{"id":25085,"date":"2013-01-28T12:00:34","date_gmt":"2013-01-28T12:00:34","guid":{"rendered":"http:\/\/www.transcend.org\/tms\/?p=25085"},"modified":"2013-02-04T11:42:11","modified_gmt":"2013-02-04T11:42:11","slug":"santiago-summit-can-latin-america-now-lecture-europe-about-economics","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2013\/01\/santiago-summit-can-latin-america-now-lecture-europe-about-economics\/","title":{"rendered":"Santiago Summit: Can Latin America Now Lecture Europe About Economics?"},"content":{"rendered":"

If there were words for schadenfreude<\/em> <\/i>in Spanish and Portuguese, you might hear them uttered on the streets of Santiago this weekend. On Jan. 26 and 27, the Chilean capital will play host to a Latin American-European economic summit\u2014and the developing region might be excused for feeling a little smug in the company of First World guests who not long ago looked down their noses when they looked across the Atlantic.<\/p>\n

Many of Latin America<\/a>\u2019s economies are sound if not booming today compared to the cash-strapped nightmare gripping European Union (EU) members like Spain<\/a> and Portugal. Having weathered the global crisis\u2014thanks to burgeoning commodities exports but also to firmer fiscal discipline\u2014Latin America is projected by the International Monetary Fund<\/a> (IMF) to grow 4% in 2013 while the Eurozone is expected to remain in recession. The Eurozone\u2019s aggregate budget deficit is 4% of gross domestic product; in Latin America, a region once known for budget bedlam and debt disaster, the average is closer to 2.5%. The Eurozone\u2019s debt-to-GDP ratio is 90%; Latin America\u2019s is under 40%. \u201cThis represents quite a big leap forward for the region,\u201d says Michael Henderson, Latin America economist at Capital Economics Ltd. in London.<\/p>\n

Europe, as a result, may have something to learn from Latin America at the Santiago summit, which will be attended by leaders from the 33 nations of the relatively new Community of Latin America & the Caribbean (CELAC), headed by Chilean President Sebasti\u00e1n Pi\u00f1era, and the EU\u2019s 27 member nations, including German Chancellor Angela Merkel. Among the chief lessons for the EU: it needs to get back to the responsible financial basics it once lectured developing regions to follow. (Which is why many observers say it\u2019s a shame the U.S. won\u2019t be present too.) Perhaps to emphasize that point, IMF Managing Director Christine Lagarde last month called out Chile as one of the world\u2019s \u201cmost stable and prosperous nations,\u201d a South American country which, like Brazil, is on the cusp of developed status.<\/p>\n

Still, if Europe\u2019s failings will be hard to ignore in Santiago, Latin America\u2019s vulnerabilities are noticeable too. For starters, as Legarde also noted, the region needs to acknowledge that its biggest strength is also its biggest weakness. Commodities, from oil to soybeans to metals, have jet-fueled the continent\u2019s impressive growth over the past decade. But its overreliance on no-tech raw materials exports\u2014the IMF calls South America the world\u2019s \u201cmost commodity-dependent sub-region\u201d\u2014and its failure to modernize and diversify its economies during these boom times, to improve its starkly inadequate education, infrastructure and productivity, are already proving a drag. Just ask Latin America\u2019s largest economy, Brazil, which after years of robust expansion suddenly saw just 1% GDP growth last year, and where President Dilma Rousseff is appropriately scrambling to produce more engineering graduates.<\/p>\n

What\u2019s more, financial sobriety isn\u2019t quite unanimous yet. \u201cFor every Chile,\u201d Henderson points out, \u201cthere\u2019s a country like Venezuela,\u201d where mismanagement of the oil-drenched economy has led to one of the world\u2019s highest inflation rates, \u201cor Argentina,\u201d where profligate populism is rearing its head again. Regionwide, while poverty and inequality have improved so far in the 21st<\/sup> century, 20th<\/sup>-century plagues like corruption and monopolies continue to stifle economic opportunity\u2014a large part of the reason even Chile has seen civil unrest lately.<\/p>\n

And it\u2019s doubtful that CELAC holds the solution to those problems. At a pre-summit meeting last month, CELAC finance ministers declared that the organization expects to do nothing less than \u201cbuild consensus on the principal financial and fiscal matters that will let us expand growth and development.\u201d But while the EU may have been effective at integrating Europe\u2019s myriad economies, there\u2019s little to indicate that CELAC\u2014which includes communist Cuba but just as pointedly excludes the U.S. and Canada\u2014will be much more than a symbolic expression of the two-century-old Bolivarian dream of unifying a politically, culturally and economically balkanized Latin America.<\/p>\n

Michael Shifter, president of the Inter-American Dialogue in Washington, D.C., notes that at the close of the Santiago summit, Chile will hand the rotating CELAC presidency to Cuba\u2014whose governmental ethos, as well as its economic shambles, couldn\u2019t be a starker or more conflicting contrast. \u201cIt illustrates the profound divisions within CELAC\u2019s membership and the very different ideas about how to run an economy,\u201d says Shifter. \u201cThat\u2019s the paradox of these regional organizations in Latin America, and it makes it hard to see how CELAC can be effective at pushing coordinated reforms.\u201d<\/p>\n

That said, however, the current EU mess\u2014and Britain\u2019s recent noises about extracting itself from that common market\u2014hardly make it a model for developing regions to emulate. \u201cIt\u2019s interesting that various blocs within [Latin America] have looked to the EU as an example of economic integration,\u201d says Risa Grais-Targow, a Latin America associate at the Eurasia Group. \u201cI think the European experience can help provide a useful model of what to do and what not to do in terms of providing a stronger social safety net.\u201d<\/p>\n

Which means schadenfreude<\/em> may not be the best attitude for Latin America to bring to Santiago. While thriving Latin American economies like Chile, Brazil, Peru, Colombia, Uruguay, Ecuador and Mexico can certainly bask in cross-Atlantic turnabout this weekend, they need the EU\u2014Latin America\u2019s second-largest trading partner and its No. 1 foreign investor\u2014to rebound. Europe\u2019s troubles may elicit some self-satisfaction in Latin America\u2014but if they last much longer, they could help bust Latin America\u2019s vulnerable boom.<\/p>\n

________________________________<\/p>\n

Tim Padgett is TIME’s Miami & Latin America bureau chief.<\/i><\/p>\n

Go to Original \u2013 time.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

On Jan. 26 and 27, the Chilean capital will play host to a Latin American-European economic summit\u2014and the developing region might be excused for feeling a little smug in the company of First World guests who not long ago looked down their noses when they looked across the Atlantic. Many of Latin America\u2019s economies are sound if not booming today compared to the cash-strapped nightmare gripping European Union (EU) members like Spain and Portugal.<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[51,53,146],"tags":[],"class_list":["post-25085","post","type-post","status-publish","format-standard","hentry","category-europe","category-latin-america-and-the-caribbean","category-economics"],"_links":{"self":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/25085","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/comments?post=25085"}],"version-history":[{"count":0,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/posts\/25085\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/media?parent=25085"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/categories?post=25085"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.transcend.org\/tms\/wp-json\/wp\/v2\/tags?post=25085"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}