Latin America in 2030: NIC Study Predicts Prosperity Mixed With Crime
By Dialogo July 08, 2013
Latin America’s economy will flourish over the next 17 years, though insecurity and transnational criminal activity will continue to plague the region and might even grow worse. That’s the gist of the U.S. National Intelligence Council’s latest report, “Global Trends 2030: Possible Worlds.”
“In coming years, the global economic and political landscape will be dramatically changed by the rise of China and other Asian powers, and by the emergence of non-state actors,” said the report. In Latin America, the growing demand for energy, food and water, along with pollution, climate change, natural disasters and new challenges stemming from exploding urbanization, could trigger possible state failures in weaker countries, the NIC report said.
It notes “far-reaching change during the past decade, including sustained economic growth and reduction in poverty” — with Latin American GDP growth averaging 4 percent a year.
“Other trends, such as the spread of violence associated with drug trafficking and criminal gangs, have hurt the region. Two primary factors, one external and the other internal, will drive economic growth and quality of life in Latin America over the next 18 years,” it said. The external factor is world demand for Latin products; the internal is the region’s ability to cut its dependence on commodity exports, invest in education and preserve democracy.
Report warns of income inequality
Yet the distribution of political and economic power remains dangerously uneven across Latin America, the report warned.
“Assuming that average GDP growth in the region declines to 3.5 percent with the lower global growth projections, aggregate Latin American GDP will total $9 trillion by 2030, possibly approaching half the size of the U.S. economy.
Given reduced population growth rates, Latin America’s annual per-capita income could reach $14,000 — almost 50 per cent more than current levels,” it said. “At the same time, the emergence of an even larger middle class in Latin America will fuel additional political and economic expectations with which governments must be prepared to cope.”
Political analyst Sergio Bitar, a former senator from Chile, warned that scarcity of resources will become a much more important issue than it is today throughout the region.
“Over the next two decades, climate change and a rising middle class in Asia, Africa, and Latin America will lead to shifts in living standards, citizen security, and food and water availability,” he said. “Government action will be required to prevent these negative consequences, including investment in clean energy and energy-efficient technology.”
In a more unfavorable global scenario, vulnerabilities in some Latin countries — accentuated by rising insecurity and transnational crime activity — could generate significant crises and spread throughout the region, posing challenges to the United States and other nations.
NIC: Latin America, Caribbean face bigger challenges
“Even in the case of a relatively robust global economy, subregions such as Central America and the Caribbean will find it harder to cope with security and governance challenges,” the report warned. “Rising food and fuel costs are likely to add further strain on the more fragile governance structures in Central America and the Caribbean. In recent years, Mexican drug cartels have increasingly used Central America for transshipment, which also undermines governance and rule of law.”
Unlike the rest of the region, Central America and the Caribbean lag behind on economic dynamism and aren’t growing at the rates they need to generate jobs for their large youth population.
Brazil will continue to play an outsized role on the region, although the country is vulnerable to global trade fluctuations, instability on its borders and megacities whose infrastructures are strained and whose police departments are overwhelmed with crime.
“The environment could play a critical role in Brazil’s fortunes during the next 15-20 years — the Amazon Basin produces about 20 percent of the Earth’s fresh water flows into the oceans and has a major impact on global weather,” it said. “An Amazon die-back or deforestation could alter the region’s water cycle in a way that would devastate Brazilian and much of Argentine agriculture. Recent models suggest a tipping point could be when deforestation reaches 20 percent; it presently stands at 18 percent.”
Education must remain a priority, say observers
Alejandro Werner, director of the International Monetary Fund’s Western Hemisphere Department, called for the establishment of programs to enhance education and health, “which, at the end of the day, are the most important long-term determinants of growth, employment generation, and poverty reduction,” he said.
Commodity prices, which have supported growth in many economies, might stagnate or drop, Werner told the IMF Survey Magazine. And world interest rates will eventually rise, which will affect the external and local debt repayments for Latin American countries.
“I think we have to help them transition from a more commodity-based growth strategy to one that is more self-sustaining and based on services, manufacturing and construction,” Werner said, noting that in the past 10 years Latin America has made significant advances in income inequality and poverty reduction, though some of its countries still have the world’s highest poverty rates and most unequal income distribution patterns.
Former U.S. Sen. Christopher Dodd, who co-chairs the Transatlantic Task Force on Latin America, commented on the NIC report as well.
“Latin America is a region of growing importance, expanding markets, rich resources and boundless opportunity. And it is only to the benefit of us in the United States and Europe to embrace a stronger transatlantic partnership with the nations of Latin America,” he said.
it would be very interesting and of utmost importance if the big nations in the North, Canada and the United States, and also Europe, didn't allow corrupt politicians to invest, buy or sell in their countries, and also worked hard to lower the demand for drugs, ok