Friday, July 02, 2004

Latin America lags behind

That's the title of a story in the international edition of the July 5th Newsweek, about rising popular discontent in Latin America. It's well worth a read. Here are a few choice quotes:

By the end of the 1990s, Latin America accounted for fully 55 percent of total privatization revenues across the developing world, dwarfing the numbers from Southeast Asia. Yet it's now clear that the appearance of rapid change was largely an illusion: trade barriers fell and government-run enterprises were sold, but rather than dispersing the power and capital of the state, the bulk of it was simply transferred, en masse, to a dysfunctional private elite still working in cahoots with a meddling state.

...Most Latin American nations now harbor only a parody of the private sector as a wisely regulated space in which business can flourish and compete. The ratio of the number of initial public offerings to population in Latin America is more than 10 times smaller than the world mean. The ratio of firms to population is about a third lower. Shareholder rights throughout Latin America remain poor. Brazil and Colombia have the world's most highly concentrated ownership of business capital. "This is what happens when you deregulate and privatize, absent the rule of law," says Denise Dresser, a political scientist at Instituto Tecnologico Autonomo de Mexico, a university in Mexico City. "You just transfer the resources to all the players in the old system."

And so the system doesn't really change or innovate....

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