Listening to the business-as-usual speeches by the leaders of Argentina, Bolivia, Venezuela and other South American countries in the wake of China’s economic slowdown, it seems like they are living on a different planet. They are still bragging about their countries’ abundant natural resources and raw materials, as if that mattered much in the new world of Google, Apple and Uber.
In recent years, when South America benefitted from record world commodity prices thanks to China’s ever-growing purchases of oil, soybeans and other raw materials, the region’s leaders embarked on a populist fiesta, failing to notice that the world was moving swiftly toward a knowledge economy.
They spent heavily on social subsidies, and fooled their populations into thinking that they had come up with magical formulas to reduce poverty. Meantime, they neglected investing in quality education, science, technology and innovation.
But now, the fiesta is over, and Latin America faces a perfect storm: an economic slowdown in China, falling commodity prices, a flight to safer countries by international investors, and the possibility that the U.S. Federal Reserve will raise interest rates, which would make it more difficult for countries in the region to get loans or pay their foreign debts.
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Etiquetas: Economy, South America
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