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Thursday, September 27, 2007

LATIN AMERICA IS SNARLED IN RED TAPE

What irony! When it comes to cutting government red tape and creating a probusiness atmosphere, communist-ruled China, Vietnam and former Soviet Bloc countries in Eastern Europe are moving much faster than most of Latin America. A new World Bank report -- Doing Business 2008 -- which looks at the ease of doing business in 178 countries around the world, says that countries such as Croatia, Georgia, Estonia, China, India and Egypt were the most aggressive last year in making it easier for entrepreneurs to open a company or fire underperforming workers. Read the details here, and let us know what you think.

9 Comments:

Anonymous Anonymous said...

Now if only more poor people in poor countries could read this... it seems they have little experience in Venezuela or Bolivia in pushing for growth of business and for wealth creation...
Politically there is the tendency to rely on oil, gas, and other commodities to keep people happy. Perhaps this will change with the rising middle class in wester latin american countries such as Mexico and Chile. As for oil and gas rich, socialist-leaning eastern latin-american countries such as Venezuela and Bolivia, the future seems dim.

3:08 PM  
Anonymous Anonymous said...

Your statement in the article that says “the countries that are reducing poverty the most are the ones that have most aggressively courted capitalists.” is incorrect.



Countries that are business friendly is Latin America are the ones with the slowest reduction of poverty in the region for example, Peru and Colombia have an alarming 50% of poverty and there are no signs anywhere that it is decreasing (please show me some hard numbers that show me otherwise).



On the other hand, Argentina, one of your black sheep, stands out with a 23% of poverty and still decreasing at a fast pace of about 6% a year.



Chile, apparently one of your performers, is inexplicably showing signs of going into a recession even with high copper prices. Unemployment is somehow increasing while neighbor Argentina is getting much better. Even “business friendly and competitive Chile” is losing market share fast when it competes against “business hostile” Argentina in the wine industry, please explain this.



You mention the success story of Asia that was able to reduce poverty down to 20%. I suggest you visit a country with a “success” story such as India. The meaning of poverty in India is miles different compared to what poverty means in Latin America. The standards are a lot lower in India to the point where people with clear malnutrition signs and without healthcare are not considered poor. And in the case of China, even though economic growth is high, their poverty numbers are not to be trusted for the same reasons we can’t trust numbers from Cuba.





Atentamente,



Hernan

4:45 PM  
Anonymous Anonymous said...

All one has to do to see the harm of being business unfriendly is take a large number of examples and compare them to a large number of business friendly countries, and look at the growth over the years.
For example, China and India were drastically poorer years ago and that is easily verifiable by looking at the level of increasing trade in the US, the famous growth of Indian IT and back-office work outsourced to India, the increased number of products you buy made in china, the increased market share in trade that the chinese take from latin american exports, etc. All because Asia has moved away from communism and being anti-business while some parts of latin america are lagging in making their countries business friendly.

Let's take some examples:
Argentina and Chile have headed in different directions, Chile has moved up to being the highest income-per capita country in latin american (mexico second):
http://www.latinbusinesschronicle.com/app/listado3.aspx

Meanwhile Argentina has fallen from being a european-level wealthy country to struggling to having to bounce back from economic turmoil in the 1980's and 1990's (even in 2000 the peso crisis left them with a lot of making up to do).

Still think red tape is good?

11:10 PM  
Anonymous Anonymous said...

The country in Latin America with the highest income per capita is Chile yes. However, Argentina has a higher purchase power parity.

Chile's ppp/per capita is 15200
Argentina's ppp/per capita is 12600.
Mexico's ppp/ per capita is 10700.

All these numbers can be extracted from the CIA world fact book, not exactly a left winged source.

What does purchase power parity mean? Well, it means that even though the real dollar figure income for Argentina may be lower, since it has a more independent economy, it can produce goods for a lot lower price than Chile or Mexico.

Chile and Mexico's economy are inflated and they end up paying the cost of globalization. Food, energy, etc are a lot more expensive making quality of life not as good as Argentina's.

Let me give you a clear example.
In Argentina a kilo of pollo is about 5 pesos (about 1.3 dollars).
In Mexico a kilo of Chicken is about 3 dollars (30 pesos)
In Chile.

Everything is more expensive making real dollars less worthy in Mexico and Chile. This is how the middle class gets punished in "business friendlier" countries.

And after all these years of businness friendly countries "doing their jobs" and a country like Argentina ignoring the Andreses of the world, Argentina still ranks the highest in human development according to the UN. Do not believe the lies you are being told. Check it out:
http://www.nationmaster.com/graph/eco_hum_dev_ind-economy-human-development-index


Hernan

2:16 PM  
Anonymous Anonymous said...

Be willing to stand by what you said and practice what you preach on that.

Chile actually has climbed a lot higher since it's pro-market policies in the last 20 years than Argentina. The GDP numbers by purchashing power parity (which you'd accidentaly posted with a mismatch of figures) prove the point becase Chile is already catching up the Argentina, which used to be so much wealthier compared to Chlie. Look at the level of poverty as well, which has been reduced in Chile to 18.2% (2005) per the same source you're using, the world facts book.

If we look at Argentina, you see nothing but a catch-up since it happened to have more serious recessions and crisis more recently than Chile or Mexico. Why? Because Argentina is content to fall down the ranks of richest countries even in low-performing latin-america where red-tape still rules in many areas (ahem, argentina) and so contentment is slowly undoing Argentina... still... as over the last 100 years...

4:56 AM  
Anonymous Anonymous said...

By the way, for Argentina, population below poverty line:

26.9% (July-December 2006)


...do not believe the far-left lies that orthodox economic policies (a fact, based science) are somehow bad... they are just truth.

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