beyondbrics

There are plenty of reasons to be pessimistic about Latin America. As the FT argues in a leader on Tuesday: “Despite the commodity windfall, most major economies are running budget deficits and risk overheating…. The world’s most unequal continent suffers from conspicuous corruption, rising crime and a flourishing illegal drugs trade.”

Take a longer view, however, and the picture is more promising.

Latin America, once synonymous with default, is a global creditor. In 20 years, poverty has fallen from half the population to under a third. Domestic markets are expanding and every day more integrated across the continent; their dynamism is independent of the Asian-inspired commodity boom. The region also enjoys the demographic tailwind of a young working population, much as south-east Asia’s “tiger” economies did when they took off. Latin America faces a historic opportunity.

The FT has often argued elsewhere that Latin governments tend to risk squandering such opportunities. As Lex noted recently, Brazil, for example, spends too much time tinkering at the margin and not enough addressing root and branch reform.

But as Tuesday’s leader argues, the longer view reveals that a fundamental change has taken place – one that argues for further change and better living standards in the future:

It used to be that economic stability was the goal of only a few economic technocrats. Now it can be a popular vote-winner, too. At the same time, more radical “revolutionary” approaches have failed. That alone suggests Latin America’s recent successes can endure. To be a Latin American optimist is always risky, given the continent’s history of booms and busts. But those risks have been shrinking fast.

Related reading:
Argentina’s advice for Greece, beyondbrics
Brazil, China: Drawn into an ever closer embrace, beyondbrics
Chile: the hawk swoops, but will it scare the doves into action?, beyondbrics
Colombia and Venezuela: friends again, beyondbrics