1 / 56

Latin America n and Argentina Development: opportunities and challenges

Latin America n and Argentina Development: opportunities and challenges. 2008 Presentation For the University of North Florida Professors R. Feeney and M. Rossi Austral University, Argentina. Some facts about Latin America. 44 countries

taber
Download Presentation

Latin America n and Argentina Development: opportunities and challenges

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. Latin American and Argentina Development: opportunities and challenges 2008 PresentationFor the University of North Florida Professors R. Feeney and M. Rossi Austral University, Argentina

  2. Some facts about Latin America • 44 countries • 550 million people live in this region(50% more than the US, 8% of world population) • It produces 7% of the world GDP (one third of the US) • Its territory is 21 million square kms (double than de US) • Major world provider of soja, copper, sugar, beef, etc. and many other raw materials • 25 uninterrupted years of democratic regimes in most of the countries

  3. Evolution of the world GDP per Capita (PPP) 1950-2003 US, Can, NZ, Au Western Europe World LA Africa

  4. Latin American Nations Ranked by Gross Domestic Product(GDP- (PPP)) in 2006 Millions of International Dollars, CIA

  5. GDP per capita (PPP) 2005, CIA

  6. Poverty Line (lowest to highest) Source: CIA World Factbook[5

  7. Unemployment Rate (lowest to highest) Source: CIA World Factbook

  8. A key Variable: the Socio-Economic Conditions in Latin America

  9. Latin America USA Income Inequality in Latin America

  10. Central Questions about Latin America • Why Latin America has not improved more rapidly after all? • Why being rich in natural resources yet it is relative poor? • The relationship of the US with Latin America • Is Latin America ready for change, especially for regional free trade (FTAA)? • Is the business environment the same across Latin America?

  11. 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

  12. North American Free Trade Agreement –2006 Results • 2006 Total Value $868 billion • Increase in the last 5 years by 32% • Trade with Canada equals $533 billion, increase by 15% • Trade with Mexico equals $335 billion increase by 60% • Trade with Canada and Mexico accounts for almost 45% of the total U.S. trade • 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

  13. Brazil and Mercosur, or how Americas trade is difficult • Brazil control on trade in South America • strong internal fiscal control (conservative members of cabinet) • strong control of currency volatility • strong attraction of foreign direct investment • strong opposition to U.S. subsidies • strong opposition to free trade USA style • Production of ethanol

  14. Argentina Basic Briefing • Population 2008: 41,000,000 • Capital (population): Buenos Aires (12,000,000) • Life expectancy at birth: 76.32, Male: 72.6 Female: 80.24 • Total surface 2,766,891 km²

  15. Where we come from? Rosario: The Center of the Agribusiness Production Area in Argentina Rosario

  16. Argentina’s GDP 1993-2007in constant prices of 1993pesos Hundred of millions of pesos 1993 1995 1998 2000 2002 2004 2005 2007 Year

  17. Arg Vice-Pres resigns X/2000 2004-2007 Recovery Devaluation of the Real I/99 III/2001Finance Secretaries(2) Resign External Credit CutVII/01 XII/01Financial Bolt Argentina’s GDP 1993-2007 in constant prices of 1993 pesos 1989-1990 Hyperinflation 1993 1995 1998 2000 2002 2004 2006

  18. By now (2007) Argentina’s per capita GDP is higher than the pre-crisis level

  19. 2005 prices: 27 thousand billions times 1970 The Horror Story: Inflation in Argentina (INDEC)

  20. Inflation in Argentina (INDEC) Pegged currency Recession Devaluation Recovery with increasing inflation pressure

  21. Balance of Non-Financial Public Sector, in Argentina 1995 - 2006 From Deficit to Suplus

  22. Balance of Non-Financial Public Sector, in Argentina 1995 - 2006

  23. Argentina’s Central Bank Reserves 2003-2007 50 000 million U$ dollars 10.000 mill US dollars 2003 2004 2005 2006 2007

  24. Argentina’s Total Foreign Debt 107 Billion USD=55% /ARG GDP MillionsUSD

  25. International Commerce

  26. Argentina´s Unemployement Rate

  27. Infrastructure and Investment: Public and Private Investment 1993-2006 in millions of 1993 pesos

  28. Infrastructure and Investment: Public and Private Investment 1993-2006 in millions of 1993 pesos

  29. Industrialactivity • Industry was growing year by year, after the 2001 crisis

  30. Currency • The last years were characterized by a relative high peso-dollar real exchange rate

  31. Exports • Exports are mostly based on commodities with low value added

  32. Internal environment • Domestic demand feels strong and sustained

  33. Threats • After many years of sustained demand, the industry is close to full capacity • Energy demand is climbing to a maximum, without enough investment to expand the offer

  34. Threats • Domestic energy prices were kept artificially low (electricity, natural gas, gasoline, etc.) creating an adverse scenario for private investment in those areas • Inflation: growing fast, being not recognized by official indexes

  35. Emerging Markets • Emerging markets grew aggressively in 2007

  36. Emerging Markets

  37. Merval index vs. DJI • Since Argentine domestic markets are mostly driven by food commodities’ prices, there is a good perspective for sustain

  38. + Strong short term growth Good Fiscal performance Positive foreign trade exchange Foreign debt reduction Higher employment - Still a risky country Potential Inflationary risk Strongly dependent on commodity prices Poverty: 30% of the population has serious problems Weak capital and financial system Low competitiveness in many industries Weak Infrastructure Low foreign Investment Summary of Argentina’s Macro Situation

  39. Business Environment • Since Argentine domestic markets are mostly driven by food commodities’ prices, there is a good perspective for sustained consumption, at least for the next 5 years • If a global recession occurs, Argentina should not have problems due to: • Historical high level of reserves • The Banking sector is totally recovered from the 2001 crisis • The sovereign debt was restructured

  40. Next short-term challenges for companies in Argentina • Inflation pressures: both internal and external • Labor costs: unions do not follow official indexes • Energy costs: will tend to reach international prices In such an environment, companies should be more competitive improving productivity and value added

  41. Population 2005: 175,468,575 Capital (population): Brasilia (1,600,000) Life expectancy at birth: male 58.96 years, female 67.73 years (2001 est.)  Physicians per 1000 people: 1.47  Rural/urban population ratio: 21/79 GDP per capita: U $9,100 Brazil Basic Briefing

  42. Foreign investment 1998-1999 first country in the world 2004-2005 third place after Mexico and China Crisis of Confidence Crash of Stocks 3% increase in base rate since October 14 Leading MERCOSUR Brazil Economic development based in central economy

  43. Population 2005: 16,598,074  Capital (population): Santiago de Chile City (6,000,000 metropolitan) Life expectancy at birth: 76.96male 73.69 years, female 80.40 years (2001 est.) Total surface: 756,950 km²  Chile Basic Briefing

  44. Chile’s Economic Miracle(chart in terms of GDP per capita) Chile’s per capita GDP Average LA GDP per cap

More Related