Friday, October 28, 2011

Daniel Chavez Moran: Latin American Decade

Founded by Mexican philanthropist Daniel Chavez Moran, the nonprofit Vidanta Foundation and its affiliated institutions of higher learning focus on the promotion of Latin American studies, and the analysis of Latin American international relations and strategies for a positive integration of the region in the global economy. Daniel Chavez Moran came across these insights on the Latin American decade ahead from Alberto Ramos of Goldman Sachs, a leading global investment banking, securities and investment management firm:

  • This definitely could be the Latin American decade—if policy-makers seize the opportunity to adopt longstanding structural reforms geared to increase productivity, diversify the economic base, and boost real GDP growth. 

  • Second-generation reforms that could help unlock the growth potential in Latin American economies include reforms in education, labor markets, and trade, but also institutional reforms aimed at increasing the efficiency of the public sector and at attracting domestic and foreign investment. 

  • Brazil has emerged as an important power in the region and has in recent years attracted significant portfolio and direct investment flows. But the large capital inflows added pressure on the exchange rate, which has reduced the overall competitiveness of Brazil's non-commodity exporters. 

  • China's emergence as a global economic and financial powerhouse and major consumer of commodities has admittedly levered the economic performance of Latin America. At the same time, China is now a formidable competitor in the export of manufacturing goods, particularly for Mexico. 

  • Since Latin America is commodity rich (given its large endowment of natural resources), it experiences a significant positive "wealth shock" when commodity prices rise. The macro resilience accumulated in recent years has better prepared the region to withstand negative price shocks, and so a downward correction of commodity prices should not in itself trigger disruptive macroeconomic dynamics. 

Related posts: Daniel Chavez Moran on partnering for progress and Daniel Chavez Moran on Mexico’s global economy.

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