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Latin America Has a Growth Problem

Latin American Economic Problem


This paper is based on the article Latin America Has a Growth Problem that was originally published by The Bloomberg News on April 9, 2015. The article emphasizes the seriousness of the worsening economy of Latin America, coupled by increased organized criminals gangs and drug trafficking. It was issued before the Summit of Americans, which would address the challenges faced by these countries and discuss the ways in which they can meet the high expectations of the voters in case of underperforming economy. The authors of the article are worried that there will be adequate response to this matter of grave importance by the participators of the Summit, who are considered to be key decision makers. According to the article, the leaders will not tackle the order of the meeting but rather follow their own interests.

Since mid-1990s the economy of Latin countries has been worsening with no signs of improvement. This largely happened because of the dictatorial government of the countries, which is mainly interested in their own profits. It is clearly portrayed by such leaders as Venezuelan President Nicolas Maduro and his counterpart, Cuban leader Fidel Castro who have severed his relationships with President of the United States, Barrack Obama. The article also addresses the menace that has been experienced in these countries because of the organized criminal activities and the problem of drug trafficking.

Summary of the Article

In this paper, the author has done extensive work and showed that most of Latin countries face similar problems, which are the slow economic growth in the region and ever-rising debt. The authors note that the margin of this problem will be hard to outline due to the economic difficulties being experienced worldwide. The study performed by the Inter-America Development Bank forecasts that the slow growth of the economy in China and the plunge in oil prices will affect export and tax collection of commodity producers. It is coupled by the high U.S. interest rates and the fact that dollar is more valuable as compared with the local currencies of these countries. The failure of local currencies means that these countries are suffering from high inflation rates. The article also analyzes the biggest economies in South America such as Brazil and Mexico. For instance, Brazil is experiencing a slump in prices of its commodities that compose half of its exports. It is even suggested that its economy can decline by 1% this year. The public debt in these countries is in the upward trend, with Brazil recording a public debt of 65% of gross domestic product (GDP). The currency is having a biggest drop of 14% this year.

The IDB postulates that in the next two years these countries’ economies will be in a worse state than it was before the recession occurred. The countries, such as Chile, Mexico, and Venezuela that are mostly dependent on tax revenues could face an average of 9% less in their collection. Brazil President, Dilma Rousseff, promises to do whatever it takes to return the country back to normal. Nevertheless, the president does not mention the fact that Brazil expanded social benefits during the boom years, while she failed to fulfill her election promises. Her government put in place policies that cut money from being invested in the infrastructure and allocated it to the insupportable burden on the governmental funds.

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The authors of this article also articulate clearly that to arrest the economy downturn there should be a change in infrastructure, while the educational sector should also be prioritized. The government should institute measures to increase the tax base and pursue tax evasion. Pensions and transfer payments should be analyzed carefully and, due to low oil prices, subsidies have to be phased out so that funds can be freed for other uses.

In this year Summit, the theme is “prosperity with equity”, which these countries certainly need. To achieve this, they should conduct better policies regarding financial matters. Such countries as Brazil, Mexico, Santiago, and Caracas need to address the problem of rampant corruption.

Evaluation of the Article

The article helps in outlining the main issues faces by Latin American countries, which make it complicated for them to develop. Latin American countries have to adopt a development plan for financial resilience, poverty alleviation, and vigorous economic growth. Currently, there are plentiful resources to realize this. Brazil is the seventh largest economy in the world yet citizens have poor living standards with widening gap between the poor and the rich. The research shows that most of the government revenues in this country are embezzled by the powerful individuals in the government, and therefore measures should be put in place to curb corruption. The other menace of the organized criminals and drug trafficking can be addressed by developing appropriate policies to address the problem; this will require member states to come together and face it as a common enemy. The article emphasizes that the problem becomes specifically complicated, as other countries of the world may be interested in this situation. There is therefore a strong need for state members of the Summit to address these issues and try to solve them without persecuting their own industries. Cross-border policies, as well as outdated immigrant policies should be reviewed by the member states. It is also essential to note that the Summit proposal should be taken into account and implemented immediately, for the changes to come. Leaders should keep their promises and assist Latin American countries in recovery from their crisis. This will help to establish healthy economies, liquidate poverty and drug trafficking all over the world.

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A Personal Reflection on the Article

As the authors state, the main issues that the leaders from these regions should be addressing is how to grow their economy and service rising debts. Their self-interest relationships with one another should not be tolerated. Such countries as Brazil should focus more on maximizing revenues from the tax collection and ensure that these taxes are allocated for the best cause of the economy. This could be done by higher degree of governmental control over businesses, as well as by implementing policies that could terminate corruption. Education should become one of the most important spheres of developing in the analyzed countries. This should be done to increase literacy among the Latin American population. Appropriate level of education could help to develop different industries and create more work places. This, in turn, may decrease currently high level of unemployment and poverty. As pointed out in the article, the organized gang criminals exist as a result of high unemployment rate among the youth. It should be emphasized that education should not only be received by children in schools and universities. There is also a strong need to establish evening schools for adults to become proficient in various spheres and obtain literacy. These measures will boost infrastructure and create numerous possibilities for the population to become prosperous and successful.

The discussed countries should also reduce drug trafficking, as well as handle the people who are engaged in these illegal activities. Drug trafficking problem can only be combated if the member states join hands in the fight against the vice. For this to be performed, it is significant for Latin American countries not to rely on drug trafficking as a main source of economic profits for the government. They should reject this source of revenues and develop other industries which could increase the economic level of the society. In relation to this problem, it is also important to deal with drug abusers and implement special rehabilitation courses for them. Drug dealers, on the other hand, should be punished in order to prevent the population from massive drug abuse.

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Speaking about industries and infrastructure, there is also a strong need to source other trade and commerce destinations, such as Asia, Africa, and Europe, which are economically developed. The analyzed countries could follow the example of China which managed to develop its economy shortly by boosting its export and trade relationships with other countries. As Latin American countries are rich in certain products, such as fruit, vegetables, mineral deposits, etc., it is therefore recommended for them to advance their relationships with other countries and rearrange export. According to the article, the countries currently face a lot of problems that cannot be instantaneously solved. Nevertheless, other countries could come to assistance and help implement new policies and strategies to increase living standards and economic rates of Latin American countries. As contemporary world is globalized, such solution will be profitable not only for the analyzed countries, but also for the entire world.


The growth of economy is what every country strives for. Even the largest economies, such as China and U.S., are still in the process of growing. For this to be realized, a country should obtain visionary leadership with the set objectives and goals. This could only happen if the countries of Latin America realize their problems and unite for a common cause. Leaders must respond by initiating post-crisis dynamics. Actions should be taken to improve institutions and markets, increase competitiveness and productivity with the help of provision of new opportunities in business industries and investment ventures for the population. Citizens must be involved to achieve social development and overall growth for them in the decades to come.