Latin American Economic Problem - Case Study Example

LATIN AMERICAN ECONOMIC PROBLEM Introduction Latin America is symbolized with diverse economic models, political systemsand social structures. Over the years, the region has shown high levels of resilience as brought out by the steady economic growth over the years. Other economic growth indicators for the region include poverty reduction and increased confidence in the region from the outside world in terms of investments and trade inclusion. The region has also worked towards modifying its economic systems to fit into the modern fiscal systems in other parts of the world. The Latin American government is working hand in hand with the private sector to ensure the full corporation in all spheres of the region’s economy (Global Agenda Council on Latin America 1). In spite of these achievements, it is important to note that the region is facing a number of challenges as discussed by Marisol in the article “The three big issues facing Latin America.” Summary of the Article “The three big issues facing Latin America” The article was written a month before the World Economic Forum on Latin America was held at Panama City. Marisol describes this as an important step to ensuring that the region moves a step further towards infrastructural development as well as economic growth and productivity. The article brings to light the current economic and infrastructural position of Latin America so that one can understand the reason as to why the Economic Forum is focused on the region in particular. It also highlights the possible challenges that the region is facing. Further, Marisol goes on to establish possible solutions to these challenges and how to help the region grow. According to her, she wants to ‘focus on Latin America’s efforts to drive economic dynamism, innovate for social inclusion and environmental sustainability, and modernize its economic and institutional infrastructure.’ Evaluation of the article Latin America is known for democracy, cultural diversity, wide variety of resources and a big class of bourgeoisies. The region has this far managed to survive in a competitive world where every country and state wants development for its own good. The government of Latin America has over the years managed to ensure that despite tough economic challenges, the country remains top of the list when it comes to economic and infrastructural development. The region has this far managed to invest largely in good quality infrastructural facilities. On top of this, there are many lucrative businesses in Latin America that have managed to succeed in the region as well as outside its boundaries. The country is well known for many multinational companies that make billions of dollars as revenue per annum. Latin America is well endowed with natural resources. The region is beautiful and has over the years served as a huge tourist destination. Tourism fetches a huge portion of the foreign currency that has led to rapid economic development over the years. The huge population of the region ensures availability of human capital whenever it is needed. Most of the development projects initiated in the region do not require outsourcing of labor. The government involves its people in developing their own country. This has ensured low rates of unemployment as well as the internal flow of capital within the country’s population. It ensures that there is enough money flowing within the region and also serves as a measure of curbing inflation. The country has also indicted signs that it is now ready for external investments as it has managed to weather through tough economic times without necessarily crumbling down. One problem with the Latin America region is the fact that it has limited its economic development activities to the government and the public sector only. This is to mean that the private sector is not highly involved in matters of investment or making important regional decisions that are related to economic development (Eric & Christine 80). Looking at Brazil, Marisol notes that government infrastructure of worth 214 billion is actually based on very pivotal partnerships between the government and the Brazilian private sector. In Mexico, she notes that the energy, communications and manufacturing industries have opened their doors to the private sector. The government no longer tries to control everything that goes on around Mexico hence instilling a sense of responsibility to the economic players. Marisol argues that other Latin American countries would be better off if they adopted this model of development. Diversification of economic responsibilities will enable the government to focus on other issues while key players in the region focus on its economic development that will most definitely suit them. Marisol emphasizes on the relevance of diversification to any state in any part of the world. Diversification simply refers to opening one’s doors to other opportunities. A country does not have to rely on a single factor to help it grow economically. This model is bound to lead to huge financial problems, especially in the modern world. The Latin American countries would be better off economically if they learn to diversify their economic activities and goals. According to Marisol, a large portion of the Latin American exports are mere commodities. Apparently, this makes 60% of the region’s exports. Although this represents a 20% increase over the past one decade, the region would be better off if it included other products in its export list (The Economic Development of Latin America 67). Moreover, the region would do better if its commodities were offered in relatively higher prices so as to earn an extra dollar in the ever changing market trends. Most countries in the Latin American region have substituted local products for imports. Most of the local industries have been shut down due to lack of a good market to sell their products. This means that the countries are spending more on goods that they can actually produce. Marisol proposes that the government should step in to encourage growth of local industries. She sees it as an opportunity for the region to promote specialization for its industries. This form of specialization requires knowledge and the embracement of Small and Medium Enterprises (SMEs). The growth of local industries is meant to curb the expenses spent on importing. This way, the money can go to other useful projects. At the same time, jobs are created within the region. The world has reached a global edge where almost everything is done through a computer. Consequently, top quality services or products are expected by the receiving party. There is increased competition in the market as each country tries to outdo the other in terms of business, economic or infrastructural development. The Latin American region is encouraged to adapt this competition. It needs to gear up on the level of infrastructure that exists within its environs (Marisol, 2014). Something should be done to curb the prevailing high transport costs incurred by those carrying out their businesses in and around the Latin American region. The region is also expected to put in extra dollars to improve its physical infrastructure. Financial resources are required if any country is to achieve top of the world infrastructure. In this case, both public and private investments are needed to improve the physical conditions of Latin American countries. Apart from these, strong institutions need to be setup to monitor the use of public funds and ensure transparency and accountability from all involved parties. Latin America is also faced with the problem of inequality. While the region has achieved a lot when it comes to alienation of poverty, a lot more still needs to be done in terms of equality. This is more so when it comes to gender equality. Most countries in the region are against women empowerment. They fail to understand that educating a woman is educating a society. While men are allowed to study and pursue a good career, women are kept as housewives and treated like slaves. The region needs to work on gender parity and embrace an all-inclusive model if it wants to improve its economic position (Marisol 14). The World Economic Forum is aimed at enlightening the Latin American citizens on the need of equal chances to education and jobs as well as on the importance of ensuring that the skills and knowledge imparted to people is of high value and relevance to the changing needs of the society today. The regions also needs to appreciate that the middle class bracket is rapidly expanding and it important that measures to cope with the rising demands of better services and products from this people be put in place. A major upcoming challenge in the Latin American region is the increase in crime, insecurity and drug trafficking in the region. It has been reported by the United Nations Office on Drugs and Crime that Latin America is today the most dangerous place in the world. Between 2000 and 2010, homicide cases reported in the region were at 11% while 1million people died as a result of criminal violence and robberies (Eric & Christine 20). Combating crime is a difficult task; one that entails the corporation of all stakeholders affected. In this case, the government plays a crucial role in ensuring that the justice system is running efficiently and any lawbreakers are dealt with according to the law. High rates of crime are bound to cause trouble for any country that wants to grow economically. No country is willing to invest in a place where they are not guaranteed of the safety of the money even when it is in a bank’s safe. On the other hand, countries are willing to corporate and work with any country that is peaceful. To combat crime, the Latin American region needs to ensure proper law enforcement at all costs. Good security and peace in a country is a sure way for this region to attract more investors hence higher economic development. In conclusion, the essay takes an in-depth look at Marisol’s article of the economic stand of the economic standing of the Latin American region. Even though the region seems to be doing much better than it was a decade ago, it is important that it improves its conditions if it wants t survive in the modern economic and financial world. Works cited Marisol A. de B. (Mar 26th 2014). The three big issues facing Latin America. Retrieved from http://forumblog.org/2014/03/three-big-issues-facing-latin-america/ The Economic Development of Latin America and its Principal Problems. Economic Commission for Latin America United Nations Department of Economic Affairs Lake Success, New York, 1950. Retrieved from http://www.rrojasdatabank.info/prebisch_theec-development.pdf Eric F. and Christine V. G. (April 25, 2014). Taking a Bite Out of Latin American Crime: Violence comes with big financial costs to several countries. Retrieved from http://www.usnews.com/opinion/blogs/world-report/2014/04/25/drug-and-crime-problems-are-stifling-latin-americas-potential Global Agenda Council on Latin America 2012-2014 retrieved from http://www.weforum.org/content/global-agenda-council-latin-america-2012-2014 Read More