Latin American Economic Problem: Economic Issues in Chile

Latin American Economic Problem: Economic Issues in Chile This is an analysis of a newspaper article by Christian Science Monitor titled “Latin America: Where the world jobs are” and authored by Sara and Villagran. The article seeks to unravel the various economic issues facing Chile, a country in Latin America. However, the good steps made by the country are identified and discussed at length. The newspaper article is keen to document the strides made by an employee who was laid off at the height of economic recession, a phenomenon that brought a number of countries to their knees. The discussed individual is an Atlanta citizen who seeks greener pastures in Latin America. The employee is keen to establish an individual site, a site that seeks to collect data to help empower women of various communities. According to the newspaper article, Latin America has over the time lagged in opening up its economy for foreign investors. However, it is quick to point out that the aforementioned worry is being addressed by the positive gesture of the institutions towards foreign investments.

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Global economic crisis brought down not only the economic giants but also the developing economies. A number of firms axed their employees to contain surging operation costs. The move practically brought down a good number of families in the globe including Latin America. Despite the global crisis, Latin America had imminent difficulties facing their economies. Economic giants i.e. the United States of America and other western economic powerhouses have been advocating for sound economic policies to open up the Latin America market to foreign investors. According to United Nations statistics, Latin America was exposed to rough economic times for two decades. During this period, the economy realized a drop of its gross domestic product by 2%. This is the worst decline Latin America has faced since 1983, the moment of a debt crisis that brought the region to its knees (Mainwaring 237).

Latin America is at the brim of economic difficulties courtesy of a number of factors. The article points out that the slowdown in economic breakthrough is due to the inability to attract foreign investors. The authors are also quick to point out that these factors differ from one country to another. Chile, one of the countries in Latin America has a difficulty in encouraging its own citizens to invest in the economy. They have a negative culture towards entrepreneurship.

Economic experts observe the move by Tara, a citizen from Atlanta and a former magazine editor to invest in Chile as a good way to nurture the investment spirit of Chile citizens. Another observable factor is the unfavorable balance of payment. Many economies are recovering from the aftershocks of the crisis. The slowdown in economic activities between Latin America and its foreign partners has led to the weakening of product prices. Weak prices of exports have affected the region negatively. In addition, the region has done badly in attracting direct foreign investment. The aforementioned is reflected in the lambasting the region is receiving from the investment world who is criticizing its investment climate. The authors touched the thorny issue

in the article pointing out that the investment climate is curtailed by the mode of operations of structures and institutions. The authors argue that a few families hold important companies. The families are the ones dictating the prices of commodities traded in the market. The monopolistic nature of operations discourages competition as the families’ networks frustrate investors who are keen to develop their businesses in Latin America. Foreign investors are persons keen to establish firms in a country of interest with an objective of making profits and grow in the future.

However, their objectives are curtailed by the level of bureaucracies in Latin America systems.

Most investors rely on loans from countries of interest to engage in business operations in that country (Esperanza 93). They often base their borrowing in their portfolio. Latin American countries disadvantage some individuals who are keen to create opportunities i.e. employment opportunities and grow economies by frustrating their moves to acquire loans. According to the author, Chile is one such country where one should be well connected or otherwise come from ‘the family of investors’ to be able to access loans.

Latin American countries have accrued a lot of debt than any emerging economy in the west. Some countries being debt defaulters are facing global financial markets wrath. The authors of the newspaper point out that the citizens are rigid to invest and those businesses are left to a few families. This is a genuine assertion. Citizens have developed none borrowing culture because of the prevailing situation in the local and global financial markets. The global financial markets have enforced stringent measures that are less hospitable to Latin America economies, or else those economies servicing large amount of debts. It is imminent that Latin America economic problems are entangled with their weak internal institutions and their vulnerable economic policies. This is exaggerated by external factors such as debts and stringent

measures adopted by trading partners that have otherwise discouraged investment in the economy.

According to the authors, Chile is one of Latin America whose economy limits foreign interference. The government of Chile is not keen to open its economy to accommodate foreign investors and increase competitors. According to the article, a number of reasons have necessitated the move. First, Chile is an economy controlled by a few individuals who are keen to exploit the public. The families who control the economy in terms of their contribution to the national coffers are not ready to accommodate competitors. They are running monopolies and are out to fleece the public while producing commodities that cannot compete well with commodities from other countries. Secondly, the population of Chile is much backward in terms of technology. This lack of innovation and backwardness is replicated in most Latin America economies. The problem is that these individuals fail to prosper in entrepreneurship. In addition, they are not well placed to bargain for loans from financial institutions as they lack basic convincing skills and past expertise in running businesses.

Despite the huge number of problems facing Latin America, it is well placed to make a comeback and be an economic giant. According to the article, Latin America has good numbers in terms of population that is able and ready to work. Foreign companies seeking to conquer the Latin America market can use this as cheap labor. Chile and Latin America at large is experiencing large rates of unemployment. This is attributable to the failure by the government to provide a hospitable environment to investors. Failure to establish new investment projects means limited employment opportunities are created. Also, for an economy to grow, demand for goods and services ought to be present. By demand, it means citizens should be willing and able to purchase given products available in the market. However, that is not possible if the citizens in

an economy lack financial muscle to purchase produced commodities. It is therefore apparent that the forces of demand and supply play an important role in ensuring that a country stays in a strong footing that will enhance growth in the long run.

In conclusion, the authors of the article have done pretty well in trying to unravel the economic problems faced by Latin Economies. It is evident from the writing that the economies are in dire need of economic revolutions to enable them complete in the same platform with other economic giants. The article has largely identified the need for liberalization of economies.

Therefore, it is paramount for Latin America to advance sound policies that will open up the economy and increase foreign direct investments in these nations. The aforementioned move will increase opportunities for its citizens. Another aspect that the author identified as a major factor affecting Latin economies and in this case using Chile as a guessing point is the monopolistic nature of firms. The author vividly pointed out that it is not easy for citizens to acquire loans from banks unless they are well connected. This is a retrogressive move in the 21st century.

Citizens need to be able to acquire loans without necessary ‘knowing people’. Finally, Latin economies need to seek better ways of meeting their financial obligations without necessarily relying on foreign debt. Foreign debt dents the ranking of a country in the global sphere in a way that hinders foreign investments.

Works Cited Esperanza, Durān. Latin America and the world recession. Cambridge, UK: Cambridge University Press, 2009.

Mainwaring, Scott. Democratic governance in Latin America. Stanford, Mexico: Stanford University Press, 2010.

Sara, Miller and Villagran, Lauren. “Latin America: Where the world's jobs are.” Christian Science Monitor 19 Feb. 2012.