Latin America and the New Global Economy
The importance of implementing a consistent free market, which encompasses the USA and Latin American countries, is sampled by the possibility of establishing such a treaty with Colombia. The current Bush administration has made a great push for this project, which has encountered the US Senate objection, mostly from the Democrat block. The possible mutual benefits are immeasurable and would allow further control over international markets in the region, since resource used for tariffs and other fees can be allocated for that custom monitoring and auditing purposes otherwise, which enhance the process quality assurance. Perhaps, this is a long process, but I had previously written in my previous blog on the Grand Colombia, that such an idealistic market in today’s economic perception opens more possibilities that can attain that possibility must not be historic but rather rational but understood a message of free choice market for every sovereign country involved, whether historically part of that ideal union or not. The positive outcome of a free-trade agreement has more pros than cons and can benefit the Andean and Central regions, in conjunction with other Latin American markets.
I believe that there is a trend for Latin American countries to become allied with emerging economies such as China, India, or Russia. My greatest concern is that Latin American markets would have a better choice and opportunity in the all-Americas unified market than risking a backslash of these economies in relation to markets where Latin American countries can expand their economies, for example, the textile industry, could easily and unexpectedly be stabbed in the back if the free market where those economies would prevail at some point with little or “no port control”. Indeed, this vision is not about planning on protectionism. While the issue is not about political ideas, it is in fact about diversifying the markets, but enhancing the natural roots of the entire continent. Instead an open economic can significantly expand the Latin American unified markets with the United States in at least the most convenient markets. The perception that there might be drawbacks is certainly not better than expanding with those emerging economies mentioned before. The cultural differences are also an important factor, which in the end take the economy to the personal affinity level. The emergent economies currencies interdependence with the US Dollar, the Euros, the Yen, and the Pound Sterling is quite significant in terms of net revenue in either direction.
Likewise, Brazil's emerging economy could become another hub for the Andean region, in fields such as biofuels, where Brazil is an avant guarde pioneer.
The perception that the current global economic market can probably cause a stronger impact on the economic powers than the developing countries in the long-term, when developing countries can use their own level of economic maturity to move forward in their planned economic strategies, in particular, during the current global crisis. The developing countries experience is and has been repetitive, and therefore it may have less significant impact on the psychology of those economies, although they are apparently more critical in practicality. Besides, I believe that the presence of the web and the global B2B strategies could be of more benefit for developing countries and emerging economies than for those already developed, which is significantly more tangible in sectors that are cost centers, such as Information Technology.
What Latin American countries need to do is to consistently implement a well planned strategy of resource utilization and distribution that optimizes their revenue and balances the resources allocated domestically for their nations’ usage and those allocated for export. This is important when nationalization of any resources has become an issue in the best interest of each nation, or conversely when the expansion of export of a particular resource is quite desirable.
The global markets are perceived not only at the investment levels, but obviously at the labor level, independently from the socio-economic model. Labor markets are significantly affected in the United States, Asia, and developing countries more as an effect of global economic interaction than as a domestic robustness itself, i.e., the labor markets are predominantly dominated by the global economic rather than the domestic trends, aggregate economic reliability and independence, domestic price indexing, and so on. Therefore, for instance, unemployment is a direct outcome of this global interdependence, which surpasses the capacity of economic powers, i.e., more developed countries, to prevail over her trends.
An important aspect of the free-trade agreement is that money exchange will not be as costly for Latin American currencies and the residual Fisher effect on inflation would be minimized, which means better actual revenue and residual revenue, while it can positively affect the investment markets, and create the unified economic market of the Americas. Indeed, there would possibly more resources allocated to legal activities, and illegal activities could be monitored more effectively.
Although I believe that the entrance of the Euro in the global economy has had a significant impact in the overall economic interdependence for European and non-European countries, and partaking and non-partaking countries of that Euro economy, my observation that it has been the actual Euro transactional effect and not is stored value in a bank that has lead to this impact. My study started out with a simple informative brochure, which I obtained directly from a French Ministry. My conclusion derives that while the Euro was a paperless currency in its initial stage, it remained constrained in comparison to the USD and the Japanese Yen. The impression in countries members of the EU had an enormous psychological impact, and inflation was the daily topic of economic discussion.
Finally, developing countries, and Latin America in particular, need to learn that any economic phobia or excessive protectionism in the direction of any socio-economic-politic system, must be put aside, meaning that the real economy market is only the global market, the only one, and that every nation needs to carefully find the strategic g-spot of the global economy: G here stands for global!
