THE AMERICAS: Keeping their fingers crossed: In Latin America, the most trenchant opponents of globalised finance look most likely to suffer at its hands," The Economist, 4 October 2008.
Interesting argument that says Latin America will do better than average with the global credit squeeze because they haven't availed themselves of mortgage debt instruments and—in general—don't rely on foreign equity that much. Of course, all will suffer a drop in commodity prices.
Worst off? Venezuela. Chavez can't rule easily when austerity is called for, because he's primarily a populist who bribes the public by having them eat the economy's seed corn. Ah, but plenty of arrests happening of "foreign imperialist plotters." Good show for a while.
The "well-behaved countries like Chile (which sensibly banks profits when copper is high), Mexico (which is fiiiiiiiinally opening up slowly to FDI in its energy sector), Brazil, Colombia and Peru, things won't get too bad.
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Comments (2)
There are two theories about the effect of spread of big capital in the
"third world"(globalization). 1) the arrival of capitals from west,will bring;prosperity,civilaization,and destroy and bring them out from barbarism.aside from Japan,Germany,China(which they all had thier industrial revolution from before)and the execptional small packs of tigers countries (taiwan,hong kong,ect)which thier economy was allowed to develop to compat Soviets,there are no example to show
a country that is conectted has developed thier national economy in an indepenence way & is not at the mercy of this world capital web(big corp.,world bank...) . 2)The arrival of capitals from west will prevent these countries industrial revolutions and make them a consumming countries of the west's products,& thier economic development (national industries) comes to a halt at the best or bankrupted,and rubbed out of thier national wealth. We all know that capitalism starts at nation state,& throuugh it natural course,
and with inovations(applied technology)due to competition,and accumilation of wealth goes through an industrial revolution nationaly,EX; England in 18 century,and U.S after its independence,
& after the civil war,where Lincoln and the industrial north,won over
the slaveowners and cotton traders to England ,in the south. The first theory makes case of the west,as a genetricly advance people, & thier duty to bring civilaization to east(& all the philosephies that comes with it),the second attempt to show the real roots of the problems of the undeveloped countries.
Posted by farhad | November 3, 2008 10:03 AM
Chile is being hit hard. Copper prices have fallen from $4.20 a pound to $1.83 today. Chile also invested a large percentage of its GDP abroad, and these investments are worth a fraction of the value they were worth only a few months ago.
Mexico is in a more severe recession than America.
You are right, however, that Venezuela is being hit hardest, since it's government revenues are most dependent on oil prices. Chavez has recently become much more friendly toward multinational companies. He is even saying nice things about America. He seems to have seen the light.
Posted by anand | November 3, 2008 1:15 PM