Economies of Latin American Countries Term Paper

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The faster recovery of industrial production in emerging economies can be partially explained through the rebuilding of inventories, which were initially low and required replenishment when it became clear that the global economy would slow its freefall. Still, developing countries have shown significant heterogeneity in relation to the countries of Eastern Europe and Central Asia, much worse than emerging Asia. The results from Latin America were located in the middle of these two regions.

Even more significant is the fact that emerging economies were more resistant to the crisis with respect to its own past, but not with respect to developed countries. During the global crisis, emerging economies were able to resemble a little more developed countries and magnified the external impact.

While past crises harder to hit emerging economies to developed, this time the two groups of similar countries fell as a result of the financial system and the impact of amplification by a weak public sector.

This time there was a new element that completely changed the dynamics of the crisis. Emerging economies were ready and able to apply a wide range of countercyclical policies, which may help alleviate the negative effects of the crisis. For example, several emerging countries enjoyed adequate fiscal space and credibility to implement expansionary monetary and fiscal policies, to provide even higher than those in developed countries. For example, Argentina spent twice as France, Germany or the UK in discretionary fiscal measures in 2009-2010.


Although these tools are available for developed countries for some time, were never options for emerging economies, which have their own history of pro-cyclical policies during episodes of seizure. Which brings me to the concussion that, contrary to past crises, the emerging economies' resilience to the global crisis of 2008-2009 may be due in part to the combination of macroeconomic and financial policies and stronger positions shift international financial safer.

Overcome for further economic development, the Latin American region, its dependence on commodity exports and build up competitive structures. A new challenge for Latin America is the production of biofuels. On the one hand, they can provide jobs and incomes in agriculture and make an important contribution to climate protection. On the other hand, it could become a major environmental impact - for example if more forest areas are cleared. It can also lead to undesirable price increases for staple foods.

Only a democratically governed and the most "sociable" Latin America have a good chance to successfully integrate into the world markets and world politics. The international development policy can accompany and support the governments of the countries of Latin America and the Caribbean and along the way.

Latin America and emerging Asia: the return to potential

The recession was short-lived and the recovery has been rapid and vigorous in the middle of 2009 in Asia and Latin America. The reactions of economic policy were not long in coming: they have lower interest rates combined Interest and fiscal stimulus packages. These monetary and fiscal policies of support have stimulated domestic consumption and increased confidence businesses, helping these areas to overcome the global financial crisis. Then growth in these areas has led to the recovery of world trade and fed the regional dynamics.

In the end, largely from emerging economies World in 2010 thanks to robust growth: 6.2% for all Latin America (7.5% in Brazil, Argentina 9.1%, 5.5% Mexico 5.2% 8.8% in Chile and Peru), Asia 8% faster and 10.3% in China. End of 2010, most of emerging Asia and Latin America have caught up or exceeded their level of activity in early 2008 and found their growth trajectory pre-crisis (Figures 4a, 4b and 4c). However, the strength of the recovery between different areas: Asia is the only area to have closed the output gap (Output gap), Latin America is catching up, and the main countries except Mexico have already exceeded their potential. Finally, the difference CEEC production continues to grow. End of 2010 several Latin American countries have reversed their trend pre-crisis (Argentina and Brazil), while others come close (Chile, Peru). Some countries such as Mexico, weakened by the crisis, or Venezuela (Down 1.4% of GDP in 2010 after stagnating in 2009), constrained by political issues and access to capital markets, are lagging behind. The recovery was mainly based on the components of domestic demand. The household consumption and business investment has resumed in all countries, supported notably by the return of foreign capital and a financial environment more accommodating.

Credit to the private sector resumed at a rapid pace. While investment rates have not recovered their pre-crisis level, they have rarely been so high. The return of demand has resulting pressure on production capacity - the utilization productive capacities are very high in Brazil and Argentina - and a strong import growth in 2010. The recovery seen in the current account beginning of 2010 has gradually given way to a further deterioration in second half. As on the eve of the crisis, a number of countries Latin America (Brazil, Argentina) are entering a phase of overheating with a resurgence of inflationary pressures driven by wage increases higher than productivity growth.

Regional Integration

In Latin America there is greater awareness to ensure that regional integration is politically and economically sensible to shape globalization. Model for the integration process is the European Union, which is next to the U.S.A.'s biggest trading partner and Latin America. After the failure of a pan-American free trade zone, the Central American Integration System (Sistema de la Integracion Centro Americana, SICA), the Caribbean Single Market (Caribbean Community, CARICOM), the Andean Community (Comunidad Andina de Naciones, CAN) and the Common Market of the South (Southern Common Market Sur, Mercosur) for the political and economic integration in the region of importance.

The association conducted since 2000, the EU negotiations with Mercosur are also important for the European economy. A final, things are starting yet, since the differences between the two economies have not yet been overcome. These include disagreements over access to the European market for agricultural products from Mercosur countries and on access to markets of Mercosur countries for industrial products from Europe.

In June 2007, Association negotiations with Central America and the Andean Community have begun. They should improve the access of these countries to the European market and make contributions to political cooperation. In 2007, with the Caribbean countries (CARIFORUM) Economic Partnership Agreements under the agreements between the EU and the ACP States completed, to be implemented in subsequent years. The future of relations between Latin America and Germany or the EU will be influenced substantially by the progress of regional integration.

Priority areas of cooperation with Latin America

In consultation with other donors and with the goal of optimal division of labor, the Federal Republic will intensify its development cooperation with Latin America even more strongly on the subject areas in which it has very much experience. The main areas of German cooperation with the countries of Latin America and the Caribbean have been defined:

Democracy, rule of law and participation of the poor ( good governance )

Environment and Climate Change

Urban water supply and sanitation

These priorities are already out with an upward trend for three quarters of regional portfolios. Latin America and the Caribbean are for the EU and Germany are important partners in shaping the global environment for example on climate change and the conservation of biodiversity, international trade and security policy.

In order to get the region's countries a fair chance of development, Germany is working for it to consider its development policy interests even more than before. This applies to the German and European foreign policy, the design of international trade relations (for example, EU agricultural market issues, WTO) and the strategies of major global players such as the World Bank and European Commission.

At the international level, Germany is committed by his significant contributions to the World Bank, the Inter-American Development Bank (IDB) and the Caribbean Development Bank (CDB) for Latin America and the Caribbean. In addition, the Federal Republic is a major donor of European development cooperation and present as bilateral donors in most Latin American countries.

Support of the indigenous population

About ten percent of people in Latin America belong to the group of indigenous peoples. In Bolivia and Guatemala, they even form the majority of the population. They are particularly affected by poverty and exclusion. The BMZ has adopted in 2006 a "Concept for Development Cooperation with Indigenous Peoples in Latin America and the Caribbean. The aim is to support the autonomous development of the indigenous population.

Collaboration with emerging economies

Germany is supporting the 2007 at the G8 summit in Heiligendamm agreed and confirmed in 2009 in L'Aquila dialogue between industrialized and major emerging countries. In Latin America, Mexico and Brazil are emerging from their economic and political importance particularly important players - for example…[continue]

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