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  • Author: Roberto Setubal
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Gradually and firmly over the past 15 years, Brazil has consolidated a stable democracy, broken free from macroeconomic instability, and taken remarkable steps toward alleviating poverty and reducing a historically high level of income inequality. The country that welcomed Dilma Rousseff as its new president on January 1 is also the country that will host the 2014 World Cup and the 2016 Summer Olympics. Ms. Rousseff has a chance to push Brazil further along the road to development. To get there, she must maintain the achievements of the past and persevere in making the changes that Brazil needs. The opportunities are big—so are the challenges. Brazil's political, economic and social advances have paved the way for the development of a large consumer market. This puts the country in a position to benefit from today's global marketplace. Consumer spending in advanced economies is flattening out. At the same time, with their large potential consumer markets, emerging markets are becoming “consumers of last resort,” attracting an increasing share of global resources. Brazil is one of them. A new, larger middle class is now emerging. From 2003 to 2009, about 35.7 million people joined Brazil's middle-class income bracket. By 2014, Brazilian economists and business leaders estimate that another 30 million will have made that move. This development will have far-reaching implications for businesses, but also for society as a whole. Investment is very likely to rise in the years ahead. New projects now follow the expected consumer patterns of this new middle class. Investment is spurred by macroeconomic stability and other developments that have increased confidence and enabled a slow but steady decline in real interest rates. This has lowered the cost of capital and stimulated credit and capital markets. Investments will also increase for more specific reasons. First, the new deepwater oil fields will require vast financial resources and new technology, allowing Brazil's oil production to double by 2020. Second, pent-up demand for housing will be a catalyst for investment, since a significant number of Brazilians still live in sub-standard homes. Third, the World Cup and Olympics will require investments on a considerable scale. Preparing for these large sports events will benefit diverse sectors of the economy, through spending on ports and airports, urban transportation, sports facilities, hotels, telecommunications, energy, and security. Tourism is likely to benefit during the games, and also afterward. Nevertheless, with public and private domestic savings at their current low levels, Brazil will need to continue tapping external savings to finance growth. That means a larger current-account deficit and an exchange rate appreciated by capital inflows. Brazil will have to make the most of its available resources. It will be essential to create an environment that is conducive to private sector saving and investment. Ensuring stable macroeconomic conditions is critical. Remaining market-friendly in a well-regulated environment is also crucial for healthy and abundant financing. A well-established institutional design for regulatory agencies, which instills the necessary confidence that the private sector can undertake major, long-term projects, is indispensable. A great deal can be achieved through small but focused changes, instead of ambitious but often unrealistic regulatory agendas. The advance in credit regulation in Brazil is one such example. Developing a deeper market for private, fixed-income securities is important, but there needs to be a liquid secondary market, so that families have more confidence in extending the maturities on their investments. Just as we have such a market for equities, we can have one for fixed-income securities...
  • Topic: Security, Economics
  • Political Geography: Brazil
  • Author: Raul Rivera
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Most people have grown used to thinking about Latin America as a region of marginal global importance: painfully poor, violent, politically and economically unstable and, to top it all, fragmented into some 20-odd countries, each one different from the other. So when Jerry Wind, founding editor of Wharton School Publishing, invited me to speak on Latin America at a Wharton conference aimed at senior U.S. executives, I wondered what a group of U.S. businesspeople would be interested to hear about the region. Who, after all, would want to do business in a place like that? But how accurate are those perceptions? As I prepared for my talk, my conclusion was: not much. Let's address the four principal myths about the region one by one. Myth 1: Latin America Really Does not Matter Economically To start, the territory of continental Latin America is larger than the U.S. and China combined, four times larger than the European Union, and seven times larger than India—a country roughly the size of Argentina. With almost every ecosystem represented, it is in fact the world's most biodiverse region, containing five of the world's ten most biodiverse countries. The region's bio-capacity (the biological productivity of the land measured in hectares per capita) is also larger than any other's. Witness the region's role in the global food chain: it is the largest producer of soybeans, coffee, sugar, bananas, orange juice, a leading fishmeal producer, and a major grain and meat exporter. Its mineral riches keep world industry running: silver, gold, copper, zinc, lead, tin, bismuth, molybdenum, rhenium, telurium, borium, strontium—you name it. And it produces one out of every six barrels of oil. In fact, much of the global community depends on Latin America's vast riches for its prosperity—indeed, for its survival. To that point: the Amazon basin plays a crucial role in the recycling of atmospheric carbon, absorbing one fourth of all global emissions. Latin America's population, now approaching 600 million, is twice that of the U.S. and significantly larger than the combined population of the European Union. Those numbers do not include some 50 million U.S. permanent residents and citizens who trace their origins back to the region (and keep close ties with it). By 2050, the region's population will have risen to an estimated 800 million. Latin America is not poor either. It boasts a per-capita GDP similar to the global average: $10,000. It is no richer or poorer than the rest of the world. In fact, 400 million people, or two-thirds of all Latin Americans, already belong to the global middle class, with their purchasing power fueling much of Latin America's growth. With some 200 million people still living in poverty, Latin America's poor are still numerous. But their ranks are declining fast, at a rate of 5 million a year over the past decade. As a result, its Gini coefficient improved by 10 percent between 2002 and 2008. In brief: the world's poor are now elsewhere—mainly in Asia and Africa. A population this large combined with average income levels have turned Latin America into the fourth largest economy in the world, with a regional GDP of some $6 trillion (purchasing power parity). That is larger than that of Russia and India's combined—larger, in fact, than that of any country or region other than the U.S., the EU and China. Not bad for a “region of marginal importance.” You could argue that Latin America's fragmentation into small, separate markets makes all the difference. But you would be wrong. As a result of the free-market reforms of the past decades, Latin America's economy is now the most open to trade in the developing world, with average tariffs down to 10 percent or less. Intraregional trade is booming. Most significantly, Chile, Colombia, Mexico, and Peru have signed bilateral free-trade agreements (with both the EU and the U.S., though Colombia's is waiting for the U.S. Congress' approval). These agreements are giving rise to a free-trade zone of some 200 million consumers, larger than Brazil and fully open to global trade. Surprisingly, it does not yet have a name—or a space among the BRICs. It will, though. Let's name these four countries the L-4 for now...
  • Topic: Economics, Poverty
  • Political Geography: United States, Europe, India, Brazil, Colombia, Latin America, Mexico, Chile, Peru
  • Author: Robert A. Pastor
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Two decades ago, the leaders of Canada, Mexico and the United States forged an agreement that transformed North America from just a geographical expression to the world's most formidable economic entity. The North American Free Trade Agreement (NAFTA) eliminated most of the trade and investment barriers that had segmented the continent. Within a decade, trade among the three countries tripled and foreign direct investment (FDI) quintupled. By 2001, the three nations of North America accounted for 36 percent of the world product—up from 30 percent in 1994. And while many economists have waxed enthusiastic about the growing power of Brazil, U.S. trade with Mexico today is more than six times larger than its trade with Brazil. Unfortunately, since 2001 regional cooperation has stagnated. NAFTA, designed to expand trade and investment, has proven too limited in addressing the current issues facing the three countries. The time has come for the leaders of North America to recommit to regional integration if they want to effectively address the policy issues facing the region. For example, in the wake of the 2008 financial crisis, NAFTA can play a major role in job creation. A revamped agreement can potentially double exports and allow North America to once again compete with integrated markets in Asia and Europe. Beyond jobs, enhanced coordination and information sharing among NAFTA partners will allow for better control of immigration and the flow of illicit drugs across our borders. Finally, strengthening ties will begin to close the development gap between Mexico and its two neighbors, fortifying the economic and political bloc. The Rise and Fall of North America Though NAFTA has long faded from the headlines, the agreement's first years showed much promise. When the North American market was created in 1992, the impact was almost immediate. Contrary to the claim by U.S. presidential candidate Ross Perot that American jobs would be “sucked” into Mexico, the dramatic increase in North American trade coincided with the largest wave of job creation in U.S. history. Between 1992 and 2000, roughly 22 million jobs were added in the U.S., while trade with and FDI in Canada and Mexico grew more than 17 percent each year. The combination of expanded trade and investment meant that the three countries were actually making products together rather than just trading them. By combining U.S. capital and technology with Mexico's cheaper labor and Canada's abundant resources, the enlarged North American market experienced rapid growth, while Europe stagnated. From the onset of the U.S.-Canadian Free Trade Agreement in 1988 to 2001, trade among Mexico, Canada and the U.S., as a percentage of their trade with the world, leapt from 36 percent to 46 percent. The decline of the integration idea could be dated to the spring of 2001, when Presidents Vicente Fox of Mexico and George W. Bush of the U.S. met Canadian Prime Minister Jean Chrétien in Québec. Fox and his Foreign Minister Jorge Castañeda arrived with a suitcase filled with proposals, such as a North American Commission, a “cohesion” fund to reduce the development gap, a customs union and an immigration agreement. But Chrétien was not interested in including Mexico in Canada's talks with the U.S., and Bush rejected any new multilateral institution or fund. The opportunity for progress was lost. The share of trade among the three countries as a percentage of their trade with the rest of the world dropped from 46 percent in 2001 to 40 percent in 2009—almost to pre-NAFTA levels. The average annual growth of trade among the three countries declined by two-thirds, while growth of foreign direct investment decreased by one-half…
  • Topic: Development, Economics
  • Political Geography: United States, Canada, Brazil, North America, Mexico
  • Author: Saskia Sassen
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: There is little doubt that the North-South axis remains dominant for Latin America's geopolitical positioning. But new relations are emerging and deepening at subnational levels, in turn creating new intercity geographies and challenging that geopolitical notion. These relations are a direct product of economic and cultural globalization. Some examples are the shift of migration from Ecuador and Colombia toward Spain rather than the U.S., the growing economic relations between Chinese businesses and organizations and São Paulo and Rio de Janeiro, and the emergent relations between these cities and Johannesburg, South Africa. The Internet has allowed a rapidly growing number of people to become a part of diverse networks that crisscross the world. And nongovernmental organizations (NGOs) from various parts of the world are establishing active connections over social struggles in Latin America. In other words, beneath the still-dominant North-South geopolitics, transversal geographies are growing in bits and pieces. One trend is the formation of intercity geographies as the number of global cities has expanded since the 1990s. These subnational circuits cut across the world in many directions. A second trend is the growth of civil society organizations and individuals who are connecting around the world in ways that, again, often do not follow the patterns of traditional geopolitics. The New, Multiple Circuits There is no such entity as the global economy. It is more correct to say there are global formations, such as electronic financial markets and firms that operate globally. But what defines the current era is the creation of numerous, highly particular, global circuits—some specialized and some not—interlacing across the world and connecting specific areas, most of which are cities. While many of these global circuits have long existed, they began to proliferate and establish increasingly complex organizational and financial foundations in the 1980s. These emergent intercity geographies function as an infrastructure for globalization, and have led to the increased urbanization of global networks. Different circuits contain different groups of countries and cities. For instance, Mumbai today is part of a global circuit for real estate development that includes investors from cities as diverse as London and Bogotá. Coffee is mostly produced in Brazil, Kenya and Indonesia, but the main place for trading its future is on Wall Street. The specialized circuits in gold, coffee, oil and other commodities each involve particular countries and cities, which will vary depending on whether they are production, trading or financial circuits. If, for example, we track the global circuits of gold as a financial instrument, it is London, New York, Chicago, and Zurich that dominate. But the wholesale trade in the metal brings São Paulo, Johannesburg and Sydney into the circuit, while trade in the commodity, much of it aimed at the retail level, adds Mumbai and Dubai. And then there are the types of circuits a firm such as Wal-Mart needs to outsource the production of vast amounts of goods—circuits that include manufacturing, trading, and financial and insurance services. The 250,000 multinationals in the world, together with their over 1 million affiliates and partnership arrangements worldwide, have created a new pattern of relations that combine global dispersal with the spatial concentration of certain functions often while retaining headquarters in their home countries. The same is true of the 100 top global advanced-services firms that together have operations in 350 cities outside their home base. While financial services can be bought everywhere electronically, the headquarters of leading global financial services firms tend to be concentrated in a limited number of cities. Each of these financial centers specializes in specific segments of global finance, even as they engage in routine types of transactions executed by all financial centers. It's not just global economic forces that feed this proliferation of circuits. Forces such as migration and cultural exchange, along with civil society struggles to protect human rights, preserve the environment and promote social justice, which also contribute to circuit formation and development. NGOs fighting for the protection of the rainforest function in circuits that include Brazil and Indonesia as homes of the major rainforests, the global media centers of New York and London, and the places where the key forestry companies selling and buying wood are headquartered—notably Oslo, London and Tokyo. There are even music circuits that connect specific areas of India with London, New York, Chicago, and Johannesburg. Adopting the perspective of one of these cities reveals the diversity and specificity of its location on some or many of these circuits, which is determined by its unique capabilities. Ultimately, being a global firm or market means entering the specificities and particularities of national economies. This explains why global firms and markets need more and more global cities as they expand their operations across the world. While there is competition among cities, there is far less of it than is usually assumed. A global firm does not want one global city, but many. Moreover, given the variable level of specialization of globalized firms, their preferred cities will vary. Firms thrive on the specialized differences of cities, and it is those differences that give a city its particular advantage in the global economy. Thus, the economic history of a place matters for the type of knowledge economy that a city or city-region ends up developing. This goes against the common view that globalization homogenizes economies. Globalization homogenizes standards—for managing, accounting, building state-of-the-art office districts, and so on. But it needs diverse specialized economic capabilities. Latin America on the Circuit This allows many of Latin America's cities to become part of global circuits. Some, such as São Paulo and Buenos Aires, are located on hundreds of such circuits, others just on a few. Regardless of the case, these cities are not necessarily competing with one other. The growing number of global cities, each specialized, signals a shift to a multipolar world. Clearly, the major Latin American cities have circuits that connect them directly to destinations across the world. What is perhaps most surprising is the intensity of connections with Asia and Europe. Traditional geopolitics would lead one to think that Latin America connects, above all, with North America. There is a strong tendency for global money flows to generate partial geographies. This becomes clear, for example, when we consider foreign direct investment (FDI) in Latin America, a disproportionate share of which goes to a handful of countries. In 2008, for example (a relative peak of FDI), FDI flows into Latin America were topped by Brazil at $45.1 billion, followed at a distance by Mexico at $23.7 billion, Chile at $15.2 billion, and Argentina with $9.7 billion. On average, between 1991–1996 and 2003–2008, FDI in Brazil increased more than five-fold while tripling in Chile and Mexico. Among the countries in the Latin American and Caribbean region receiving the lowest levels of foreign investment in 2008 were Haiti, at $30 million; Guyana, at $178 million; and Paraguay, at $109 million. Globalization and the new information and communication technologies have enabled a variety of local activists and organizations to enter international arenas that were once the exclusive domain of national states. Going global has also been partly facilitated and conditioned by the infrastructure of the global economy…
  • Topic: Economics, Government, Non-Governmental Organization
  • Political Geography: United States, New York, America, South Africa, London, Colombia, Latin America, Mumbai, Sydney, Ecuador, Dubai, Chicago
  • Author: Gaston Chillier, Ernesto Seman
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Most Latin American countries have regarded immigration policy as a function of border protection, using approaches that emphasize security and law enforcement, including strict regulation of work and residency permits. Nevertheless, such policies have not only failed in recent years to curb the growth of undocumented migrants; they have also clashed with resolutions adopted in 2003 and 2008 by the Inter-American Court of Human Rights that guarantee migrant rights. Argentina is a notable exception. Thanks to a law passed in 2004, it has emerged as a model for innovative immigration policymaking. The law incorporated the recognition of migration as a human right. But what really made it historic was the open, consultative process used to conceive, develop and pass the legislation. How Argentina got there is an instructive story—and it may hold lessons for its neighbors and for other areas of the world. A Country of Immigrants Struggles with Its Limits As a country known both as a source and a destination for immigrants, Argentina has always carved out a special place for itself in Latin America. In the nineteenth century, it forged a national identity through an open-door immigration policy that was geared selectively toward European immigrants. But migration from neighboring countries such as Bolivia, Chile and Paraguay increased steadily to the point that—by the 1960s—the number of immigrants from its neighbors outpaced arrivals from Europe. In response, Argentina imposed stricter controls on the entry and exit of foreigners, beginning with legislation introduced in 1966. The legislation established new measures for deporting undocumented immigrants. In 1981, under the military dictatorship, legislative decrees that allowed the state to expel migrants were codified into law for the first time as Law 22.439, also known as La Ley Videla (named after the military dictator Jorge Rafael Videla, who was later convicted of human rights violations). The law contained several provisions that affected constitutional guarantees, including the right of authorities to detain and expel foreigners without judicial redress; the obligation of public officials to report the presence of unauthorized immigrants; and restrictions on their health care and education. For example, undocumented immigrants could receive emergency health care, but hospitals were then obligated to report them. The resolutions and decrees of the National Migration Office—first established in 1949—turned the office into a vehicle for the violation of migrant rights and precluded it from regulating immigration and addressing immigrants' status. From the downfall of the military dictatorship in 1983 until 2003, congress failed to repeal La Ley Videla or enact an immigration law in accordance with the constitution and international human rights treaties recognizing migrant rights. In fact, the executive branch expanded the law's discriminatory features and promoted the autonomy of the National Migration Office to establish criteria for admission and expulsion from the country without any legal oversight. The continuation of La Ley Videla relegated close to 800,000 immigrants—most of whom came from neighboring countries—to “irregular” status, with serious sociopolitical consequences. Efforts to rectify the situation at first met little success. In the absence of reform, Argentine immigration policy was based on individual agreements with countries like Bolivia and Peru to regulate immigrant flows. These agreements failed to address the larger realities of immigrant flows and Argentine authorities often expelled immigrants despite the treaties. As a result, courts repeatedly upheld detentions and expulsions sanctioned by the immigration authorities, with no formal mechanisms to ensure justice for immigrants. In turn, the high cost of filing or pursuing an appeal generally made this an unlikely option. In 1996, this unjust and unsustainable situation led to the creation of the Roundtable of Civil Society Organizations for the Defense of Migrant Rights, a diverse coalition of human rights groups. The roundtable sought to counter xenophobic rhetoric from state ministries and from the president. It worked for migrant rights and included a diverse coalition of immigrant associations, religious groups, unions, and academic institutions. A key goal was to expose the contradictions and inconsistencies of La Ley Videla by sponsoring reports on human rights abuses of migrants, bringing cases to court and submitting complaints to the Inter-American Human Rights System. In 2000, the organization outlined a specific agenda to repeal La Ley Videla and to pass a new immigration law that respected the rights of foreigners. Criteria for the new legislation included: administrative and judicial control over the National Migration Office; reform of deportation and detention procedures to guarantee due process; recognition of the rights of migrants and their families to normalize their immigration status; and elimination of discrimination and other forms of restrictive control in order to ensure access to constitutionally guaranteed social rights and services…
  • Topic: Human Rights, Migration, Immigration
  • Political Geography: America, Argentina, Latin America, Chile, Bolivia
  • Author: Kevin P. Gallagher, Arturo Sarukhan, Anne-Marie Slaughter, Kurt G. Weyland
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Do traditional models of international relations apply in Latin America?
  • Topic: International Relations, Economics, Environment, Government
  • Political Geography: Brazil, Latin America, Mexico
  • Author: Robert Maguire
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Haiti's next president must put the country on a path to real development.
  • Topic: Development, Government, United Nations
  • Political Geography: America, Haiti
  • Author: Alejandro Grisanti
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: President Chávez' oil policies will bring few long-term benefits to Venezuelans.
  • Topic: Education, Government, Oil
  • Political Geography: Venezuela
  • Author: Jose Antonio Lucero
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Has the increased political involvement of Indigenous peoples improved their situation?
  • Topic: Government, Politics, Reform
  • Political Geography: America, Colombia, Venezuela, Ecuador
  • Author: Luis Moreno Ocampo, Susan Segal, Fernando Henrique Cardoso, Carlos Chamorro, Enrique Krauze, Alma Guillermoprieto, Dolores Huerta
  • Publication Date: 06-2011
  • Content Type: Journal Article
  • Journal: Americas Quarterly
  • Institution: Council of the Americas
  • Abstract: Reflections on a changing hemisphere.
  • Topic: Cold War, Development, Government, Human Rights
  • Political Geography: Cuba, Latin America