Latin America:Argentina & Brazil

Past, Present & Future

Latin America

10,000 Km=

Nagoya to Paris

One Subcontinent• 562 million people• 20 Countries• U$ 3.3 trillion GDP• Spanish, Portuguese, French

languages• Resource rich (oil, land, water,

minerals)• Under colonial rule from XVI to XIX

century• Indians, Europeans, Africans, Asians

(Chinese and Japanese) • Brazil & Peru: largest nikkei

communities in the world

Differences• Colonial history• People • Culture• Political regimes• Economic structure• Soccer skills!

Latin America TodayGeneral Scenario• Democracy (more than 10-20 years)• Market economies (except socialism oriented Cuba &

Venezuela) • (Post Import Substitution) trade opennessEconomy• Steady growth (4.55% in 2006, 4.23% in 2007)• Inflation under control (4.2% in 2006,but 14.1% in 2007)• (Official) Unemployment still high (9.1% in 2004)• Exports (main partners: US, China, Europe)

– Industrial components (e.g. Mexico, Brazil)– Commodities (e.g. Chile, Argentina)

BrazilBrazilFacts• Population: 189.3 million• Area: 8,514,877 km² (5th)• GDP per capita (PPP): U$ 9,700• Federative Republic: 26 states, 1 FD• President: Luiz Inacio Lula Lula da Silva (since 2003)

Economic Facts• Interest rate: 12 % • Gini coefficient (UN): 0.57• HDI: 0.800• WB Doing Business Rank: 122nd (113 in 2007)• GDP growth: 4.3% in 2007 (4.1% in 2006)

Field Ranking

Ease of Doing Business 122

Starting a Business 122

Dealing with Licenses 107

Employing Workers 119

Registering Property 110

Getting Credit 84

Protecting Investors 64

Paying Taxes 137

Trading Across Borders 93

Enforcing Contracts 106

Closing a Business 131

Pending issues• Red Tape harnessing private sector• Politicization of regulatory agencies’ and state companies’ • Adequate Protection of the Environment

Overcome issues• Political / Macroeconomic predictability• Public Foreign Debt• Public Policy to Redistribute Income

ArgentinaArgentinaFacts• Population: 39.4 million• Area: 2,766,890 km² (8th)• GDP per capita (PPP): U$ 13,307• Federative Republic: 24 provinces• President: Cristina Fernández de Kirchner (since 2007)

Economic Facts• Interest rate: 11.1 % • Gini coefficient (UN): 0.49• HDI: 0.869• WB Doing Business Rank: 109 (101 in 2007)• GDP growth: 9.1% in 2007 (8.2% in 2006)

Pending issues• Predictability and coherent policies• Inflation ghost• Growing inequality + growing insecurity• Corruption + Regulatory burden

Overcome issues• Political past• Debt restructuring (still some not paid debt)• Environment as political objective

Challenges

• Stark income inequality• Heritages of protectionist, state-led

industrialization• Poor quality, lacking infrastructure• Poor industry regulation• Rigid, heavily charged labor market

LA challenges and our hopes