Upload
api-25911686
View
220
Download
0
Embed Size (px)
Citation preview
8/14/2019 Economic Cooperation in Latin America
1/24
EconomicEconomiccooperation incooperation inLatin AmericaLatin America
Ing, Tom Dud, PhD.Ing, Tom Dud, PhD.
8/14/2019 Economic Cooperation in Latin America
2/24
8/14/2019 Economic Cooperation in Latin America
3/24
3
IntroductionIntroduction Latin America has 17 countriesLatin America has 17 countries
Colonized by Spain & Portugal (Iberian countries)Colonized by Spain & Portugal (Iberian countries)
Large, diverse populationsLarge, diverse populations 490 million people total490 million people total
75% of the people live in cities75% of the people live in cities
Several megacities (more than 10 million people)Several megacities (more than 10 million people) Industrialization & development grew since 1960sIndustrialization & development grew since 1960s
Free Trade Area of the Americas (FTAA) proposes to integrateFree Trade Area of the Americas (FTAA) proposes to integrateeconomies of Latin America, North America and the Caribbeaneconomies of Latin America, North America and the Caribbean(except Cuba)(except Cuba)
Natural resource extraction remains importantNatural resource extraction remains important
8/14/2019 Economic Cooperation in Latin America
4/24
8/14/2019 Economic Cooperation in Latin America
5/24
8/14/2019 Economic Cooperation in Latin America
6/24
IntroductionIntroduction
Common colonial pastCommon colonial past Often military regimesOften military regimes Differences across the regionDifferences across the region
Developing nationsDeveloping nations Main export articles agricultural productsMain export articles agricultural products
and natural resourcesand natural resources Large social disparitiesLarge social disparitiesThe role of the state in the economy isThe role of the state in the economy is
importantimportant
8/14/2019 Economic Cooperation in Latin America
7/24
8/14/2019 Economic Cooperation in Latin America
8/24
0
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
1 600 000
1 800 000
2 000 000
Brazil
Mexico
Argentina
Colombia
Venezuela
Chile
PeruEcuador
DominicanRepub
lic
Guatem
ala
CostaRica
ElSalvador
Bolivia
Uruguay
Panama
Honduras
Paraguay
Nicaragua
Haiti
GDP in Latin America in 2008 (mil. USD, PPP)
8/14/2019 Economic Cooperation in Latin America
9/24
0
2000
4000
6000
8000
10000
12000
14000
16000
Chile
Argentina
Mexico
Uruguay
Venezuela
Panam
a
CostaRica
Brazil
Peru
DominicanRepublic
Colombia
ElSalvador
Ecuador
Guatem
ala
Paraguay
Bolivia
Honduras
Nicaragua
Haiti
GDP/c in Latin America in 2008 (USD, PPP)
8/14/2019 Economic Cooperation in Latin America
10/24
Main features of ecoMain features of economic developmentnomic development
in Latin Americain Latin America
Import substitution policiesImport substitution policies Strong role of the state in theStrong role of the state in the
economyeconomy
Huge investments in order to buildHuge investments in order to buildnational industries and infrastructurenational industries and infrastructure
PopulismPopulism Low level of domestic savings theLow level of domestic savings the
need of external financingneed of external financing
8/14/2019 Economic Cooperation in Latin America
11/24
Failure of import substitution Failure of import substitution The Lost DecadeThe Lost Decade
La Dcada Perdida
It is a designation to the financial period ofcrisis in Latin America during the 1980s
Average level of economic growthbetween 1980 and 1989 1,2
Hyperinflation in many countries
Growth of income and wealth inequality Unsustainable foreign debt
Rise of military regimes in the region
8/14/2019 Economic Cooperation in Latin America
12/24
Main factors behind theMain factors behind theeconomic collapseeconomic collapse
The prices of main export articles (agriculturalThe prices of main export articles (agriculturalproducts and natural resources) were falling in theproducts and natural resources) were falling in theinternational marketsinternational markets
The price index of these products fell 28 % in the 80sThe price index of these products fell 28 % in the 80s
and the share of Latin American countries decreasedand the share of Latin American countries decreasedconsiderably (1960 7,7 %, 1990 4 %)considerably (1960 7,7 %, 1990 4 %) The economic problems led to the fall of the domesticThe economic problems led to the fall of the domestic
consumption what led to the collapse of the industryconsumption what led to the collapse of the industry The export oriented industries were not able toThe export oriented industries were not able to
support the economysupport the economy Collapse of domestic private investmentsCollapse of domestic private investments Corruption and capital flightCorruption and capital flight
8/14/2019 Economic Cooperation in Latin America
13/24
MacroeconomicMacroeconomicdisequilibriumdisequilibrium
Rapid growth of the consumer prices fromRapid growth of the consumer prices from19801980 (80 56 %, 85 274 %, 89 1023 %)(80 56 %, 85 274 %, 89 1023 %)
Record levelsRecord levels: Argen: Argentinatina 3731 %, 3731 %,Nicaragua 6727 %, Peru 2948 %Nicaragua 6727 %, Peru 2948 %
Long term deficits in the balance ofLong term deficits in the balance ofpaymentspayments
Rapid growth of external debt from 228 bln.Rapid growth of external debt from 228 bln.
USD to 481 bln. USDUSD to 481 bln. USD Fiscal policy is a notorious weak point ofFiscal policy is a notorious weak point ofLatin American governments huge budgetLatin American governments huge budgetdeficits are normaldeficits are normal
8/14/2019 Economic Cooperation in Latin America
14/24
Economic reforms in theEconomic reforms in the90s90s
Democratization and economic reformsDemocratization and economic reforms Washington consensus created by the MMFWashington consensus created by the MMF
and the World Bankand the World Bank LiberalizationLiberalization
PrivatizationPrivatization Anti inflation policiesAnti inflation policies Growing economic cooperationGrowing economic cooperation Mintaorszg ArgentnaMintaorszg Argentna
Argentina model countryArgentina model country Economic turbulences and crises in the late 90sEconomic turbulences and crises in the late 90s
Brazil and Argentina Brazil and Argentina
8/14/2019 Economic Cooperation in Latin America
15/24
Chile Chile oppression and economicoppression and economicreformsreforms
Salvador Allende Salvador Allende socialist presidentsocialist president 1970 1970
Military coup led by August Pinochet in 1973Military coup led by August Pinochet in 1973(financed by US corporations and the CIA)(financed by US corporations and the CIA)
8/14/2019 Economic Cooperation in Latin America
16/24
Chile Chile oppression andoppression andeconomic reformseconomic reforms
Neoliberal economic policiesNeoliberal economic policies Chicago Chicagoboysboys
Result fastest growing economy in LatinResult fastest growing economy in Latin
AmericaAmerica Reform of the pension system one of theReform of the pension system one of the
most copied and controversial reformsmost copied and controversial reforms
1989 1989 the return of democracy intothe return of democracy into ChilChilee Limited role of the state in the economy Limited role of the state in the economy
the only exception is the copper miningthe only exception is the copper mining
8/14/2019 Economic Cooperation in Latin America
17/24
Chile Chile oppression andoppression andeconomic reformseconomic reforms
Chile is the local champion of freeChile is the local champion of freetrade FTAs with USA and Canadatrade FTAs with USA and Canada
Problem still big income inequalityProblem still big income inequality
8/14/2019 Economic Cooperation in Latin America
18/24
Start of economic cooperationStart of economic cooperationin Latin Americain Latin America
ALALCALALC - Latin American Free Trade Association- Latin American Free Trade Association Goal - creation of a free-trade zoneGoal - creation of a free-trade zone
Lost impetus as of 1965, and almost come to aLost impetus as of 1965, and almost come to acomplete standstill in the 70'scomplete standstill in the 70's
ALADI - The Latin American IntegrationALADI - The Latin American IntegrationAssociationAssociation Goal - economic preference zone was establishedGoal - economic preference zone was established
creating conditions favorable to the growth of bilateralcreating conditions favorable to the growth of bilateralinitiativesinitiatives
8/14/2019 Economic Cooperation in Latin America
19/24
Mercosur - Mercado ComnMercosur - Mercado Comndel Surdel Sur
It is a Regional Trade Agreement among Argentina, Brazil, ParaguayIt is a Regional Trade Agreement among Argentina, Brazil, Paraguayand Uruguay founded in 1991 by the Treaty of Asuncin, which wasand Uruguay founded in 1991 by the Treaty of Asuncin, which waslater amended and updated by the 1994 Treaty of Ouro Preto.later amended and updated by the 1994 Treaty of Ouro Preto.
Mercosur origins trace back to 1985 when Presidents Ral Alfonsn ofMercosur origins trace back to 1985 when Presidents Ral Alfonsn ofArgentina and Jos Sarney of Brazil signed the Argentina-BrazilArgentina and Jos Sarney of Brazil signed the Argentina-Brazil
Integration and Economics Cooperation Program or PICEIntegration and Economics Cooperation Program or PICE Bolivia, Chile, Colombia, Ecuador and Peru currently have associateBolivia, Chile, Colombia, Ecuador and Peru currently have associate
member status. Venezuela signed a membership agreement on 17member status. Venezuela signed a membership agreement on 17June 2006, but before becoming a full member its entry has to beJune 2006, but before becoming a full member its entry has to beratified by the Paraguayan and the Brazilian parliamentsratified by the Paraguayan and the Brazilian parliaments
8/14/2019 Economic Cooperation in Latin America
20/24
8/14/2019 Economic Cooperation in Latin America
21/24
8/14/2019 Economic Cooperation in Latin America
22/24
Union of South AmericanUnion of South AmericanNationsNations
ItIt is an intergovernmental union integrating two existingis an intergovernmental union integrating two existingcustoms unions: Mercosur and the Andean Communitycustoms unions: Mercosur and the Andean Communityof Nations, as part of a continuing process of Southof Nations, as part of a continuing process of SouthAmerican integration.American integration.
It is modeled on the European UnionIt is modeled on the European Union -- including aincluding acommon currency, parliament, and passportcommon currency, parliament, and passport
One of the initiatives of UNASUR is the creation of aOne of the initiatives of UNASUR is the creation of asingle market, beginning with the elimination of tariffssingle market, beginning with the elimination of tariffsfor non-sensitive products by 2014 and sensitivefor non-sensitive products by 2014 and sensitive
products by 2019.products by 2019.
8/14/2019 Economic Cooperation in Latin America
23/24
The Dominican Rep blicThe Dominican Republic
8/14/2019 Economic Cooperation in Latin America
24/24
The Dominican RepublicThe Dominican RepublicCentral America Free TradeCentral America Free Trade
AgreementAgreement Originally, the agreement encompassed theOriginally, the agreement encompassed theUnited States and the Central AmericanUnited States and the Central Americancountries of Costa Rica, El Salvador,countries of Costa Rica, El Salvador,Guatemala, Honduras, and Nicaragua, and wasGuatemala, Honduras, and Nicaragua, and wascalled CAFTAcalled CAFTA
In 2004, the Dominican Republic joined theIn 2004, the Dominican Republic joined thenegotiations, and the agreement was renamednegotiations, and the agreement was renamedDR-CAFTADR-CAFTA
The goal of the agreement is the creation of aThe goal of the agreement is the creation of afree trade area, similar to the North Americanfree trade area, similar to the North AmericanFree Trade Agreement (NAFTA).Free Trade Agreement (NAFTA).