Por Alejandro Chafuen: Publicado el 24/3/16 en: http://www.forbes.com/sites/alejandrochafuen/2016/03/24/time-to-tango-in-latin-america-three-trends-to-consider/#49a94745560a
The winds of change continue to blow in Latin America. Seeing corrupt leftist regimes fall (or merely fail to secure continuity) is a very welcome sign. President Barack Obama’s trip to Argentina and Cuba denotes the current administration’s optimism regarding the region, particularly as the president chooses to be accompanied by relevant business leaders. The trip to Argentina was less controversial and very well received, with President Obama even daring dance a Tango. Is it time for others to follow suit and jump in as investors in Argentina and elsewhere?
One of my favorite investors, the late Sir John Templeton, championed the notion of buying at the time of maximum pessimism. Yes. But not blindly. As Scott Philipps wrote in his Buying at the Point of Maximum Pessimism, it pays to understand long term trends, and perhaps the most important trend to follow are those in the political and economic spheres.
It is hard to analyze Latin America as if the region were a well-defined entity; Latin America is very diverse. Some economies are stagnating, a few are completely stagnant, and others are prospering. If I had to describe each key country’s current situation in one word, I would label Venezuela as the most tragic; Brazil, the most dramatic;Argentina, the most intriguing; and Chile, the saddest. On the other hand, there is hope for market-oriented continuity in Colombia, México and Peru. The burden of a weak of rule of law affects all but a few countries: Chile, Uruguay and perhaps Costa Rica. In this area, rays of hope are scant.
Large segments of the Latin American population have begun to reject the consolidation of left wing populist and arbitrary regimes; perhaps this is one of the most important trends to highlight. We have seen election results in Argentina and Venezuela that were largely unexpected at this time last year. In Venezuela, electoral results themselves were not as surprising as the fact that the military stood by them instead of engaging in a large scale cover-up. Demonstrators have flooded the streets of Brazil (by far the most relevant, economically potent country in the region), seeking to end decades of corruption and impunity. In Bolivia, the electorate rejected a change in the rules that would have permitted the re-election of current President Evo Morales. Though these events seem to herald change in the region, not all battles have been won. In Ecuador, for instance, leftist populist president Rafael Correa retains full control of the National Electoral Council, which has ruled against a referendum that would prevent him from running for president indefinitely.
I would love to credit these changes to a shift in the understanding of the importance of economic freedom. But although think tanks favorable to the free society have worked and continue to toil in all of these countries (often very courageously and at great risk to the lives and patrimonies of their members), these changes are mostly due to a negative economic trend: a major slowdown in the economy of most countries in the region. In Brazil and Venezuela, the economy has been shrinking for two years. Argentina’s economic slowdown was less severe, yet the country faced lower rates of growth in conjunction with increased inflation. When rampant corruption and abuses of power came to light, Argentina’s electorate shifted gears, pushing for a change in government. In Mexico, the second largest economy in the region, slow economic growth mimics that of the United States at just above 2%. In a paper written at the turn of the century, Ernesto Talvi of CERES, a think tank in Uruguay, described in great detail how, following the 1998 economic crisis in Russia, which had depressing effects across the developed world, Latin America passed from having two thirds center/right governments, to two thirds center/left, but some of it, radical left. What we are seeing is the reverse, albeit in a more moderate fashion.
Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.