Specialization of Production in Latin America

Since the 1980’s  all of the Latin American countries have been working hard to both reform their economies and inject better business practices for sound economic management.  Most of the Latin American countries faced world economic conditions and did not make attempts to hide behind protectionist barriers.  “Export Revenue stagnated or declined inn the second half of the 1950’s and early 1960’s, while import needs as a proportion of GDP did not fall quickly enough.”  (Mahon, 1992). This became the feature of the Recurrent balance of payments crisis which impacted the major Latin American countries.  There has been a genuine concerted effort to move forwards.  It is useful to examine a cross-section of the larger countries to gain an appreciation of the complexities and progress made.

Peru

The significant aspect here is the overall improvement of social conditions in the last 20 years.  In general terms the standard of living has increased significantly.  Poverty still remains but many people now consider themselves in the middle income class.  The following Table produced from Statistics obtained from the World Bank illustrates the levels of improvements on a number of different fronts.   The increase in the Literacy rate, the increase in life expectancy and the significant reduction in infant mortality.

Brazil

Brazil faces some tremendous challenges in entry to the Latin America global market.  It has a very high public sector deficit, this needs to be reduced without creating a tremendous burden ob Brazilian society.  Considerable financial reforms are required around the taxation systems  and credit subsidies. This needs to attack the fiscal deficit problem.  Brazil needs to move towards more transparency and an open economy. It needs to examine how its resources can be used to stimulate and promote economic growth. It needs greater exposure to world markets after decades of protectionism. Above all it needs to address the issue of poverty and income distribution.

Venezuala

Globalization has been kind to Venezuala owing to its wealth in Oil production together with the refined bi-products.  It has been diversifying and in 2003 figures shown 94% expansuion in growth  with the bulk of this outside the oil sector.  So the country has experienced 5.5 years of exceptional growth.  The collapse of the world financial situation pointed towards a more gloomy time ahead for Venezuala as it does not receive any significant investment from the United States.  They have a confident leadership and they have worked hard on the domestic front to improve the social conditions of the Venezualan people.

Chile

Chile has one of the strongest economies in Latin America.  Market conditions are open with some 57 Free Trade agreements in place.  The country has both a high level of investment and employment.  Owing to the international confidence in the Chilean markets they have been relatively unaffected by the worlds financial problems.