M&A Activity in Latin America Off to a Red Hot Start this Year
March 5th, 2010Takeovers in Latin America are off to the best start in at least a decade, bucking a global slump, as economic recoveries in Brazil and Mexico spur consolidation in the telecommunications, food and commodities industries.
America Movil SAB’s $25.7 billion purchase of Carso Global Telecom SAB in Mexico was the largest in the region this year and the second biggest globally. Latin America tallied 192 announced deals worth $72 billion since Jan. 1, the most in Bloomberg data going back 10 years and the only region to see an increase in transactions this year from the end of 2009.
More than a third of 2010’s transactions were in Brazil, where the economy is rebounding from a recession, the currency is up 32 percent against the dollar in the past 12 months and interest rates are at record lows. The region may have its best year for acquisitions since 2007, said Udi …
Colombia-US Trade Deal Faces More Delays
February 18th, 2010WASHINGTON – Support for a free-trade pact with Colombia is growing among Democrats long opposed to it, but midterm elections and a full domestic agenda may further delay the deal, Bogota’s defense minister said on Thursday.
Democrats seem encouraged by President Barack Obama’s will to get the long-postponed deal passed to boost exports, minister Gabriel Silva told reporters in Washington after meeting with Senator Chris Dodd, a Democrat from Connecticut, an influential voice within his party.
“He is optimistic. The Democratic Party, in the voice of President Obama, has expressed the goal of reaching the approval of the free-trade agreement,” he said.
But he said Dodd “mentioned this is a complex electoral year with a very heavy domestic agenda”, referring to stalled debates on healthcare reform and pressing demand to create jobs.
“The dynamics in the Congress could be in our favor and that is how we hope it will be,” Silva …
Opinion: Brazil’s “Closed Economy” has to Change and Mature
February 16th, 2010SOURCE: Latin Business Chronicle
In a way, Brazil is a jail. Fortunately, it is a beautiful prison, with glittering beaches, exotic flowers and wonderful food. However, it has 190 million Brazilians locked in a closed economy—forced to accept whatever quality of goods and services, at whatever price and quantity.
Despite all of the BRIC hype, Brazil remains one of the most closed economies in the world. Brazil’s exports and imports, as a percentage of GDP, should be 16 percent in 2010. Argentina’s trade as a percentage of GDP will be more than twice as much, and Chile’s trade will be 56 percent of GDP. To put things in perspective, Singapore’s is more than 150 percent of GDP.
The country’s closed economy is the reason why Brazilian firms can charge exorbitant prices for basic goods and services. Automobile prices, for example, are multiples of what they are in other countries. Brazil’s cellular services are the …
Parts of $500 Million in World Bank Funds Targeted Toward Latin America and Caribbean Businesses
February 1st, 2010The World Bank expects to secure $500 million in a first round of money raising for a private equity fund to co-invest in companies in sub-Saharan Africa, Latin America and the Caribbean, President Robert Zoellick said.
“All of you, as African leaders, know the perils of this economic crisis,” Zoellick said at the African Union Summit in Ethiopia today, according to a copy of his speech. “But you also know about Africa’s opportunities and its potential to be another source of growth for the world economy.”
The International Finance Corp., the World Bank unit that lends to companies, will manage the fund, as well as a $200 million pool to invest “in systemically important banks” in Africa, Zoellick said. Investors are pension funds and sovereign wealth funds, according to the World Bank.
The Washington-based institution, which has committed $88 billion to poor and middle-income countries since the middle of 2008, …
Brazil Saw Big Drop in Foreign Investment in 2009
January 26th, 2010The U.N. Conference on Trade and Development highlighted the sharp decline in foreign direct investment in 2009, which affected all regions of the global economy. The data published in its “Global and Regional FDI Trends in 2009″ on Jan. 19 illustrates that drop:
–Sharp decline. Global FDI is estimated to have fallen by 38.7% in 2009. Total flows of 1.0 trillion dollars paled in comparison to the 1.7 trillion recorded in 2008 and the record flows of some 1.8 trillion in 2007, which followed several years of strong global FDI growth.
–Truly global. The global decline of FDI in 2009 followed a drop of 33% in FDI to developed economies in 2008. However, flows to developing and transition countries had remained just positive in 2008. Therefore, in 2009 the downturn in FDI became truly global.
–Similar impact. Developed countries in 2009 registered a fall in FDI of 41.2%, while developing and …
Brazil Surpasses Chile as the New Model Latin America Economy; Lula Leverages “Most Popular Politician on Earth” Label
January 18th, 2010SOURCE: CHRISTIANSCIENCEMONITOR
For two decades, Chile was the “teacher’s pet” of Latin America, the student who always brought home straight A’s. Economists gushed that the Andean country’s commitment to free-market policies and democratic reform made it a model for the developing world. And as Chileans enjoyed the trappings of a sustained average growth rate of more than 5 percent per year, poverty plummeted from 40 percent to 13.7 percent. But in the past year, Chile’s gold star has gone to its hulking neighbor to the east, Brazil.
The agricultural juggernaut just won its bid to host the 2014 World Cup and the 2016 Olympics; it discovered vast oil deposits that could turn it into a major oil exporter; it was one of the last countries to be pulled into the global economic crisis and one of the first to pull out.
To be sure, the so-called Chilean “miracle” that constructed the most …
Is Costa Rica Truly The Happiest Place on Earth? Maybe, or Maybe Not
January 12th, 2010Nicholas Kristof’s recent Times Op-Ed set out to explain why Costa Rica is “the happiest nation on earth.” This led my happiness coauthor Betsey Stevenson and I to explore further (which is why we are writing this post together). Kristof claims that:
There are several ways of measuring happiness in countries, all inexact, but this pearl of Central America does stunningly well by whatever system is used. For example, the World Database of Happiness, compiled by a Dutch sociologist on the basis of answers to surveys by Gallup and others, lists Costa Rica in the top spot out of 148 nations.
That’s because Costa Ricans, asked to rate their own happiness on a 10-point scale, average 8.5. Denmark is next at 8.3, the United States ranks 20th at 7.4, and Togo and Tanzania bring up the caboose at 2.6.
The ultimate source of these data is …
Latin America Cited as Not Investing Enough in Infrastructure
January 8th, 2010SOURCE: Americas Economia(Espanol)
A historical paradox. Already in the nineteenth century Karl Marx used the term “infrastructure” to refer to the economic base determines the social structure and development, and upon which the “superstructure” of political and legal institutions. This superstructure is created in the interests of the dominant groups. Any change, or “revolution” in the superstructure, which will oppose the …
The $1 Billion Bungle: How US Businesses are Hurt by Cuba Travel Ban
December 18th, 2009U.S. tourism companies could take in at least $1.1 billion a year on trips to Cuba if Washington didn’t ban most of its citizens from visiting the island, officials said Wednesday during a videoconference with American tour operators.
That figure includes $600 million in sales by airlines, $300 million for travel agents and $200 million in U.S. tourism-related exports and services, including food and drink items that could be sold to Cuba as well as spending on advertising to promote Cuba as a destination, said Miguel Figueras, a top aide to Cuban Tourism Minister Manuel Marrero.
Figueras provided few details on how Cuba arrived at the numbers, but pointed to a previous study by the American Society of Travel Agents in asserting that without travel restrictions, 1.8 million U.S. tourists would come to Cuba annually. That includes some 482,000 Cuban-Americans visiting relatives on the island, he said.
More than 2 million …
Latin America Economies Set for Big Rebound in 2010, Led By Brazil
December 12th, 2009In an upwards revised prospect the Commission said the region will grow 4.1% in 2010 with positive growth trends for most of the countries, but noted that doubts on whether the economic recovery will persist in time given the uncertainty coming from global markets.
“The worst of the crisis has been left behind. The motors of growth have already been restarted, but we still don’t know how much will fuel last,” said Alicia Bárcena, Secretary Executive of ECLAC.
The preliminary balance says that recovery will be stronger in South America and Central America (excluding Mexico) with growth rates of 4.7% and 3%, while the Caribbean will have a more modest expansion, 1.8%.
According to the 2010 prospects, Brazil will be leading growth next year with 5.5%, together with the 5% for Peru and Uruguay. Bolivia, Chile and Panama are expected to grow 4.5% while Argentina and Suriname will be in the …
