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.
- Jorge Chami Batista, “Latin American Export Specialization in Resource-Based Products: Implications for Growth,” The Developing Economies (v.42/3, 2006);
- 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);
- John Burdick, Philip Oxhorn, and Kenneth M. Roberts, Beyond Neoliberalism in Latin America?: Societies and Politics at the Crossroads (Palgrave Macmillan, 2009);
- Forrest Colburn, Latin America at the End of Politics (Princeton University Press, 2002);
- Ketelhohn, “Strategic Management Practice in Latin America,” Journal of Business Research (v.59/3, 2006);
- Bernardo Kosacoff, Andrés López, and Mara Pedrazzoli, Trade, Investment and Fragmentation of the Global Market: Is Latin America Lagging Behind? (CEPAL, 2008);
- Sylvia Maxfield, “Linking Business’s Gender and Diversity Practices With Corporate Citizenship: Implications for Latin America,” AcademiaRevista Latinoamericana De Administracion (v.38, 2007);
- 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);
- UNDP Human Development Report 2007/2008, hdr.undp.org (cited March 2009);
- Yale Center for Environmental Law & Policy, “Environmental Performance Index 2008” (Yale Center for Environmental Law & Policy, 2008).
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