Analysts typically treat Latin America and Asia as two completely different entities, with few similarities. Asia tends to be treated as a homogeneous bloc, with the appellation “Tiger” placed after it. Most people conjure up images of high tech manufacturing and modern capitals, whenever someone mentions Asia. Latin America is synonymous with commodity production, with huge tracts of land dedicated to agriculture, mining and oil. Images of poverty and creaky infrastructure are the common perceptions. At more than 16,000 kilometers of distance and 30 hours of travel time between the two, it is easy to rely on the common perception and prejudices. However, Asia is much more culturally, economically and politically diverse than Latin America. At the same time, many of the Asian countries share similar traits with Latin American counterparts. The contrasts and comparisons establish an interesting framework for comparative analysis.
Like the Americas, Asia consists of a large number of countries. However, the fixed income emerging markets focuses on a small subset—Indonesia, Thailand, The Philippines and Malaysia. There are many other countries in Asia, but they are either too rich or too poor to be considered emerging markets. In contrast to Latin America, the Asian countries do not share a common historical or racial heritage. They have very different patterns of colonization and external influence. They are totally indigenous, without the overwhelming European influence that shaped Latin America. Hence, each Asian country has a different set of social factors that describe the political and social spectrum. Last of all, in contrast to the common perception of the Asian Tigers, each country has a very different economic model.
Latin America’s colonial experience was one of Iberian mineral exploitation, Christian religious domination and racial extermination. Asia was colonized by a wider variety of European powers, particularly England, France, Holland, Spain and Portugal. With the exception of The Philippines, proselytizing was kept to a minimum in Asia. Hence, the religions that existed prior to the onset of colonization, mainly Hinduism, Buddhism and Islam, remained in place. Although there was some mineral extraction, in places such as Indonesia and Malaysia, trade was the main colonial objective. Europeans were more interested in establishing trading centers to warehouse products coming in and out of China, source locally manufactured and agriculture goods, such as silks, textiles, rubber, spices and tea. Hence, the Europeans were relegated to coastal facilities. This avoided the wholesale extermination of the local population, as was done in Latin America through war and disease. This legacy created unique social groups in each of the countries that are not replicated in other parts of Asia, thus making the region much more diverse than Latin America.
The four Asian emerging market countries, however, share common traits with Latin American counterparts. Thailand, for example, is a light manufacturing hub, similar to Mexico and Turkey. The Thai industrial landscape is dominated by sprawling industrial groups, with large revenues—and low margins. Not surprisingly, all three countries have current account deficits—with deep authoritarian streaks. Like Brazil, Indonesia has an enormous landmass—choked with commodities. It is 8 hours of flight time from tip to tip. At 220 million, the Indonesian population is similar to Brazil’s. But with a GDP of less than $400 billion, it is much poorer. Indonesia lacks Brazil’s industrial base—limiting the value added to the commodity productive process. The Philippines could be Colombia’s twin. A failed economy, it has been unable to fully develop its natural resource base or manufacturing capacity. It is only able to export its labor force and live off of the remittances. It has deep ties to the U.S., as well as an extremely corrupt political system. Last of all, Malaysia is the Argentina that could have been. Skillfully mastering its natural resources and well-educated labor force, Malaysia is a major commodity exporter and high tech manufacturing center. Thus, allowing it to post an enviable current account surplus.
The contrasts and comparisons between Asia and Latin America are fascinating, and they allow us to establish a better sense of countries that are usually clouded by a fog of statistics, prejudices and local soap operas.