Saturday, October 8, 2011

"We live in an interconnected world"

Luis Alberto Moreno, the President of the Inter-American Development Bank, interviewed withThe Economist and touched on several important points when it comes to Latin America, it's future, development and growth.  He mentioned it’s a tense time for the global economy, indeed it is.  Though it’s not really Latin America who we should worry about, it’s the shocks outside Latin America that can affect Latin American economies.

Latin American domestic markets have grown largely with little inflation.  Many of these countries also have extremely large amounts of reserves and small deficits. 

 He mentions that it’s clear that Europe needs to straighten things out.  From the IMF meetings we should see them as the decision making unit.  Shocks in a stock market across the world will certainly be felt on the other side.  Personally, I’m interested to see what comes out of these debates.

To end the interview, Moreno spoke on the development challenges in Latin America.  INFRASTRUCTURE and HUMAN CAPITAL.  How can these countries invest only 2% of their GDP on infrastructure? Infrastructure is extremely important in attracting Foreign Direct Investment, so why not focus more on developing it?

Better infrastructure + Foreign Direct Investment = more capital flow in your country (I don’t believe there’s anything entirely wrong with that)

We then reach the human capital challenge: the quality of education which should lead to betterment in the quality of innovation in the sense of technology.

Both great challenges but I have faith that with Mr. Moreno’s efforts and with the collaboration of the Latin American countries, both of these challenges will be surpassed.

Finally, Latin America has undergone a great evolution, the “advent of democracy” as Moreno puts it.   With this inevitably comes trade liberalization.

Trade liberalization is an interesting topic.  After watching this interview, I can’t help but question the future of Latin America? When will it experience negative effects due to trade liberalization? I hope to continue seeing much development and growth in these countries.  It’s clear that countries like Brazil, Chile, Uruguay and Costa Rica are doing something right.  Let’s wait and see what the future holds for the rest of Latin America.

1 comment:

  1. It is a very interesting time indeed for South America in a highly interconnected world. The future is difficult for many of us since the PR campaigns puppeteering international markets and stocks and everyone seems to be in for a rocky ride especially as China's wheels also seem to be grinding to a halt. Would love to have you write a post for my blog if you are interested. Keep up the classy work!

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