The Latin American economy: another lost opportunity?

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    The big numbers of the Latin American economy are striking. In contrast with the complicated situation of the European economy and the United States’ timid steps toward economic recovery, the Latin American economy is enjoying enviable boom times.

    Mexico is an especially noteworthy example because, despite the bloody narcotic trafficking war, which takes the lives of thousands of Mexicans each year, its economy is growing by leaps and bounds.

    There is no doubt that the region emerged from the global financial crisis stronger than it was before. Brazil is a driving force in the Latin American economy, and the Andean countries—with the exception of Venezuela—along with Chile and Argentina, are growing and consuming at a rapid pace.

    Economic success story or train wreck?

    The great question is whether the new Latin American economy is a success story or whether we are on the verge of an economic train wreck. That question was the subject of discussion at a seminar held last weekend in Miami with Andres Oppenheimer of the Miami Herald, Jose Luis Valderrama, president of Hispanic Group, Luis Pineda, president of Ausbanc, and myself.

    Oppenheimer pointed out the danger of the Chinese economy running out of steam and immediately affecting Latin American economic growth. On top of that are the problems of lack of regional integration, rampant corruption and stagnant education.

    To me, the big unknown is whether Latin America will be able to use this period of economic growth to solve its major structural problems or whether it will remain unresolved.

    Will Latin America come out of this decade stronger as a whole?

    Will it be the Latin American economy, with Brazil at the lead, countering China’s tremendous power? Or will we be left with another lost opportunity?

    We are still very far from seeing a prosperous, fairer, stable Latin America, with a strengthened democracy and solid structures capable of addressing global challenges.

    My pessimism can be reduced to one sentence: “I am the state.”

    These four words are uttered ad nauseam by Rafael Correa, but that are totally applicable to Hugo Chavez, Daniel Ortega, and – why not? Cristina Fernandez de Kirchner.

    When Correa or Chavez assumes that totalitarian role in the purest Castroist style, it means pushing aside the basic principles of distribution of powers in a democratic system.

    And without judicial independence or freedom of the press, there is no democracy and there can be no social justice. Or equitable distribution of wealth. Or improved education. Or better infrastructures. Or consolidation of the middle class, the basis of prosperity in Western society.

    So, are we facing another lost decade in for the Latin American economy? I’m afraid so. Because it’s not just Correa or Chavez. We have the lady of the south, Cristina Fernandez de Kirchner. Her battles against the two great Argentine newspapers, Clarin and La Nación, confirm that the Government Palace is tempted to make a play for absolute control.

    But in other countries, such as the Dominican Republic, the relative economic bonanza has not led to anything as simple as improving the country’s legal certainty in foreign investments. Narcotic trafficking networks and corruption are undermining the basic structures of the Dominican State and the same thing, or something even more serious, is happening in Nicaragua, El Salvador and Guatemala. Education remains stagnant and there are no booming economic sectors beyond the traditional ones driven by the insatiable international demand for raw material.

    The golden opportunity is still there to be grabbed, but much improvement is needed in Latin America if it is not to see this new opportunity slip through its fingers.

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