Three interesting graphs:
Three interesting graphs:
Christian Century: A secular Latin America?
In recent months, observers have remarked on the growing number of Americans who claim no religious affiliation (the “nones”), whose numbers are highest among the young. We can argue about just what these numbers mean, but possibly they do mark the beginning of a secularizing trend, a drift toward European conditions. Surprisingly perhaps, given our customary assumptions about Latin America, conditions in several Latin American nations mirror those in the U.S. Increasingly these countries are developing a European coloring. ...
... Whatever the causes, the European experience indicates that countries where the fertility rate falls well below replacement (2.1 children per woman) might be facing rapid secularization.
With that figure in mind, let’s look at the countries of Latin America, and especially the most economically developed ones. A few decades ago, all had classic Third World population profiles and very large families. In the 1960s, for instance, Brazil’s fertility rate hovered around 6 children per woman, alarming those who warned of a global population explosion. By 2012, though, Brazil’s figure was 1.82, far below replacement level. Chile and Uruguay both record similar rates of 1.87. Argentina is still above replacement, but the rate is falling fast. That’s a social revolution in progress—as well as a gender revolution.
In religious terms, these countries present a complex picture, with strong evidence of a continuing passion for religion. Brazil is home to some spectacularly successful Pentecostal megachurches, which Catholic clergy seek to imitate in order to hold on to believers. New evangelical churches are also booming in the other Latin nations, to the point that Protestants claim to be living through a new Reformation.
At the same time, though, signs of secularization appear that would have been unthinkable not long ago. Nine percent of Brazilians now say they follow no religion, and the proportion of nones is much higher among those under 20. Uruguay emerges as the region’s most secular country, with 40 percent having no religious affiliation. ...
Region now has as many middle class people as those who are poor thanks to rapid growth in incomes, study reveals.
Income inequality is falling in Latin America even as it rises elsewhere in the world, according to a World Bank study that encourages government intervention to reduce the wealth gap.
Over the past 15 years, more than 50 million people have risen into the middle class, which is now – for the first time – about the same size as the population of poor in the region, says the report, which was unveiled on Tuesday. ...
... He said the main reason for the reduction in inequality is not a compression of income from the rich at the top, but because of a rapid growth in the incomes and spending power of those at the "bottom of the population pyramid".
About 30% of the region's population is now in the middle class, which the World Bank defines as those who have less than a 10% chance of falling back into poverty. This is similar to the proportion who are classified as poor. In between is the biggest group, the 38% who are considered "vulnerable" because they live just above the poverty line on an income of between $4 and $10 a day. ...
... The report, titled Economic Mobility and the Rise of the Latin American Middle Class, recommends improvements in public education and healthcare as a way of consolidating the upward mobility of the population. Currently, one of the biggest gaps is not in spending power, but in access to decent social services. In many countries, poorer families have no choice but to put their children in low-standard schools and their sick in poorly-funded hospitals, while the middle class spend substantial sums on private education and health care.
The World Bank's president, Jim Yong Kim, emphasised the role played by the private sector, which he said creates 90 percent of jobs in developing countries.
But he said the great strength of the story in Latin America was that countries that have self-consciously focussed on reducing inequality have also experienced rapid economic growth. ...
Strolling down the main shopping drag in this working-class Rio de Janeiro suburb, it's not the second-skin dresses in shocking pink spandex that catch the eye or even the strapless tops with strategically placed peekaboo paneling.
The newest look can instead be found in stores like Silca Evangelical Fashion, where the hot items are the demure, long-sleeved frocks with how-low-can-you-go hemlines and the polyester putty-colored potato sack dresses.
In the birthplace of the "fio dental" or dental floss string bikini, so-called evangelical fashion has emerged as a growing segment of the country's $52 billion-a-year textile industry, catering to the conservative sartorial needs of Brazil's burgeoning numbers of born-again Pentecostals.
Once so difficult to procure that evangelical women tended to make much of their own clothes themselves, the modest garb is now popping up all over Brazil.
On the tiny high street of Rio suburb Itaborai, not one but two evangelical clothing stores compete to dress the faithful. M&A Fashion got its start two decades ago as a conventional clothing shop, selling the short, tight styles favored in this tropical country, but shifted to evangelical offerings five years ago. Silca Evangelical Clothing, two doors down, opened in March. ...
New York Times: With Venezuelan Food Shortages, Some Blame Price Controls
... At the heart of the debate is President Hugo Chávez’s socialist-inspired government, which imposes strict price controls that are intended to make a range of foods and other goods more affordable for the poor. They are often the very products that are the hardest to find. ...
... Venezuela was long one of the most prosperous countries in the region, with sophisticated manufacturing, vibrant agriculture and strong businesses, making it hard for many residents to accept such widespread scarcities. But amid the prosperity, the gap between rich and poor was extreme, a problem that Mr. Chávez and his ministers say they are trying to eliminate.
They blame unfettered capitalism for the country’s economic ills and argue that controls are needed to keep prices in check in a country where inflation rose to 27.6 percent last year, one of the highest rates in the world. They say companies cause shortages on purpose, holding products off the market to push up prices. This month, the government required price cuts on fruit juice, toothpaste, disposable diapers and more than a dozen other products.
“We are not asking them to lose money, just that they make money in a rational way, that they don’t rob the people,” Mr. Chávez said recently.
But many economists call it a classic case of a government causing a problem rather than solving it. Prices are set so low, they say, that companies and producers cannot make a profit. So farmers grow less food, manufacturers cut back production and retailers stock less inventory. Moreover, some of the shortages are in industries, like dairy and coffee, where the government has seized private companies and is now running them, saying it is in the national interest. ...
... If there is one product that Venezuela should be able to produce in abundance it is coffee, a major crop here for centuries. Until 2009, Venezuela was a coffee exporter, but it began importing large amounts of it three years ago to make up for a decline in production.
Farmers and coffee roasters say the problem is simple: retail price controls keep profits close to or below what it costs farmers to grow and harvest the coffee. As a result, many do not invest in new plantings or fertilizer, or they cut back on the amount of land used to grow coffee. Making matters worse, the recent harvest was poor in many areas.
A group representing small- to medium-size roasters said last month that there was no domestic coffee left on the wholesale market — the earliest time of year that industry leaders could remember such supplies running out. The group announced a deal with the government to buy imported beans to keep coffee on store shelves.
Similar problems have played out with other agricultural products under price controls, like lags in production and rising imports for beef, milk and corn. ...
Women overseas are reaching new heights professionally. Here's what we can learn from our emerging market counterpart.
The mention of women in emerging economies often evokes a picture of oppressed and poverty-stricken victims, relegated to the sidelines of male-dominated cultures. That’s the usual narrative, exemplified by the best-selling Half the Sky by Nicholas Kristof and Sheryl Wu Dunn. Yes, these problems are real and of critical importance. But educated women in Brazil, Russia, India and China — the BRIC economies which represent the four largest emerging markets — and the United Arab Emirates, are telling a different tale: one of agency and power.
Just as in the U.S. — where female college graduates now outnumber men — BRIC women are flooding into universities and graduate schools. They represent 65% of college graduates in the UAE, 60% in Brazil and 57% in Russia. These figures represent more than just a tiny elite: Between 15 and 25% of young women in the BRICs/UAE are now college-educated — a substantial number. And they’re not just earning degrees: They are bursting with the desire to use them.
Highly educated women the world over are ambitious, but ambition and aspiration among BRIC/UAE women is off the charts. New data from the Center for Work-Life Policy show that 85% of female college graduates in India and 92% in the UAE consider themselves very ambitious, compared to a paltry 36% in the U.S. In India, 86% of college-educated women are shooting for the top job, closely followed by their counterparts in Brazil (80%) and China (76%).
And turbo-charged ambition is paying off. In Brazil, 14% of the CEOs of large companies are female; in India, the figure is 11%. Meanwhile, the number of women who head up Fortune 500 corporations in the United States and FTSE 100 firms in the United Kingdom is stuck at less than 5%. What’s behind these startling numbers? Our study — which is based on rich, new data — describes opportunities and obstacles, which are surprisingly different from those in the West. ...
Christian Science Monitor: Latin America's middle class grows, but with a tenuous grasp on status
Although 56 million households have joined Latin America's middle class, many lack the benefits and job security to ensure stability.
With a regular salary as a beauty salon manager, Edgar Ladino supports his two children, leases a compact car, and is able to make rent payments on time.
“It’s not my dream job, but it’s OK,” he says with a shrug, sipping a latte at a Bogotá shopping mall.
Mr. Ladino may not love his job, but it has landed him a spot in the burgeoning Latin American middle class. Millions across the region are finally setting up new companies, buying cars and homes, and helping to further stabilize democracies. In the world’s most unequal region, their rise has dominated policy documents, academic papers, and press reports.
Fifty-six million households have joined the Latin American middle class in the past decade and a half, according to new analysis by the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), which studied 10 countries in the region representing 80 percent of the population. The growth mirrors trends in the rest of the world, the group says, with 1.3 billion people today calling themselves middle class.
But behind good news lies a troubling reality. While new members of Latin America's middle class might be better off than their parents, the benefits often taken for granted by their Western counterparts remain far from their grasp. Many are barely holding on to their new status, with insecure jobs and poor access to quality education for their children. In most cases, they are more likely to fall into poverty again than rise into affluence. ...
The Globalist: Brazil’s Potential in the Rousseff Era
In 2003, President Lula inherited a poor, resigned nation on the verge of an economic implosion. Eight years later, Brazil’s new president, Dilma Rousseff, leads an emerging, optimistic nation. Dan Steinbock explores how Brazil can realize its full growth potential in the post-crisis landscape.
One interesting note is the continued decoupling of the rest of the world from the American economy.
When Lula won the presidency in 2002, Brazil’s main trading partners were the United States (25.5%), the Netherlands (5.3%), Germany (4.2%) and China (4.2%).
Over the eight years, the U.S. share collapsed, while the Chinese share more than tripled. By 2009, Brazil’s main trading partners were China (13.2%), the United States (9.6%), Argentina (7.8%) and the Netherlands (5.0%).
Steinbock's presription for Brazil's economic health?
In order to realize its full BRIC potential, Brazil has to undertake seven critical steps. First, reduce the importance of the informal sector. Second, correct macroeconomic deficiencies (including the high interest rate and a relatively high government-debt-to-GDP ratio).
Third, reduce the notorious red tape. Fourth, streamline the labor code. Fifth, contain political corruption. Sixth, improve the quality of public services (e.g., education, justice and security). And seventh, develop new infrastructure.
In order to engage in the Asian trajectory of growth, however, even more reforms are needed, including far greater trade openness, significantly higher investment and savings and substantially lower public and foreign debt.
New York Times Economix: The Haves and the Have-Nots
This really is a fascinating chart but it is kind of like one of those pictures with all the dots. You look at it long enough and a dolphin appears.
Across the horizontal axis are ventiles (and no, they aren't related to gentiles.) Each ventile is 1/20, or 5%, of the population ranked from least to most income. The verticle axis is percentile of the world income distribution (All income is in inflation adjusted international dollars.)
So, the poorest ventile in the USA still recieves more than 68% of the rest of the world. Brazil has a wide disparity of income with the bottom ventile at the bottom of the world distribution and the top ventile nearly on a par with the USA top ventile. India's top ventile doesn't event make it the level of the lowest ventile in the USA.
Among other things we can see how much greater is the income inequality in emerging giants but their lines are very likely to mirror the USA line in coming years.
The Brookings Institution: Poverty in Numbers: The Changing State of Global Poverty from 2005 to 2015
... How many poor people are there in the world and how many Are there likely to be in 2015?
To calculate the number of people in the world living in extreme poverty, we update the World Bank’s official $1.25 a day poverty estimates for 119 countries, which together account for 95 percent of the population of the developing world. To do this, we take the most recent household survey data for each country, and generate poverty estimates for the years 2005 to 2015 using historical and forecast estimates of per capita consumption growth, making the simplifying assumption that the income distribution in each country remains unchanged.
Global poverty figures are then calculated by adding together the number of poor from each country. (See the Appendix for a full account of our methodology.) Our results indicate that the world has seen a dramatic decrease in global poverty over the past six years, and that this trend is set to continue in the four years ahead. We estimate that between 2005 and 2010, the total number of poor people around the world fell by nearly half a billion people, from over 1.3 billion in 2005 to under 900 million in 2010. Looking ahead to 2015, extreme poverty could fall to under 600 million people—less than half the number regularly cited in describing the number of poor people in the world today. Poverty reduction of this magnitude is unparalleled in history: never before have so many people been lifted out of poverty over such a brief period of time.
When measured as a share of population, progress remains impressive, but is more in line with past trends. In the early 1980s, more than half of all people in developing countries lived in extreme poverty. By 2005, this was down to a quarter. According to our estimates, as of 2010 less than 16 percent remained in poverty, and fewer than 10 percent will likely be poor by 2015.
The first Millennium Development Goal defines a target (MDG1a) of halving the rate of global poverty by 2015 from its 1990 level. In an official report prepared for the U.N. MDG conference this past September, the World Bank stated that we are 80 percent of the way toward this target and are on track to meet it by 2015, though the Bank warned that “the economic crisis adds new risks to prospects for reaching the goal.”3
Our assessment is considerably more upbeat. We believe that the MDG1a target has already been met—approximately three years ago.4 Furthermore, by 2015, we will not only have halved the global poverty rate, as per MDG1a, but will have halved it again.
Over the past half century, the developing world, including many of the world’s poorest countries, have seen dramatic improvements in virtually all non-income measures of well-being: since 1960, global infant mortality has dropped by more than 50 percent, for example, and the share of the world’s children enrolled in primary school increased from less than half to nearly 90 percent between 1950 and today.5 Likewise there have been impressive gains in gender equality, access to justice and civil and political rights. Yet, through most of this period, the incomes of rich and poor countries diverged, and income poverty has proven a more persistent challenge than other measures of wellbeing.6 The rapid decline in global poverty now underway—and the early achievement of the MDG1a target—marks a break from these trends, and could come to be seen as a turning point in the history of global development. ...
Here are some interesting charts and graphs:
I particularly liked this graph:
Nigeria will soon have more poor people than India.
Wall Street Journal: Brazil Vote's Winners: Evangelicals
Candidates Courted Growing Bloc for Edge in Sunday Election Run-Off.
RIO DE JANEIRO—Brazilians will take to the polls Sunday to determine their next president, but already one big winner of this political season has emerged: evangelical Christians.
Former cabinet minister Dilma Rousseff is expected to win the run-off, with pollster Datafolha projecting a 56% to 44% spread against former São Paulo Gov. José Serra. The surprise is how much the final stretch of the campaign in this predominantly Catholic country was shaped by an increasingly powerful bloc of conservative Protestants.
Ever since Brazil returned to democracy in 1985, presidential elections have been dominated by economic concerns as the country lurched from crisis to crisis. Potentially explosive issues such as whether to legalize abortion and gay marriage were rarely on the front burner, though the nation of 190 million is often called the world's biggest Catholic country.
This time, a grass-roots campaign of sermons, Internet videos and DVDs distributed mainly by evangelical pastors thrust moral questions like abortion and gay marriage abruptly onto the political agenda and forced Ms. Rousseff and Mr. Serra to declare positions. Joined by some conservative Catholic bishops, the evangelicals mobilized at least partly in response to the government's approval last year of a broad social plan supported by Ms. Rousseff's party that included calling for greater gay rights and abortion rights.
In order to shore up support among religious conservatives, both Ms. Rousseff and her rival, Mr. Serra, added opposition to legal abortion to their campaign platforms. That meant a big move to the right for Ms. Rousseff, an ex-Marxist guerrilla who has supported legalizing abortion in the past. ...
The Economist: Less smoke, less ire
Brazil, long the world’s deforester-in-chief, is mending its ways.
THE Amazon’s dry season, from July to September, is when the grileiros cut and burn the rainforest. The smoke is so thick it can be seen from space. It also stops rainclouds forming, so the flames burn higher. But on a recent surveillance flight over the forest frontier in Brazil’s state of Pará, there was hardly a wisp of smoke in the sky. Even the people from Greenpeace, whose flight this was, were impressed.
They can take some credit, thanks to their Amazon beef campaign. But even before that Brazil’s deforestation rate had slumped. Between 1996 and 2005 some 19,500 sq km of the Brazilian Amazon were cleared each year. At that rate, a third would be gone by 2050 and the rest might wither. But the rate of clearance has been reduced drastically and in 2008-09 it was at its lowest level for two decades, at a mere 7,008 sq km. This is partly because of tumbling prices for agricultural commodities, the reason for previous downward blips in 2006 and 2008. But it is also because of government action. When soya and beef prices briefly began to climb at the end of 2007 there was a renewed spurt of hacking and burning. But it was swiftly quashed.What has changed? ...
Does culture affect long-run growth? This column argues that countries with a more individualist culture have enjoyed higher long-run growth than countries with a more collectivist culture. Individualist culture attaches social status rewards to personal achievements and thus provides not only monetary incentives for innovation but also social status rewards. ...
Two interesting graphs:
The Economist: Latin America - So near and yet so far
... As Latin America marks the bicentenary of the start of its struggle for political independence, many of its constituent countries have more recent cause for celebration too. The five years to 2008 were Latin America’s best since the 1960s, with economic growth averaging 5.5% a year and inflation generally in single digits. Even more impressively, a region which had become a byword for financial instability mostly sailed through the recent recession. After a brief downturn in late 2008 and early 2009, a strong recovery is now under way, with most forecasts suggesting economic growth of over 5% this year for the region as a whole.
Along with growth came a better life. Between 2002 and 2008 some 40m Latin Americans, out of a total population of 580m, were lifted out of poverty, and income distribution became a bit less unequal almost everywhere. Poverty increased in 2009 because of the recession, but will start declining again this year. Average unemployment went up slightly to 8.2%, but should come down again this year to 7.8%, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC).
Latin America weathered the recession partly thanks to good fortune but also to sound policies. After the cataclysmic debt crisis of 1982 the region’s policymakers abandoned the protectionism and fiscal profligacy that had brought hyperinflation and bankruptcy. In their place they adopted the market reforms of the Washington Consensus (opening up their economies to trade and foreign investment, privatisation and deregulation).
But they found the road to stability and faster growth a long and bumpy one. During a second bout of instability, from 1998 to 2002, the region introduced more pragmatic policies. ...
... Some Latin American countries may at last have found a path towards economic development. But getting there may be no quicker or easier than achieving independence. Latin America has often flattered to deceive (see article). Today there are at least three big worries. First, since 1960 it has seen the lowest growth in productivity of any region in the world, not least because around half of all economic activity takes place in the informal sector. Second, despite some recent improvement, its income distribution is still the most unequal anywhere. This has acted as a drag on growth and caused political conflict. Third, it suffers from widespread crime and violence, much of it perpetrated by organised drug gangs. The murder rate is hideously high in some countries.
A problem for any report such as this one is that Latin America is so diverse as to defy most generalisations. ...
The world's net rate of forest loss has slowed markedly in the last decade, with less logging in the Amazon and China planting trees on a grand scale.
Yet forests continue to be lost at "an alarming rate" in some countries, according to the UN Food and Agriculture Organization (FAO).
Its Global Forest Resources Assessment 2010 finds the loss of tree cover is most acute in Africa and South America.
But Australia also suffered huge losses because of the recent drought.
"It is good news," said the report's co-ordinator Mette Loyche Wilkie, a senior forestry office with FAO.
"This is the first time we've been able to say that the deforestation rate is going down across the world, and certainly when you look at the net rate that is certainly down.
"But the situation in some countries is still alarming," she told BBC News.
The last decade saw forests being lost or converted at a rate of 13 million hectares per year, compared to 16 million hectares in the 1990s.
However, new forests were being planted to the tune of more than seven million hectares per year; so the net rate of loss since the year 2000 has been 5.2 million hectares per year, compared to 8.3 million in the 1990s.
Globally, forests now cover about 31% of the Earth's land surface. ...
Foreign Policy: The Wal-Mart Effect
When India's first Wal-Mart opened this summer in Amritsar, the response was mixed, with detractors fearing that big-box stores would eventually crowd out India's fabled "wallah" culture. What no one remarked on, however, was that Wal-Mart's debut in a country is a bellwether for future growth. Indeed, Wal-Mart has started operations in 15 countries since 1991, and 13 of them have had boom economies, with an average of 4.4 percent annual growth since Wal-Mart arrived. Over the last five years, the economies of Wal-Mart countries outside the United States have grown 40 percent faster than the world average. So what's going on? Does the ability to buy giant bags of Froot Loops at cut-rate prices inspire economic growth? More likely, Wal-Mart is simply a smart, cautious investor. "Wal-Mart chooses to go places with a sizable middle class," says Nelson Lichtenstein, a historian who just published a book on Wal-Mart's rise. And Wal-Mart's attention to middle-class growth could pay off for the company in the future.
The portion of the global middle class that lives in the developing world should rise from 56 percent in 2000 to 93 percent in 2030, according to the World Bank. Next up for the Wal-Mart effect, Lichtenstein says: Russia and Eastern Europe. Picture the new global bourgeoisie outfitted with cheap hibachi grills, extra-durable puppy toys, and energy-efficient minifridges, and you've got a glimpse of the coming Wal-Mart revolution.
Christian Science Monitor: Why South American economies are rebounding first
Commodities-hungry China is pulling Brazil, Chile, and others out of recession. But Mexico and Central America, dependent on US sales, are lagging.
Mexico City; and SÃo Paulo, Brazil - Latin America, long tied to the economic well-being of the United States, finds itself in a rare position these days: recovering from the global financial crisis faster than most of the rest of the world.
After shrinking 2.5 percent this year, the regional GDP is expected to return to 2.9 percent growth next year, according to the International Monetary Fund's World Economic Outlook.
But the recovery has two faces.
Brazil and other commodities-exporting nations in South America are blazing the way forward thanks to increased trade with China, as Mexico and Central America languish from a sustained drop in demand in the US.
"Every time that the US or Europe or any other of the big world locomotives were in trouble, Latin America fell," says Alfredo Coutino, Latin America director at Moody's Economy.com. "This is the first time in many, many decades in which Latin America is better prepared, in terms of economic strengths, to deal with the external recession." ...
Christian Science Monitor: Russia's new presence in Latin America
Christian Science Monitor: Brazil becomes antipoverty showcase
Christian Science Monitor: Farming superpower Brazil spreads its know-how
Christian Science Monitor: Latin America better girded for financial crisis
Reuters: Poverty still plagues Brazil
Jul 9 - Poverty still haunts Brazil, even as a booming economy has lifted millions of Brazilian into a new middle class.
The income of Brazil's poorest 10 percent grew by about 9 percent per year between 2001 and 2006 - meaning millions of poor are moving out of danger of hunger.
Deborah Lutterbeck reports.
Note: One of the thing I found interesting about this report is that you could easily have titled it "Remarkable Improvement in Brazilian Poverty" yet Reuters chose the dire title "Poverty still plagues Brazil."
Christian Science Monitor: Brazil bucks global economic downturn
The high food and commodity prices hurting most countries are buoying Brazil, a top exporter of minerals, soy, beef, chicken, and grains.
São Paulo, Brazil - When Carl's Jr. looked at expanding its international fast-food franchise operation earlier this year, several emerging markets were muted. But after a trip to São Paulo and Rio de Janeiro in June, company officials made sure Brazil was on the list.
Why? The country's young, meat-eating population is growing, which is important to the American chain, says Mike Stout, director of international franchise sales.
But Carl's Jr. also had other motives that speak to Brazil's newfound economic robustness.
"Disposable incomes are increasing and more and more people are moving into the middle class," Mr. Stout said in a telephone interview from St. Louis, shortly after a two-week visit here. "The economy is growing and inflation is stable. From a business perspective, we love the market."
Add to that lower interest rates and easier credit, and you have the reasons Brazil is emerging as an investment magnet. Direct foreign investment to Brazil doubled last year as companies as diverse as real-estate developer Tishman Speyer and agricultural machinery producer John Deere looked to the Southern Hemisphere as a place to do business.
It is a remarkable turnaround for a nation accustomed to boom and bust and strengthens Brazil's place as Latin America's economic powerhouse. ...
The Economist: The ghost at the till: Latin America’s economies
UNLIKE the developed world, Latin America has been barely touched so far by the credit crunch. Many of its economies are still growing fast, helped by demand for their commodity exports. But the commodity boom has started to have a less desirable effect: soaring food and fuel prices are pushing inflation up across the region. This has become a test of credibility for Latin America’s new-found economic stability, and for its central banks. Some of the more important ones have responded more robustly than many of their Asian peers—even if claims that Brazil’s hawkish Central Bank is “the new Bundesbank” require a pinch of salt.
The regional average inflation rate rose to 7.5% in April, from 5.2% a year before, according to the IMF. This is an underestimate, since Argentina’s official inflation figure of 9.1% is probably less than half the true rate. It also conceals a divide. Around the turn of the decade, several of the larger countries adopted floating exchange rates, and inflation targets administered by more-or-less independent central banks. Another group of countries—including Argentina and Venezuela—have given greater priority to growth than to price stability. But even among the first group, inflation has been rising. In response, central banks in Chile, Colombia, Mexico and Peru began to raise interest rates last year. Even so, they have missed their inflation targets, in most cases for the first time....
The Economist: Quagmire to goldmine?
The rapid growth in developing countries prompts a rethink by drugs companies.
BRAZIL has long been a thorn in the side of the global drugs companies. The country's vibrant generics industry has often trampled over their patents. As recently as last year, its government threatened to invoke compulsory licensing (a legal mechanism that, in effect, legitimises such trampling) to browbeat a foreign drugs firm into offering huge discounts. And Brazil's state-funded researchers have devised some impressive drugs, including a new therapy for malaria (see article). Small wonder, then, that big drugs firms have remained leery of this market.
Indeed, they have been cautious about developing countries in general, which they have regarded as the source of many headaches and few profits. A decade ago Britain's GlaxoSmithKline (GSK) got a bloody nose in South Africa when it tried too vigorously to defend patents on an HIV drug. More recently Novartis, a Swiss firm, lost a bitter battle in India over patent protection for Gleevec, a profitable cancer drug. In Thailand the government has invoked compulsory licensing for some drugs. And next week the industry can expect another drubbing over patents harming “innovation for the poor” at the World Health Organisation's annual assembly.
But consider the story of Moksha8, a new drugs firm launched last month with money from Texas Pacific Group, a private-equity outfit. It aims to capitalise on Big Pharma's neglect of many emerging economies by striking licensing deals for branded drugs which it, in turn, intends to market to affluent customers in those countries. It already has some two dozen drugs under licence for Brazil from Roche and Pfizer. Fernando Reinach of Votorantim, a Brazilian firm that also invested in Moksha8, expects its annual sales to top $1 billion within a year or two.
All of which suggests that the situation is ripe for change. For much of its history, the industry has focused chiefly on the diseases that afflict people in rich countries, while largely neglecting research into diseases of the poor. But as growth slows in developed markets, and the twin threats of generic drugs and price controls advance even in pharma-friendly America, drugs companies are thinking again. ...
The Economist: Poverty amid progress
A revolution in South America's fastest-growing economy is not reaching everyone.
BLOCKS of flats or offices are under construction on nearly every street. New hotels and restaurants sprout on every corner, while shopping centres multiply in what were once shantytowns. Across the city, thoroughfares have been torn up to make way for new bus lanes and terminals. Such is the anarchic volume of traffic that just crossing the street has become a time-consuming and perilous exercise. Lima, Peru's capital of 8m people, is shedding its former air of provincial lassitude and turning into a bustling metropolis.
The city is the visible face of a boom that has made Peru South America's fastest-growing economy (see chart). That performance owes much to record prices for mineral exports. But newer export products, from designer cotton T-shirts to mangoes and artichokes, are also flourishing. As well as trade, private investment, growing at 20% a year, and domestic consumption are driving the economy forward at an accelerating pace (in the year to February, GDP grew by 9.2%).
Thanks to high world prices for food and fuel, inflation has spiked to 5.5%, having been low for years. Nevertheless, the growth looks to be built on solid foundations. The national savings rate has risen to 24% of GDP, high by regional standards, and the government last year posted a fiscal surplus of 3% of GDP. A free-trade agreement with the United States is about to come into effect. In recognition of such achievements, Peru's debt was awarded an investment-grade credit rating last month by Fitch, a ratings agency.
Yet there are paradoxes at the heart of the boom. Despite the growth, poverty has fallen only slowly. And many Peruvians are disgruntled. The president, Alan García, was once a radical populist who presided over hyperinflation and debt default in a first term in office in the 1980s. He returned to office in 2006 a reformed character. But his people give him little credit for the strong economy. He is one of the least popular presidents in Latin America, with an approval rating of just 26% in a poll taken in the main cities in April by Ipsos-Apoyo, a pollster.
There are several reasons for the relatively slow fall in poverty. Although the number of formal-sector jobs is expanding at 9% a year, many Peruvians still labour in the informal sector of unregistered businesses, where productivity is low. Wages for the unskilled have been slow to rise. ...
It's about 90 minutes flying time from Lima to this jungle metropolis of 400,000. But daily life here is light years away from what it is in the Peruvian capital.
After almost two decades of gradual reforms by the central government, Lima is today home to first-world services, globally competitive businesses, shopping malls and an emerging middle class. But here in the hub of the Peruvian Amazon, living standards are all too similar to what they were 30 years ago.
The differences between the two cities illustrate one of the biggest challenges for the government of President Alan García, who was once a renowned socialist but now says he embraces democratic capitalism.
Peru has been experiencing fast growth – better than 6% annually – for almost seven years, and it has largely occurred on the coast and in the capital city. But the mountain and jungle regions of the country have not kept up. They remain vulnerable to the siren song of left-wing populism.
This is what makes Peru ground zero in the continental struggle between modernity and atavistic socialism. Hugo Chávez is circling like a vulture in the poorer parts of the county, hoping to pick off a prized Andean nation to add to his collection of revolutionary allies in South America. Meanwhile, reformers are trying to push ahead with deeper liberalization.
The good news is that the white hats have the momentum. If it is true that remote locations like this city are vulnerable to ideological incursions from the authoritarian left, it is also true that much of the rest of the country is beginning to think and act more like Chilean entrepreneurs than Cuban apparatchiks. Understanding why is critical to further progress. ...
The Weekly Standard: Mennonites and Mammonites...in Paraguay
...This progressive Mennonite congregation has departed in more ways than these from the customs of their forebears. Mennonites have lived in Paraguay since the 1920s, mostly in the miserably hot Chaco, a region that was barely inhabited before they arrived, and indeed barely inhabited today. For the first 70 years, they kept to themselves and preserved the pacifist and isolationist ways that characterize the sect everywhere. But now they're at the center of one of the strangest phenomena in South American politics, a saga of corruption and faith that has left these world-renouncing Anabaptists in control, for a time, of the highest worldly offices in Paraguay--and wondering whether their newfound power is a blessing or curse....
...But the economic entanglements remain, and to retreat from politics might require them to curtail the astonishing economic boom that financed the Mennonite ascent to power in Asunción less than a decade ago. Their commercial habits are too ingrained, and the Paraguayan appetite for their milk and yogurt too powerful, for easy reversal now. The seal is broken. "They are family men," Abente says, perhaps channeling the early Mennonite fathers. "But the more they have to deal with a corrupt place, the more they corrupt themselves."
Twenty years ago, when I was grad student at Eastern Unversity, there was a group of us who would periodically get together and play the table game, "Risk: The game of world domination." There were Mennonites among us and one of our favorite observations was how ruthless and successful the Mennos were in playing this game. We used to comment that it was a good thing they wouldn't get their hands on any real power. :)
MacLeans.ca: Chile: well on the way to eradicating poverty
Capitalism and globalization used to be dirty words for Latin American leftists, who in the past were quick to blame the region's poverty on what they saw as these largely destabilizing and outside factors. But after a decade in which savvy leftist legislators in Chile pursued a bold economic program to embrace the free market, while at the same time creating public policy measures to address the needs of the most impoverished in the country, poverty is rapidly becoming an anachronism in Chile, one of the world's fastest-growing economies.
Poverty has fallen faster in Chile than anywhere else in Latin America, according to figures recently published by the Chilean government. Statistics collected by the Caracterización Socioeconómica Nacional (CASEN) survey carried out by the country's planning ministry showed that poverty fell from 18.7 per cent in 2003 to 13.7 per cent in 2006. In 1990, when dictator Augusto Pinochet left office, more than 38.6 per cent of people in this Andean country of 16 million lived below the poverty line.
For the country's president, Michelle Bachelet, the breakthrough is due entirely to the steady rule of several centre-left Concertación administrations. The party, an alliance of centre-left political parties founded in 1988, has won every presidential race since Pinochet's departure. "The social achievements are obvious," said Bachelet, a former political prisoner under Pinochet's rule, in a recent public statement following the release of the CASEN statistics. "Our priorities have never varied and we stick to them: a social safety net as never before, quality education, better health care, decent homes, pensions for the most vulnerable."
...The Chilean government has invested in public infrastructure and telecommunications while maintaining a strong export-led approach to development, he says. Chile has 54 free-trade agreements with countries all over the world, including Canada. Since 1990, the country has increased exports from US$9 billion a year to US$60 billion in 2006, Heine says. As a result, Chile's economy has grown at a yearly average of 5.6 per cent, the highest anywhere outside Asia. Since 1990, per capita income has soared from US$2,500 to US$9,000 today....
The Economist: Up from the bottom of the pile
Something rather exciting is happening in Latin America.
MUCH of the news coming out of Latin America in recent years has been of radical populists proclaiming “revolution” or, as Venezuela's Hugo Chávez would have it, “21st century socialism”. In their widely propagated caricature, a tiny white elite in Latin America oppresses an indigenous majority whose poverty has been exacerbated by the free-market reforms imposed by the IMF and the United States.
So it might be hard to believe that in many countries in the region, and especially in Brazil and Mexico, Latin America's two giants, things are in fact going better today than they have done since the mid-1970s. The region is in its fourth successive year of economic growth averaging a steady 5%. In most places inflation is in low single digits. And for the first time in memory, growth has gone hand-in-hand with a current-account surplus, holding out hope that it will not be scotched by a habitual Latin American balance-of-payments crunch.
What is more, financial stability and faster growth are starting to transform social conditions with astonishing speed. The number of people living in poverty is falling, not only because of growth but also thanks to the social policies of reforming democratic governments. The incomes of the poor are rising faster than those of the rich in Brazil (where income inequality is at its least extreme for a generation) and in Mexico.
In both these countries a new lower-middle class is emerging from poverty (see article). Low inflation, achieved through more disciplined public finances and trade liberalisation, has brought falling interest rates. Credit has at last returned. So these new consumers are buying cars and DVD players or taking out mortgages. No wonder Latin Americans are in an optimistic mood: earlier this year a poll by the Pew Global Attitudes Project found a greater increase in personal satisfaction in Brazil and Mexico over the past five years than in any of the other 45 countries it surveyed. ...
See related story: Latin America's middle class: Adiós to poverty, hola to consumption
Christian Science Monitor: Ecuador moves to cut interest rates for poor
Banks and microlenders say Ecuador's leftist president may hurt most those he wants to help with 'financial justice' law.
Quito, Ecuador - Ecuador's new leftist president, Rafael Correa, is wasting no time forging his own path toward the "21st-century socialism" championed by Venezuela's anti-US leader, Hugo Chávez.
In April, three months after taking office on promises to wrest control of the country from the hands of a corrupt elite, Mr. Correa kicked out the representative to the World Bank. He blames the financial institution for forced privatization programs that have failed to benefit the poor, he says.
Now he's pushing through a controversial "financial justice" bill to increase state control of the banking sector.
The bill, which is expected to pass into law this week or next, paves the way for a complete overhaul of an abusive financial system, say government officials. It's also the latest example of a populist movement strengthening throughout Latin America.
But this new law could hurt most those Correa hopes to help. As he strives to protect Ecuador's poor from predatory lenders and free the country from the "Father-knows-best" conditionality of international institutions, such as the World Bank, he risks putting microlending groups out of business, preventing thousands of Ecuadoreans from receiving cash loans to lift themselves out of poverty. ...
The Economist: Religion in Latin America: Lighting on new faiths or none
In his first Latin American visit, Pope Benedict XVI will find a less divided church facing stronger rivals.
Benedict's choice of Aparecida for the conference suggests a desire to guide Latin America's Catholics back to traditional spirituality after decades of strife between progressive and conservative wings of the church. “Our great mission is to reach people who belong to the church but have lost a sense of living in accordance with the faith,” says Raymundo Damasceno Assis, the archbishop of Aparecida.
Belief in God is as widespread in Brazil as in the United States, says Antônio Flávio Pierucci, a sociologist at the University of São Paulo, but religious practice is close to Europe's wan levels. The numbers saying they are of no religion is small but growing. Some in the Catholic church fear that it is losing its grip over public morality. Local governments in Buenos Aires and Mexico City have recently legalised gay unions; the latter legalised abortion last month. Brazil's health minister has called for a plebiscite on the issue.
The more familiar threat to Catholic hegemony in Latin America comes from Pentecostal Protestantism. Born in the United States, this began to spread south a century ago but it has taken off since the restoration of democracy in the 1980s. According to the World Christian Database, a statistical service based in Massachusetts, more than 80% of Latin Americans are still Catholic. But that figure has been falling swiftly.
In Brazil, the world's largest Catholic country, the church has lost adherents at a rate of 1% a year since 1991, mainly to Pentecostal churches. Fewer than three-quarters of Brazilians are now Catholics while 15% are Protestants (known locally as “evangelicals”). In Mexico, 7.3% were Protestants according to the 2000 census; the figure may be almost 20% today. In Guatemala, some 30% are Protestant.
Traditional varieties of Pentecostalism emphasise a strict moral code of personal behaviour, including teetotalism and marital fidelity. Newer groups have added a gospel of self-enrichment. They offer a customer-friendly faith, telling the poor and uprooted that Christ can improve their lives and that He can be approached through ecstasy rather than ritual....
Aftershocks in the Andes is a Chicago Tribune about Bolivia's swing to the Left. The new president has ties with Evo Chavez the Leftist leader of Venezuela. The editorial attributes these developments to growing unrest over unsucessful attmepts at reforms. There are similar movments in other parts of South America.
The benefits of Bolivia's reforms have never trickled down to the poor. They haven't gone deep enough into the economy. Bolivia privatized banks, got rid of price controls and trade barriers and cut government spending--all good ideas. It opened its energy sector to outside investment 10 years ago. But many of the reforms were co-opted by special interests. The nation never tackled land reforms that would give poor Bolivians an ownership stake in their nation. Nor did it take on the difficult top-to-bottom institutional changes that would encourage Bolivians to move out of the underground economy and pay taxes on honest gains.
It is not very easy to do business in Bolivia, according to the World Bank's annual survey. Entrepreneurs must go through 15 steps to start a business, a process that takes an average of 50 days and costs the equivalent of almost $2,400--much more than most people make in a year. Hiring workers there is more cumbersome than it is elsewhere in the region. Firing them costs an average of 98 weeks of wages. Employers expect to pay 64 percent of their gross profits in taxes. And if they decide that's too much trouble, closing the business will take nearly two years.
Though it had steady economic growth in the 1990s, Bolivia's per capita gross domestic product trails far, far behind all of its neighbors. No wonder Morales won.
To me this an example of how half-way reforms often end up making things worse. There was an effort toward free markets but it appears that improved property rights and tax reform were never introduced. I am sure many of the laws about hiring and firing were passed with the intention of justice for the little guy. Instead, business left or never formed and the little guy ends up worse off than before.
With all the discussion about war these days I thought Colombia seeks peace in the middle of war, from the Christian Science Monitor, was a refreshing change of pace. Let us remember to pray for the work of the peacemakers in that troubled part of the world.