Latin American Economies Suffered Military Dictatorship Nationalist

Latin American economies suffered military dictatorship nationalist government delivered promises developing economies. Compare contrast countries: Brazil Mexico. In comparison, detail destabilizing role "inflationary finance" How countries attempt squeeze structural inflation gripped economies decades? current prospect?.

Latin American economies -- Brazil and Mexico

Brazil and Mexico are part of the same global region, traditionally challenged by autocratic leadership and dictatorship. The states are however found at different stages of economic development, sign of different contexts and responses. Mexico has for instance benefited from its proximity to the United States, which has materialized in numerous outsourcing contracts. Brazil on the other hand has created a strategy of attracting tourists and improving its infrastructure.

Brazil is the most economically developed country in South America and this is pegged to its sustained investments in agriculture, mining, services and manufacturing. In the most recent years, the country has even been characterized by an increased emphasis on international operations and Brazil is as such becoming a more important player within the global marketplace.

In the 2000s decade, Brazil has focused on reducing its national debts and improving its macroeconomic stability. As the crisis emerged however, the country was hit by a decrease in the demand for its exports, which materialized in two quarters of economic recession. Nevertheless, Brazil quickly recovered and it represented one of the quickest recoveries at a global scale. Today, the state is focused on exports and the attraction of foreign investors (Central Intelligence Agency, 2011).

The Mexican economy is conflicting, with a wide income gap between the rich and the poor. The gap is also observable in the manufacturing technologies, with some of them being hi-tech, whereas others are outdated. The private sector is dominant in Mexico and the recent developments have increased competition within the industries. The Mexican economy benefits from numerous free trade agreements, under which 90 per cent of all trade is being conducted (Central Intelligence Agency, 2011). The most relevant example is represented by the NAFTA, the North American Free Trade Agreement between Mexico, Canada and the United States of America.

The table below presents a more numeric overview of the two economies:

Brazil

Mexico

Value

Rank

Value

Rank

1.

Gross domestic product

$2.194 trillion

8

$1.56 trillion

12

2.

GDP growth rate

7.5%

18

5%

64

3.

GDP per capita

10,900

$13,800

84

4.

Labor force

103.6 million

6

46.99 million

12

5.

Unemployment rate

7%

72

5.6%

55

6.

Population below poverty line

26%

NA

18.2%

NA

7.

Public debt

60.8% of GDP

31

41.5% of GDP

66

8.

Investment

18.5% of GDP

21.1%

75

9.

Inflation rate

4.9%

4.1%

Data retrieved from CIA, 2011

The Brazilian authorities recognized the threat of inflation and focused on mitigating the risks by maintaining a high interest rate. This discouraged consumption and the excessive money circulation into the market, to as such support responsible and sustainable economic growth. The authorities have approached inflationary finance by pegging the value of their national currency to the dollar in order to generate stability. Despite these efforts, the inflation continued to increase and is higher than the 4.5% set as target for 2011. It is expected for the Brazilian government to further reduce its spending, but such a decision influences the programs developed for the poor and it is unsure whether such a measure would be sufficient (Lyons, 2011).