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Latin America & The Caribbean Introduction & Overview Economic Development Sustainable Development in Costa Rica. GEB 6366 & ECO 4955. The Caribbean. The Caribbean region consists of all the islands and mainland countries that have a coastline on the Caribbean Sea.

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Latin America & The CaribbeanIntroduction & OverviewEconomic DevelopmentSustainable Development in Costa Rica

GEB 6366 & ECO 4955

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

the caribbean
The Caribbean
  • The Caribbean region consists of all the islands and mainland countries that have a coastline on the Caribbean Sea.
  • The islands and mainland countries between latitudes 80oN and 260o N, and longitude 59o W and 85o W.
  • Although Guyana is located in South America, it shares a common history with other Caribbean nations: it also has a part of the Caribbean coastline.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Also include The Bahamas, Suriname, and Turks and Caicos Islands.
  • The region that is called the Caribbean consists of twenty-seven nations.
    • Dutch-speaking Nations: Aruba, Suriname, and the Netherlands Antilles (Bonaire, Curacao, and the southern portion of Saint Martin)
    • Spanish-speaking nations: Cuba, the Dominican Republic, and Puerto Rico
    • French-speaking nations: Guadeloupe, Haiti, and Martinique.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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English-speaking nations: Anguilla, Antigua and Barbuda, the Bahamas, Barbados, Belize, the British Virgin Islands, the Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad and Tobago, Turks and Caicos Islands, and the U.S. Virgin Islands.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

latin america
Latin America
  • Those territories in the Americas where the Spanish or Portuguese languages prevail
  • Central and South America
    • Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela
    • All independent nations

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Southern Hemisphere: From Latitude 32o N to 56o S and 30o W to 140o W
  • Some the economies of Latin America are currently described as emerging economies
  • Mainly middle-income countries that are growing and becoming more integrated in the global economy
    • Argentina Brazil Chile
    • Colombia Costa Rica Mexico
    • Venezuela

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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What is not shown for Latin America and the Caribbean is the large percentage of the population (approaching 50%) that is living in poverty and the inequality in income distribution (the top 10% of the population has access to 48% of goods and services produced).

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

theories of economic development
Theories of Economic Development
  • Linear Stages Theory (Walt Rostow, 1960); a series of successive stages of economic growth through which all countries must pass.
      • Traditional society
      • Preconditions for take off
      • Take-off
      • Drive to maturity
      • The age of mass consumption

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Structural Change Models of Development.
      • Agriculture to manufacturing
        • Import substitution
        • Export promotion
      • Change in the pattern of development (structure of production, employment, consumption & trade)

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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International dependence models (Radical)
      • Neoclassical dependence model underdevelopment - the result of the historical progression of the unequal capitalist system that favors rich countries over poor countries
      • False paradigm model underdevelopment - caused by inappropriate advice provided by well-meaning but often uninformed, biased, and ethnocentric international advisers from developed countries (assistance agencies & multinational donor organizations

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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The dualistic-development model: -
    • Two distinct sectors (labor intensive sector - inferior sector, and a capital intensive sector - superior sector).
    • Both sectors act independently.
    • The superior elements do nothing to pull up the inferior element or cause any benefit to trickle down to the inferior elements.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Neoclassical growth model:
      • Stresses the creation and proper functioning of markets.
      • Opening up national markets will increase investment and capital accumulation resulting in an increase in the rate of growth of output.
      • Economic development is expected to take place with the higher capital-labor ratio and per capita income.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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New Growth Theory (Paul Romer)
    • Income growth is a consequence of public and private investment in human capital that offsets the natural tendency of diminishing returns.
    • Investment in physical and human capital generates external economies and productivity improvements that cause the economy to grow continuously.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

costa rica
Costa Rica
  • A stable economy that depends on tourism, agriculture, and electronics exports.
  • Political stability and free-trade zones serve to attract foreign investment
  • Has a sizeable external debt of around $7 billion
  • Inflation is around 5.5%

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Costa Rica
    • 18.02 births/1,000 population (2007 est.)
    • Literacy: 97%
    • GDP Per Capita (PPP): $13,500 (2007 est.)
    • Unemployment rate: 5.5% (2007 est.)
    • Population below poverty line: 18% (2004 est.)
    • Income distribution: Gini index: 49.8 (2003)
    • Stock of direct foreign investment - at home: 6.897 billion (2006 est.)
    • Internet users: 1.214 million (2006)

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

achieving sustainable development in costa rica
Achieving Sustainable Development in Costa Rica
  • Sustainable Development:
    • Achieving economic and social development in ways that do not exhaust the nation’s natural resources: (conserve resources, protect the environment, and ensure human health and welfare
    • A process of change in which the exploitation of resources, the direction of investments, the orientation of technological development, and institutional change are made consistent with the future as well as present needs

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Preconditions/Conditions for Sustainable Development
  • Must be able to meet the globalization challenge successfully
  • Collaborative efforts among world leaders to address global issues (alliances, integration, collaboration, and partnerships that work towards a global policy)
    • Must have the capacity to make friends with the outside world
    • A modern vision of the world (where the world is and where it is heading)
    • Must have connectivity with the outside world

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Good, efficient, working public institutions and good governance with clear and focused objectives
    • Solutions must be implemented in a nonpolitical and professional way
    • Better governance to ensure transparent regulatory frameworks that will enhance vigorous market creation and opportunities for the private sector

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Sustainable development requires the creation of partnerships between segments of the society
    • Franklin Chang-Diaz National Center for High Technology (CENAT), brings government, universities, and the private sector together t work on solutions for the challenges of sustainable development.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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A strategy (plan) to deal with the modern world
  • A good sound macroeconomic balance with policies to improve social infrastructure and improve human capital, including a policy to improve safety
  • Need to distinguish between a national plan and a government plan.
  • Sound economic policies within countries: leader must be surrounded with good ideas and propositions

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Environmental pro-activeness; resource use should impact productivity positively.
    • Plants and natural resources should be a source of new products for the industries
    • Taxonomic inventory of plants

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Sustainable development requires human development in health and education
    • Ex. Costa Rica educational system is changing so that it can ‘harvest’ knowledge to meet the challenges of globalization.
    • However, in the 21st century literacy is not only the ability to read and write but also includes technological understanding
    • The new definition of literacy means Costa Rica has a literacy rate of about 25%.
    • Education must produce person or citizen who will thrive in the new globalized world.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Sustained development require the development of an information society or a society with connectivity
    • Information should flow to where the people are
    • There should be connectivity for those who need it most, those at the bottom of the pyramid, at the bottom of the ladder.

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Although Costa Rica invest more in health (currently about 8% of GNP) that other developing countries there is still room for improvement
      • Telemedicine
      • Examine patients through telemedicine

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

role of the financial sector
Role of the Financial Sector
  • Provides payment services
  • Matches savers and investors
  • Generates/distributes information
  • Allocates credit efficiently
  • Prices, pools, and trades risks
  • Increases asset liquidity
    • In Latin America and the Caribbean, the above is undertaken by the banking sector
    • Banks are the main financial intermediaries

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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The Central Bank is a part of the financial sector
    • The Bank is a legal entity in the public sector
    • Role:
      • Economic stabilization through monetary policy
      • Maintains the internal and external value of the domestic currency
      • Promotes the soundness and integrity of the financial system

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Names of some central banks in Latin America
  • Banco Central de la Republica Argentina
  • Banco Central do Brasil)
  • Banco Central de Chile
  • Banco Central de Costa Rica
  • Banco de la República Colombia
  • Banco de México
  • Banco Central de Venezuela
  • Banco Central de Nicaragua
  • Banco Central de Honduras

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Names of some central banks in the Caribbean
  • Central Bank of Aruba
  • Central Bank of Barbados
  • Banco Central de Cuba
  • Bank of Guyana
  • Bank of Jamaica
  • Eastern Caribbean Central Bank
  • Banco Central de la Republica Dominicana
  • The Bank of the Republic of Haiti (French: Banque de la République d\'Haïti,
  • Central Bank of the Netherlands Antilles
  • Central Bank of Trinidad & Tobago

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Eastern Caribbean Central Bank
    • The monetary authority for six independent Caribbean nations
      • Antigua & Barbuda
      • Dominica
      • Grenada
      • St. Kitts & Nevis
      • St. Lucia
      • St. Vincent and the Grenadines
    • and two overseas Caribbean territories of the United Kingdom namely,
      • Anguilla
      • Montserrat

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Exchange rates per US$1 (Latin America)
    • 3.17 ARS Argentina Pesos
    • 1.l766 BRL Brazil Reais
    • 684.373 CLP Chilean Pesos
    • 2,783.11 COP Colombian Pesos
    • 496.585 CRC Costa Rican Colones
    • 10.7462 MXN Mexico Pesos
    • 2.91 PEN Peru Nuevos Soles
    • 2.1446 VEF Venezuelan Bolivares Fuertes

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Exchange rates per US$1 (Caribbean)
    • 1.80 AWG Aruba Florin
    • 1.00 BSD Bahamas Dollars
    • 2.02 BBD Barbados Dollars
    • 0.93 CUS Cuban Peso
    • 34.5275 DOP Dominican Republic Pesos
    • 2.65 XCD Eastern Caribbean Dollars
    • 203.730 GYD Guyanese Dollars
    • 37.73 HTG Haitian Gourdes
    • 71.50 JMD Jamaican Dollars
    • 6.29891 TTD Trinidad & Tobago Dollars

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

inflation consumer prices annual
Inflation, Consumer Prices (annual %)

2004 2005 2006

Argentina 4 10 7

Aruba 3 3 4

The Bahamas 1 2 2 Barbados 1 6 7

Belize 3 4 ..

Brazil 7 7 4

Chile 1 3 3 Colombia 6 5 4 Dominica 2 2 ..

Source: World Development Indicators database

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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Inflation, Consumer Prices (annual %)

2004 2005 2006

Dominican Republic 51 4 8 Ecuador 3 2 3

El Salvador 4 5 4 Guyana 5 6 7

Haiti 23 16 13

Jamaica 14 15 9 Mexico 5 4 4 Paraguay 4 7 10

Peru 4 2 2 Venezuela 22 16 14

Source: World Development Indicators database

Rhodd & Chiang (ECO 4955 & GEB 6365 - Spring 2008)

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