2023-07-25 15:23:09
The Elcano Royal Institute published a report on Monday on how important it is at this time to look towards Latin America. The document comes to light after Spain assumed the presidency of the Council of the European Union (EU) and after the rapprochement between the Community of Latin American and Caribbean States (Celac) and the EU.
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Under several aspects, the Institute wonders if the subcontinent is an economic failure. They highlight, for example, the performance of Venezuela and Argentina which, due to their economic and political crises, have not yet fully taken off and, on the contrary, hinder the total development of the region.
The Institute identified four elements that make up the most widespread narrative in Europe about Latin America: the perception that the region has missed out on economic opportunities, the lack of political stability and democratic quality, defeatism in geopolitics, and the decline in business interest in the region. However, the report concludes that these beliefs are biases that are not supported by the data.
The report suggests that Latin America is not an economic failure in its entirety, since a considerable group of countries in the region have obtained remarkable macroeconomic results.
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In addition, it highlights that the region has managed to reduce the frequency of balance of payments, debt and financial crises, from an average of four a year between the mid-1970s and early 2000s, to less than one crisis a year since then. However, Venezuela and Argentina are two countries that do not meet this standard.
The point of analysis for this standard is the frequency with which crises occurred in the region. With greater stability, Latin America has lowered its prominence in terms of conflict with respect to the rest of the world. However, it has not achieved significant progress in convergence to the per capita income levels of developed countries during the first two decades of the 21st century.
This stagnation is largely attributed to Venezuela and Argentina, which were two of the 169 economies with the highest income levels in 1945, according to Angus Maddison, but ceased to be so in 2018.
But it is not all the fault of these two countries, because in general, the growth of the region has not been so fast and only seven countries, led by Colombia, and following with Ecuador, Mexico, Costa Rica, Brazil, Panama and the Dominican Republic, show better progress.
“In the almost three-quarters of a century from 1945 to 2018, only 30 countries have achieved the jump to those levels of per capita income in developed countries: four oil exporters (Saudi Arabia, Equatorial Guinea, Oman and Bahrain), two countries with a strong tourism sector (Seychelles and Mauritius), two historic European powers destroyed in 1945 after World War II (France and Italy), Israel, six tigers s Asia (Japan, Korea, Taiwan, Singapore, Malaysia and Hong Kong), 14 European countries (among them Spain, Portugal and Greece), plus Puerto Rico and Panama”, points out the institute.
The responsibility of Argentina and Venezuela
According to the report, Argentina and Venezuela are responsible for 75 percent of the negative growth episodes in Latin America, which has led the region’s average growth to be below that of other areas, such as Europe, Africa and Asia. Guatemala and Peru are the only emerging countries that have suffered a single crisis: that of covid-19.
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The report also points out that Latin America is the second least vulnerable emerging region after emerging Europe. However, it reveals that 47 percent of vulnerability alerts are concentrated in Argentina and Venezuela.
Both countries present a deficit greater than 5 percent in GDP. To which is added the volatility of the currencies, being Caracas and Buenos Aires the governments that have carried out the most devaluations.
ANA MARIA RODRIGUEZ BRAZON
WEATHER CORRESPONDENT
CARACAS
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