Latin America Essay

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While broadly defined by many, Latin America commonly is the region of the world in the Americas where Spanish or Portuguese  are the primary  language(s). This includes the countries  of Mexico, most of Central and South America, Cuba, the Dominican Republic, and Puerto Rico. Often in the United States (and worldwide) Latin America is generically applied to all of the Americas south of the United States.

The economies of Latin American countries vary greatly; yet this  mostly underdeveloped  market  is attractive  to many multinational corporations.  The Gross  Domestic  Product  (GDP) of Latin America is  approximately   $3.33  trillion   with  a  purchasing power of approximately  $5.62 trillion. Marked by explosive growth, Latin America was projected to  have  an  economic  growth  rate  of 5.3 percent in 2006, which was the fourth  consecutive  year of growth greater than 4 percent.

While Spanish and Portuguese dominate the languages spoken in Latin America, Quechua and Aymara (languages traced to the Incas), Nahuatl and Mayan (languages traced to the Mayans), Guarani (an official language of Paraguay), English, French, Haitian Creole, Spanish Creole, and Dutch are also spoken. Most business transactions take place in Spanish, the most dominant language of the region.

Although official borders  of the region are somewhat  amorphous,  it is commonly  assumed  that  21 countries  and 10 dependencies  make up the region. These countries  are Argentina,  Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela.

French dependencies include French Guiana, Guadeloupe, Martinique, Saint Barthelemy, Saint Martin, Saint Pierre, and Miquelon. Netherlands  dependencies are  Aruba  and  Netherlands  Antilles. The U.S. dependency is Puerto Rico.

Designed to improve the economic outlook in Latin America,  ECLAC (United  Nations  Economic  Commission  for Latin America  and  the  Caribbean)  was established in 1948 and has its headquarters in Santiago, Chile. This is one of five regional associations created by the United Nations to encourage trade and mutually beneficial relationships among its members.

Several trade  blocs also exist within  the  region. These include Mercosur/Mercosul (regional trade agreement  among  Argentina,  Brazil, Paraguay, and Uruguay founded in 1991) and the Andean Community of Nations (CAN—comprised of Bolivia, Colombia, Ecuador, and Peru founded in 1969). The Caribbean Community, or Caricom, is a customs union for 15 Caribbean  countries  that  provides for free trade in goods between member  countries  and a common external tariff against nonmember countries.

The Dominican Republic–Central America Free Trade   agreement   (DR-CAFTA)  encompasses   free trade  among  Costa  Rica, El Salvador,  Guatemala, Honduras,  Nicaragua, the Dominican  Republic, and the  United  States. DR-CAFTA and  NAFTA (North American  Free Trade  Agreement)  are bilateral  free trade agreements  that have varying levels of success and have come under some scrutiny in recent years. Although  the  level of effectiveness of these  agreements has come into question, the reciprocal relation- ships with the United States continue to be fruitful for many multinational corporations.

Although these agreements are in place in an effort to improve the economies of the countries, the United Nations has marked the extreme inequality and poverty that exists in the region. ECLAC notes that this is the most economically unequal region on earth. This report notes that while industries such as technology and information  systems have been booming  in the region, much of the population  does not have access to  basic  infrastructure  and  services  such  as  food, water, and sanitation.

Finally, Latin America has been chastised by many for its environmental controls. While some unscrupulous multinational corporations choose to place their facilities in these  countries  to  avoid environmental protection policies and high labor costs in other areas of the globe, there have been efforts in recent years to improve  environmental standards.  In fact, Uruguay (ranked 3), Argentina (9), Brazil (11), Peru (16), Paraguay (17), Costa Rica (18), Bolivia (20), Colombia (23), Panama (28), and Chile (42) all rank above the United States (45) in the 2005 Environmental  Sustainability Index (ESI, developed and published by Yale’s Center for Environmental Law and Policy), which tracks elements  of environment sustainability including natural resources,  pollution  levels, and societal capacity to improve environmental performance  over time. In 2006 the ESI was replaced by the EPI (Environmental Performance Index). The 2008 rankings show Colombia (ranked 9), Ecuador (22), and Chile (30) in the top 30. By comparison, the United States does not appear in the top 30.

The Latin American economy is incredibly fruitful, bearing $715 billion in 2007. The economy is marked primarily by its heavy focus on manufacturing (where it competes heavily with China) and has experienced rapid  growth  over the  past  decade.  This period  of prosperity  is projected  to continue  through  the next several decades.

While  growing,  the  overall  performance   of  the Latin American economy has not reached its potential. Mexico constitutes  a huge percentage of the industrial  activity attributed to the  region.  Exports are chiefly agricultural, though some countries (i.e., El Salvador, Costa Rica, Brazil, Mexico) export medium-to-high-technology manufactured products.

Studies on the sustainability  of the Latin American  economy  are  mixed.  While  it has  firmly been established that the economies of these countries are growing as a bloc, there remain outside threats  (i.e., China’s manufacturing prowess) and internal  weaknesses (i.e., retention of talent  and  development  of employees) facing the region.

Bibliography:   

  1. Jorge Chami Batista, “Latin American Export Specialization in Resource-Based Products: Implications for  Growth,”  The Developing  Economies (v.42/3, 2006);
  2. Esteban Brenes, Mauricio  Mena,  and  German E. Molina, “Key Success Factors  for Strategy Implemen- tation in Latin America,” Journal of Business Research (v.61/6,  2008);
  3. John Burdick,  Philip  Oxhorn,  and  Kenneth M. Roberts, Beyond Neoliberalism in Latin America?: Societies and Politics at the Crossroads (Palgrave Macmillan, 2009);
  4. Forrest  Colburn,  Latin America at the End of Politics (Princeton  University Press, 2002);
  5. Ketelhohn, “Strategic Management Practice  in Latin America,” Journal of Business Research (v.59/3, 2006);
  6. Bernardo Kosacoff, Andrés López, and  Mara  Pedrazzoli,  Trade,  Investment and Fragmentation of the Global Market: Is Latin America Lagging Behind? (CEPAL, 2008);
  7. Sylvia Maxfield, “Linking Business’s Gender and Diversity Practices With Corporate Citizenship: Implications  for Latin America,” AcademiaRevista Latinoamericana  De Administracion  (v.38, 2007);
  8. Rodrigo Suescun, The Size and Effectiveness of Automatic Fiscal Stabilizers in  Latin  America  (World  Bank, Latin America  and  the  Caribbean  Region, Office of the  Chief Economist,  2007);
  9. UNDP Human  Development  Report 2007/2008,  hdr.undp.org   (cited  March  2009);
  10. Yale Center for Environmental  Law & Policy, “Environmental Performance  Index 2008” (Yale Center for Environmental Law & Policy, 2008).

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