Spotlight on South and
Latin America
2011 International Business
Institute for Community
College Faculty
Dr. Manuel Chavez
MICHIGAN STATE UNIVERSITY
College of Communication Arts & Sciences
School of Journalism
Latin American Studies
Central Questions about
Latin America & South America

What are the differences between Latin America and
South America?

Has Latin America improved in the last five years?

Is there another leader besides Mexico and Brazil?

Is Latin America ready for change, especially for
regional free trade (FTAA)?

Is the business environment the same across Latin
America?

Reality vs Assumptions
Business Realities in Latin
America the hard way…

Significant differences by country and by region

More than economics, institutional capacity is critical

…and accountability and transparency

…and also, the Rule of Law

National cultures vs Corporate cultures

Is NAFTA-Mexico a good example?…well
Is NAFTA-Mexico a good example?

Cross-cultural exchange very fluid and positive, resulting in:

Mexico continues to be the largest recipient of FDI, specially from the
United States and Canada (strategic sectors of Canada Investments)

American corporations are in most Mexican cities and regions (except
for the South)

How well do U.S. corporations do in Mexico?

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Auto Industry (GM, Ford, Chrysler)

Electronics & computers (Apple, Dell, Sony, HP)

Appliances (GE, Whirlpool, LG)
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Aeronautics (GE, RR, Bombardier, Bell Aviation)

Agro-industries (Kellogg’s, Pilgrims Pride, Monsanto)
So, the business and economic model is working
Canada as Economic leader in Latin America

Strategic alliances with
Mexico, Cuba, and the
Caribbean.
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Sectors:
Energy
Telecommunications
Transportation
Financial & Insurance
Foreign Relations and
Influence of Canada

Public Diplomacy
North America (NAFTA) XXI
Century Realities
a.
b.
c.
d.
e.
NAFTA consolidation
and expansion (NA
currency)
Economic regional
free trade with the
Americas
Competition focusing
on the EU + EE
countries
2005 Security and
Prosperity
Partnership (SPP) of
North America
NATIONAL
SECURITY
The New Economic Pattern of
North America

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Post-industrial USA,
from manufacturing
based to technologyknowledge based.
U.S. vertical integration
Canada and Mexico link
to the U.S. market
NAFTA
US-FTA with Chile,
Panama, Peru, and
Colombia
CAFTA (Central
America and the DR)
FTAA (is it dead?)
North American Free Trade
Agreement –2010 Results

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2010 Total Value $917.3 billion
Increase in the last 5 years by 31%
Trade with Canada equals $524 billion,
increase by 12% in 5y
Trade with Mexico equals $393 billion
increase by 61% in 5y
Trade with Canada and Mexico
accounts for almost 47% of the total
U.S. trade
The U.S. is trade partner #1 for Canada
and Mexico. For the U.S. # 1 and # 3.
U.S. corporations seeking to export to
EU through Mexico
2005 Security and prosperity agenda
(logistics, logistics, and logistics)
Data: U.S. Dept. of Commerce and U.S. Trade Authority
Office
Security and Prosperity Partnership of
North America (SPP)…NAFTA and the
Post 9/11 effect
Signed in Waco, Texas. March 23, 2005
New initiative to strengthen regional
interdependence in NAFTA Countries –the
Post 9/11 effect (SPP)
SECURITY
Content a reas
PROSPERITY
Traveler security
Manufactured goods, sectoral &
regional competitiveness
Cargo security
Movement o f goods
Bio-protection
E-commerce and ICT
Aviation security
Financial services
Maritim e security
Law enforcement cooperationTransportation
Energy
Intelli gence cooperation
Protection, prevention and Environment
response
Food and agriculture
Border facili tation
Health
Science and technology
cooperation
Total areas
10
9
Mercosur and how Americas’
trade is difficult

Brazil controls on trade in South America,
until Argentina and Chile resisted

Venezuela’s manipulation of oil and
nationalistic policies –resisted by Brazil

Argentina’s protectionism and separation of
U.S. but in practice...

Competition to attract foreign direct
investment….all over the continent

Wide Latin American strong opposition to
U.S. subsidies

Production of ethanol
What variables have a critical
role for the U.S. to induce FTAs?

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Addition of Eastern
European countries to
EU
National security in the
continent–a premium
variable for the U.S.
Political stability in the
continent
Sustainable economic
growth
But, is the U.S.
Congress ready?
What are the regional political variables
that collide with U.S. interests?


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Venezuela –the
expansion of the
Chavez model
Cuba -the transition to
market economics
The political left
expansion: Brazil,
Argentina, Bolivia,
Ecuador, Peru, Chile,
Nicaragua.
Lack of real economic
improvement (per
capita) due to trade
…and a key variable: the Socioeconomic conditions in Latin America
…and another: the Socio-economic
conditions in Latin America

Yet, the U.S. Dept. of Commerce is
seeking to reactivate negotiations by:

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sparking and sustaining innovation
creating solutions in education and workforce
development
designing successful global supply chain
strategies
fostering small business development and
growth
Mexico Basic Briefing
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Population 2010:
113.7 million
Capital (population):
Mexico City
(18,000,000)
Life expectancy at birth:
male 74.7 years, female
79.2 years (2010 est.)
Physicians per 1000
people: 1.73
Rural/urban population
ratio: 26/74
GDP: 1.05 trillion
GDP per capita:
$13,900 (2010)
Mexico’s economic model

North American
Transportation sector
 3rd generation
“maquiladora”
production
 Energy production
 Tourism & retirement
What is the future of Mexico’s
socio-economic scenario?
a.
b.
c.
d.
Rule of law,
accountability and
transparency
Reduction of social
inequality
Investment in R&D
Heavy investment in
human capital
infrastructure
Brazil Basic Briefing
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Population 2010:
167.7 million
Capital (population):
Brasilia City (4 million)
Life expectancy at birth:
male 68.7 years, female
76.2 years (2010 est.)
Physicians per 1000
people: 1.03
Rural/urban population
ratio: 13/87
GDP: 1.8 trillion
GDP per capita:
$10,800 (2010)
Brazil Economic Model
 Active
closeness
with Europe
 Less dependency
from the U.S.
 Industrialization
 National economic
development
 Global role
 Energy supplier
Brazil’s future scenario focus on
socio-economic development
a.
b.
c.
d.
e.
Rule of Law
Reduction of social
inequality
Investment in R&D
Heavy investment in
human capital
infrastructure
So what?....
Working force development requires
to add International Education and
Skills (+)

Working Knowledge in:

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Language skills –
functional level
Culture at the exchange
level
Political, economic, and
social systems.
National cultures
Corporate cultures
abroad