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Briefing on
Mexico, Brazil and Latin
America
2007 International Business
Institute for Community
College Faculty
Dr. Manuel Chavez
Center Latin American & Caribbean
Studies
School of Journalism
Central Questions about
Latin America
 Why
Latin America has not improved
more rapidly after all?
 Is
Latin America ready for change,
especially for regional free trade
(FTAA)?
 Is
the business environment the same
across Latin America?
 Reality
vs Assumptions
Business Realities in Latin
America the hard way…

Significant differences by country and by region

More than economics, institutional capacity is critical

..and accountability and transparency

..and also, the Rule of Law

National cultures vs Corporate cultures

Is NAFTA-Mexico a good example?…well
North America (NAFTA)
XXI Century Realities
a.
b.
c.
d.
e.
NAFTA consolidation and
expansion (NA currency)
Economic regional trade
with the Americas
Competition focusing on the
EU + EE countries
2005 Security and
Prosperity Partnership
(SPP) of North America
NATIONAL SECURITY
The New Political Economy of
North America







Post-industrial USA,
from manufacturing
based to technologyknowledge based.
U.S. vertical integration
The roles of Canada
and Mexico
NAFTA
USFTA with Chile,
Panama, Peru, and
Colombia
CAFTA (Central
America and the DR)
FTAA
North American Free Trade
Agreement –2006 Results








2006 Total Value $868 billion
Increase in the last 5 years by 32%
Trade with Canada equals $533
billion, increase by 15%
Trade with Mexico equals $335
billion increase by 60%
Trade with Canada and Mexico
accounts for almost 45% of the
total U.S. trade
U.S. corporations seeking to
export to EU through Mexico
2005 Security and prosperity
agenda (logistics, logistics, and
logistics)
Data: U.S. Dept. of Commerce and U.S. Trade
Authority Office
From NAFTA to U.S. Free Trade
with Latin American countries
a.
b.
c.
d.
e.
f.
FTAA and the
Summit of the
Americas 1994
Expected to take
place in the year
2005 but failed…
Chile
CAFTA and DR
Panama, Peru,
Colombia
The role of
MERCOSUR (Brazil,
Argentina and
Venezuela)
Brazil and Mercosur, or how
Americas trade is difficult

Brazil control on trade in South
America

strong internal fiscal control
(conservative members of cabinet)

strong control of currency volatility

strong attraction of foreign direct
investment

strong opposition to U.S. subsidies

strong opposition to free trade USA
style

Production of ethanol
What variables have a critical role for
the U.S. to induce FTAA?





Addition of Eastern
European countries
to EU
National security in
the continent–a
premium variable for
the U.S.
Political stability in
the continent
Sustainable
economic growth
But, is the U.S.
Congress ready?
What are the regional political variables
that collide with U.S. interests?




Venezuela –the
expansion of the
Chavez model
Cuba -the transition to
democracy
The political left
expansion: Brazil,
Argentina, Bolivia,
Ecuador, Peru, Chile,
Nicaragua.
Lack of real economic
improvement (per
capita) due to trade
…and a key variable: the Socioeconomic conditions in Latin America
…and a key variable: the Socioeconomic conditions in Latin America

Yet, the U.S. Dept. of Commerce is
seeking to reactivate negotiations by:




sparking and sustaining innovation
creating solutions in education and workforce
development
designing successful global supply chain
strategies
fostering small business development and
growth
Mexico Basic Briefing






Population 2005:
105,879,171
Capital (population):
Mexico City
(18,000,000)
Life expectancy at
birth: male 69.73
years, female 74.93
years (2001 est.)
Physicians per 1000
people: 1.73/1,000
Rural/urban population
ratio: 26/74
GDP per capita:
$10,400 (2005)
Mexico Economic Development
based in open economy since1988





GATT
Open Economy, export
oriented and Foreign
investment
NAFTA
Interdependence, Rules of
Origin and National Content
Free Trade Agreements (14)
European Union, Central
America, Chile, Israel,
Japan, S. Korea, and
Australia.
Brazil Basic Briefing

Population 2005:
175,468,575
 Capital (population):
Brasilia (1,600,000)
 Life expectancy at birth:
male 58.96 years,
female 67.73 years
(2001 est.)
 Physicians per 1000
people: 1.47
 Rural/urban population
ratio: 21/79
 GDP per capita:
$5,500 (2005 est.)
Brazil Economic development
based in central economy

Foreign investment






1998-1999 first country in
the world
2004-2005 third place
after Mexico and China
Crisis of Confidence
Crash of Stocks
3% increase in base
rate since October 14
Leading MERCOSUR
What is the future Latin American
economic scenario?
a.
b.
c.
d.
e.
Speed of second
generation reforms
From internal producing
and consuming market to
an international, regional
and global economy
US is a regional leader in
the marketplace and that is
not going to change
Rule of law, accountability
and transparency
Paradox of social
inequality (human capital
investments)
Working force development requires
to add International Education and
Skills (+)

Working Knowledge in:





Language skills –
functional level
Culture at the exchange
level
Political, economic, and
social systems.
National cultures
Corporate cultures
abroad