most economically liberal Cafta country and may be in a position to benefit the most from the trade accord. Its total exports to the U.S. actually went down in the past year but that seems to be explained largely by the end of the WTO multifiber agreement. Without Cafta, the contraction could have been worse.
Offsetting the pain is an increase in imports, which are helping diversify the economy. According to the Economy Ministry, 60% of non-maquiladora imports from the U.S. last year were in six sectors and accounted for 88% of the growth in imports over 2005. Most were intermediate and capital goods for manufacturing and services. This includes yellow corn and wheat for the agroindustry, polyethylene for plastics, electronic equipment such as telephones and computers, fuels, and paper and cardboard for packaging.
El Salvador is also shifting away from traditional low-wage, garment-assembly operations toward the delivery of value-added, high-end apparel that includes all services bundled in the production process. According to Ricardo Sagrera, president of the textile group Hilasal, enhanced two-way trade is helping El Salvador capitalize on its comparative advantages -- notably its legendary work force and its proximity to the U.S. -- and compete with China. . . .
In Guatemala, which joined Cafta in July, the government says total trade grew by 17% in the second half of last year, compared with 5% in the first half. It also says that foreign direct investment tripled last year. A Guatemalan official I talked to said that the agreement has been good for his country because it has made doing business easier. For example, customs and photosanitary regulations have to be standardized and streamlined in order to comply with Cafta. This is leading to more efficient trading within the region.
That's important for companies like Wal-Mart, which has a substantial presence in Central America and is driving competitiveness in the retail sector. The retail giant taps suppliers in Central America for the perishables it sells. Greens come from Guatemala, El Salvador and Honduras, meat and pork from El Salvador. With Cafta, the distribution process has become more efficient.
Wal-Mart's need for perishables has also helped small and medium-sized farms in the region because the company has a program to develop suppliers. "They get a reliable marketplace and we get reliable suppliers," says a company representative. Wal-Mart's requirement that suppliers must be part of the formal economy could partly explain why business startups jumped by 20% last year. The company says that Cafta has been important also because the region is its largest supplier of apparel for its Western Hemisphere operations.
Nicaragua also is enjoying Cafta benefits. Total trade with the U.S. between last April, when it joined Cafta, and December was up by more than 20% over the same period in 2005. . . .
February 24, 2007
Mexico's Loss of Movie-Making Creatives . . . and the Revenue They Spawn
The Los Angeles Times examines the large and very talented Mexican film industry—the only problem is that it’s based largely in Los Angeles, or “Frijolywood”. The inability to get financing, lack of tax incentives, crime, and problems with unions are all cited as problems. The environment is so inhospitable to film makers that Mexico produces only about 30%-40% of the films it produced in its “Golden Age”.
One producer remarks: “The government has not realized what a great source of revenue film production could bring to the country. They are asleep at the wheel.”
Posted by John at 5:00 PM | Comments (0) | TrackBackFebruary 13, 2007
Look Who's Shopping for U.S. Goods
In an excellent commentary on the benefits to the U.S. economy of freer trade, Don Lambro observes that exports to the DR-CAFTA countries (El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica and the Dominican Republic) rose 18% last year, to $20.5 billion. Yes, the same countries critics of DR-CAFTA said were "too poor" to buy anything from the U.S.
Posted by John at 4:14 AM | Comments (0) | TrackBackJanuary 3, 2007
To Stay Competitive, Outsourcers Must Outsource
ComputerWorld reports that India's share of global outsourcing has fallen from 80% to 59% in recent years, as the offshore services market has become more global and more competitive. Even sizeable Indian offshore firms like Infosys and Tata Consultancy Services are outsourcing operations to other countries such as the Czech Republic and Uruguay. The need to find workers with specific IT skills, language, and cultural skills is driving this trend.
Countries benefitting from this trend include the Philippines, Central and Eastern European countries, Brazil, Canada, and Mexico.
Posted by John at 7:41 AM | Comments (0) | TrackBackDecember 19, 2006
Private Equity Trends in Latin America for 2007
Latin America is well positioned to experience the most important venture capital cycle since Christopher Columbus raised capital for his start-up. . .
So writes Matthew Cole, a Managing Director with North Bay Equity Partners, in a post worthy of your attention.
Posted by John at 4:00 AM | Comments (0) | TrackBackDecember 18, 2006
Politics and Latin American Free Trade Agreements
The Washington Post's Marcela Sanchez on politics and free trade agreements with Latin America:
Trade integration in the Americas is quickly approaching a major milestone. If agreements with Colombia, Peru and Panama are ratified in the coming year, more than half of Latin America will have free trade accords with the United States. . . .
Whether trade becomes freer or fairer, wilder or tempered, it has already had a "stabilizing influence" in Latin America, suggests Robert Zoellick, former U.S. trade representative and deputy secretary of state. In Peru, benefits stemming from trade preferences with the United States allowed Alan Garcia to campaign for the presidency as a pro-trade leftist candidate, shaking his reckless image from his first turn in power. The Dominican Republic-Central American Trade Agreement in turn may very well "put a constraint on how far (re-elected Nicaraguan President Daniel) Ortega can go," Zoellick adds.
Those are important considerations to keep in mind as trade is reshaped in the months to come. Particularly ironic would be if Democrats end up working against, rather than with, left-of-center leaders who see trade with the United States as their best chance to generate jobs and opportunity for their people.
Ironic to say the very least.
Posted by John at 4:24 AM
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December 7, 2006
Wal-Mart Can't Open a Bank in the "Free Market" U.S., But It Can In Mexico
While Wal-Mart cannot get approval for a bank charter in the U.S. from regulators protecting a gaggle of bankers fearful of competition, Mexico is much more open to the idea:
. . . The Finance Ministry has given final approval for the bank, said Wal-Mart de México on Wednesday. The bank would begin operating during the second half of 2007. Julio Gómez Martínez, the former chief executive of Bank One in Mexico, will lead the independent unit, to be called Banco Wal-Mart de México Adelante.
One possible reason for the different receptions in the United States and Mexico is that, by most estimates, as many as 80 percent of Mexicans do not have bank accounts. Because Wal-Mart plans to offer such accounts, local groups apparently had difficulty trying to stir up public outrage.
Working-class Mexicans have been largely shut out of traditional banks by high fees, minimum balance requirements and intimidating paperwork. Community banks barely exist.
In this venture, Wal-Mart, the world's largest retailer, still might be the little guy, at least for now. Among Wal-Mart's competitors in the banking business are global banks like Citigroup and HSBC, which have made almost no effort to attract the vast bulk of working-class Mexicans. [emphasis mine]
Shouldn't the United States, as a matter of public policy, be encouraging such business activity on the part of Wal-Mart and others who want to offer similar services to the unbanked? While the numbers of unbanked of the U.S. are much smaller (only about 10% of households vs. just under 80% in Mexico, according to this study.)
Isn't it very clear by now that larger U.S. banks aren't going to addressed the unbanked market? Don't we have enough community banks whose sole purpose seems to be making loans to real estate developers?
Free markets have a fascinating way of attacking problems when allowed to work properly, yet banking in the U.S. is not an entirely free market. While the industry is quite competitive in some respects, regulators use the "safety and soundness" argument to prevent market entrants. Such is particularly the case when the protected class--those banks already chartered and in business--start screaming loud enough about the "threats" posed by entities like Wal-Mart. It's just another example of how regulation seemingly intended to protect the public is in reality used to protect established market players.
Posted by John at 4:30 AM | Comments (0) | TrackBackChina and India are Real "BRICs", Brazil and Russia Are Not
So says John Lloyd and Alex Turkeltaub in a Financial Times editorial:
Few concepts have gained more currency among business people and politicians in recent years than the idea of the Brics – the giant, emerging economies of Brazil, Russia, India and China, whose weight and influence is supposedly changing economic and political realities. Grouping the four, however, obscures a simple fact: while the rise of China and India represents a real shift in the power balance, Russia and Brazil are marginal economies propped up by high commodity prices. This difference has profound implications.
The fundamental difference between China and India on one hand and Russia and Brazil on the other is that the former are competing with the west for "intellectual capital" by seeking to build top-notch universities, investing in high, value-added and technologically intensive industries, and utilising successful diasporas to generate entrepreneurial activity in the mother country. Chinese officials, for example, are committed to developing 100 world-class universities, with a focus on science and engineering; India boasts one of the most dynamic information technology sectors outside the US. Both countries face challenges but they are taking the steps necessary to generate sustainable economic growth.
Conversely, say the authors, Brazil and Russia are now buoyed by high commodity pri