ECONOMIES, MARKETS AND STRATEGIC DECISIONS

Economies, Markets and Strategic Decisions

Economies, Markets and Strategic Decisions

Economy of Latin America

Latin America has been one of the most prosperous regions among the emerging economies in terms of many indicators, including per capita income (Boyer, 2004, 23-40). For many years, it grew at a faster rate than the rest of the world, and GDP per capita exceeded the average for the world. It was and is a source of primary commodities and a relatively small contributor to environmental degradation (with the exception of deforestation in the Amazon) relative to the other major regions of the world. It also has acquired a fairly high educational level. However, particularly in recent decades, Latin America has not managed to keep up with the other “emerging markets”.

Today, Latin America is an average region in the world. In 2009, it had an income level of PPP US$10,544 compared to a global average of PPP US$10,278. At market exchange rates, the average income of a Latin American is a bit lower than the world average: $7,028 compared to $8,531 (in 2009). The remarkable fact about Latin America is that its income level in constant dollars is estimated at 15.5 percent of that of the United States in 2009, which compares to 17.0 percent in 1965.

In brief, Latin America is close to the global average in living standards, and it has neither converged nor diverged from the United States over a 44-year period (Dunford, 2000, 143-167). Latin America seems to be stuck. The recent global economic crisis hit Latin American economies (with a few exceptions like Mexico) to a somewhat milder extent than many other regions, and there are good indications that they are recovering well. Still, the weaknesses that characterize the region have become more evident, in terms of commodity dependence; volatile private financing; and serious issues of income distribution, equity, and inclusion. Some requisite actions to strengthen the medium-term performance of the region are essential.

Latin America's opening to international trade after years of isolation has resulted in greater capital inflows, and the continent has reaped some of the benefits of a globalized world: the region's abundant natural resources have attracted foreign direct investment, it has a reasonably well-educated young and growing labour force, and it stands to benefit from a demographic dividend in the short run (Dunford, 2005, 149-176). Latin America's labour force should grow by more than 1.5 percent a year over the next 15 years, with population growth at just over 1.0 percent.

Economy of China

Economic reform in China has been applauded by many as a great success. During the reform period, the Chinese economy has been growing at an annual average rate of nearly 10 percent. In 2005, there were 600 million fewer people living below the poverty line than 1978, measured by an income of purchasing power parity of $1.25 per day (Harvey, 2005, 13-43). From 1978 to 1996, the per capita consumption of rural residents nearly quadrupled, and the per capita consumption of urban residents ...