Last week I was visiting Japan, and having almost a continuum of meetings with the private sector, public sector, and academics. I had more than 20 something face-to-face meetings, which was an un-valuable experience. I learned a lot, and several things struck me tremendously. First, they had an extremely negative view about their future. Second, they had an extremely positive view about Latin America’s future. You see, I’m used to people criticizing our region, not praising it. It was very disturbing.
In fact, after the first meeting when they talked so positively about the prospects of Latin America I though it was just a very confused person. However, when the 25th one was still saying nice things, such as LA is growing so much, and LA has such low inflation, and LA has so many people that know how to dance salsa, and LA here, and LA there. I mean, maybe that explains why they see their future so bad…
But my discomfort had to have an explanation. And the reason is that I feel very few countries in Latin America are outperforming their external environment. Interest rates are exceptionally low, international capital flows are exceedingly available, and commodity prices are skyrocketing. In this environment the question is, how can you not grow?
For instance, do you think you could do better in Venezuela? I mean, if you were Doctor Evil (and I’m your mini-me) could we think of better policies that could produce better outcomes? What about Argentina? Or Bolivia? Or Ecuador? I mean, I went for all the big 10 countries and it was only in Peru where I had a “Florida moment”; too close to call. For everything else (Master Card… no sorry….) for everybody else, I thought the performance is not good enough.
In fact, some of my fears have been expressed by Guillermo Calvo, who has a paper actually doing this exercise formally. Very few countries are outperforming. Furthermore, Nouriel has a blog in which he asks a similar question.
I would like to open a discussion on a simple question: who in Latin America is outperforming, and who is underperforming? I think no one is outperforming, I think Peru is just passing the exam, and I think the rest, from Argentina to Mexico are underperforming. I might be willing to convinced of the contrary…. Please, let me know where I’m missing the point.
Finally, just to finish the story about my trip… I was glad that on the way back things started to normalize. All the movies had a Latino flavor: Armageddon, Dante’s Peak, Titanic, The Poseidon Adventure, and Volcano. It was so good to see Latin American politics as usual…