Have you checked your Brazilian index funds lately? At the time of this writing,
mine are up more than 70% from a year ago – in a market that has been anything but upbeat. What? You don’t own Brazilian funds?
Latin America mostly triggers associations such as “underdeveloped,” “inflation,” “high crime rate,” and
“Hugo Chavez” in your mind? Friend, you may want to recalibrate your binoculars and focus a little more on major developments in
the region!
Brazil is enjoying tremendous economic growth, at twice its historic rates across
a variety of sectors, from energy to industrial manufacturing, to the automotive industry, to farming. Farming? Indeed, the country’s
agricultural exports grew by more than 8% each year during the last ten years.
As a matter of fact, much of Latin America has been doing surprisingly well in
recent years, especially when compared with the economic turmoil and inflation chaos of the 80’s and early 90’s. While not without
economic challenges, the countries in the region are enjoying relatively low inflation rates, strong foreign trade, significant investments from
abroad, and improving standards of living. Costa Rica, with its good education system and 96% literacy rate, has received sizeable IT investments,
including the establishment of large product and service development centers by global leaders such as Hewlett-Packard. Medellín in Colombia,
mostly known to the world as ‘Cocaine Central,’ now hosts the headquarters of a growing roster of multinationals, from Toyota to Philip
Morris. Chile emerged from a period of reforms as one of the region’s leading economies, partly driven by the continuing rise in demand for
its natural resources, among them copper and other precious metals. Bolivia saw Indians investing billions of dollars in local mining and steel
companies. Argentina, Brazil, Ecuador, Peru, and Venezuela all have concluded oil and gas deals with China. In addition, Brazil’s Petrobras
oil giant morphed into a strong and innovative global player and now trades on the New York Stock Exchange. These are but a few examples of a wave
of changes happening almost everywhere south of the U.S. border.
Driving Forces
Latin America continues to profit from a number of global trends. A big factor is
the enormous demand for raw materials, commodi- ties, energy, and food caused primarily by China’s and India’s extraordinary economic
growth and rapidly rising standards of living. It would be oversimplified, though, to attribute the rise of Latin America solely to its rich
natural resources. The region has also seen a steady rise in manufacturing, with numerous U.S. and European corporations either off-shoring
production or investing in new factories in order to participate in the local market boom. On top of that, a number of Central and South
American countries have become hot destinations for IT development, call centers, and other business processes and services.
Cultural Adjustments
Along with these economic changes, Latin Americans have adjusted some of their
cultural practices. While not quite dis- appearing, traditionally strong ‘machismo’ values are mellowing. Across the region, women have
entered the workforce and achieved successful careers in large numbers. For instance, Chile elected its first-ever female president in 2007. A
woman holding this country’s most powerful position would have been all but unthinkable only a decade or two ago.
Other cultural characteristics shown signs of ‘modern times,’ too.
One is people’s orientation towards time. Punctuality was never a strong suit in most Latin American countries. It still isn’t.
Never- theless, there is now a much greater sense of urgency in busi- ness centers such as Sao Paulo in Brazil or San Jose in Costa Rica, where little
evidence of the proverbial ‘mañana’ mentality foreign investors love to hate can be found. Hierarchical attitudes are also changing,
and the region’s young and well-educated enjoy taking initiative and holding significant responsibility.
Outlook
Even the most advanced Latin American countries still have a long way to go before
they can catch up with North America or Europe. The region is on the rise, though, and infrastructure, people, and cultural attitudes are all
gradually changing. At a time when most eyes are on China and India, Latin Americans may well be among the biggest winners in this age of globalization.
