pradia-latam-blog

[pradia-latam-blog]

Blog Post During Trip

http://www.emergingmarkets.org/Article/3439990/Perus-Segura-banks-on-tax-cuts-for-long-term-growth.html

While I greatly enjoyed all of the meetings during the study tour, our first meeting with the Department of Economics and Finances in Peru was one of my most memorable. From starting off the meeting wanting to leave to spending more time with us, I believe that we were able to build a great rapport with the Chief of Staff as well as learn a lot about the country. It is interesting to see that many of the issues that we asked about are discussed in this very recent article.

From reducing the informal economy, to Peru’s economic outlook, to becoming an attractive country for businesses and contributing to Peru’s economic progress, the issues are described in the above article. This makes me happy that we were able to touch in some of the major issues facing the country, directly from a great source of information. 

[pradia-latam-blog]

"Palm oil firms in Peru plan to clear 23,000 hectares of primary forest"

http://www.theguardian.com/environment/andes-to-the-amazon/2015/mar/07/palm-oil-peru-23000-hectares-primary-forest

In our discussions it has been highlighted how important commodities are to the Peruvian economy. This article expands on that further, describing how four palm oil plantations will be built in Peru's northern Amazon region. This would involve clearing over 9,000 hectors of virgin rainforest, a move likely to draw criticism from environmentalists. Although the company creating the palm oil plantations has claimed to have conducted the necessary environmental tests, many say that building this facility would create a bad precedent. It remains to see how environmental issues will fare with economic ones as Peru strives to continue growing its economy. 

[pradia-latam-blog]

"Executives Are Jailed in Chile Finance Scandal"

http://www.nytimes.com/2015/03/08/world/americas/executives-are-jailed-in-chile-finance-scandal.html

This article is about a significant scandal that is currently taking place in Chile. A government official, four members of one of the largest financial groups and a tax auditor were arrested for tax fraud, bribery, and money laundering. This arrest targeted the very elite of the Chilean economy and caused shock waves around the business/government world of the country. This scandal has marred Chile's reputation has a respite from corruption, and it will be interesting to see how this plays out within the close business community. 

[pradia-latam-blog]

"Peru’s Central Bank Cuts Reference Interest Rate to 3.25%"

http://www.wsj.com/articles/perus-central-bank-cuts-reference-interest-rate-to-3-25-1421365455?KEYWORDS=peru

In order to spur economic growth Peru's central bank cut the interest rate by 25 basis points to 3.25%. The decision came after the country grew slower than expected last fall. This decision came as a surprise to many people, who expected the bank to keep the rate steady.  The bank is also aiming to keep the inflation rate within specified parameters. Lastly, the Peruvian currency has slide almost 7% in value against the dollar, possible as well a sign of lower economic activity. The decrease in interest rates though may cause the currency to depreciate further as the cut in interest rates makes it less attractive to move capital to Peru. 

[pradia-latam-blog]

Why Chile and Colombia Are Startup Savvy

http://www.wsj.com/articles/why-chile-and-colombia-are-startup-savvy-1420675782?KEYWORDS=chile

This article highlights how Chile and Colombia are leading Latin America, and parts of the world, in start up activity. Each country received high scores on the there dimensions to measure startup activity: "the share of the working-age population engaged in early-stage entrepreneurial activity, the portion of entrepreneurs who expect to create 20 or more jobs in the next five years and the share of entrepreneurs who say they are offering innovative products or services." This is based on a study done by the World Economic Forum and the Global Entrepreneurship Monitor.

The article specifically highlights "Start Up Chile" as a great model for encouraging more entrepreneurship. In this model the government provides seed money for companies if they do activities to promote further entrepreneurship in the country. This model seems to be working and it will be interesting to see what innovations come out of this practice. 

[pradia-latam-blog]

"LatAm retail giant Falabella earmarks $4 bn for expansion"

http://latino.foxnews.com/latino/news/2015/01/06/latam-retail-giant-falabella-earmarks-4-bn-for-expansion/

Post for 2/17 class

This article describes the huge investment that Falabella is making to expand into several other Latin American countries. This demonstrates the success of the firm as well as their belief that other Latin American countries can be beneficial markets. The increased urbanization and wealth of South America has undoubtedly made this possible. 

[pradia-latam-blog]

"Peruvian upstart AJE takes on Coke and Pepsi in Asia"

http://www.ft.com/intl/cms/s/0/dd0e0c00-0cf2-11e4-bf1e-00144feabdc0.html#axzz3SgIviP2E

Post for 3/17 class

This article highlights how this Peruvian company is beginning to win markets worldwide and compete with large, established companies such as Coca-Cola and Pepsico. In the words of the article, this shows "how a nimble developing-world rival can use its home market experience to tap into demand from hundreds of millions of new consumers in emerging markets." As more and more MNC use developing markets for growth and as local firms are becoming stronger, this should be happening more and more. The ability of this home-grown companies to win in their own and other markers will have large effects on how business in Latin America can drive growth, particularly in urban areas.

[pradia-latam-blog]

"Income Gap Shrinks in Chile, for Better or Worse"

http://www.nytimes.com/2014/12/03/business/economy/income-gap-shrinks-in-chile-for-better-or-worse.html?ref=topics&_r=0

This article highlights the income disparities in Latin American countries with a specific focus on Chile. Chile, like most of Latin America, has struggled with income inequality for most of its history. The top 10% of income earners capture 42% of in the income, compared with 25% in Spain and 30% in the US. While the distribution is consistently a problem it has been shrinking over the past few decades.  The Gini index indicated decreases in inequality in 16 of 18 South American countries between 2002 and 2012, despite a wide array of government-types of programs. Nobody really understands this region-wide trend giving the variety of approaches. As we visit Santiago it will be interesting to see how the changing demographics have affected the city and its people. 

[pradia-latam-blog]

"An Economic Boom Recedes, but South America Might Avert the Bust"

http://www.nytimes.com/2014/12/30/world/americas/an-economic-boom-recedes-but-south-america-might-avert-the-bust.html?ref=topics

This article outlines the economic challenges of South America after the commodity boom and rising incomes of the past decades. With commodity prices decreasing many countries are facing more bleak economic conditions. Peru is specifically highlighted due to its dependence on the mining sector. Mining was a key component of the six percent annual growth that the country enjoyed from 2002 to 2012. Growth has now slowed to 3 percent annually. Peru has responded by introducing stimulus measures and increasing production. This last point does not appear to make economic sense, as increasing production (supply) with an equal or reduced demand should decrease the price and make it more likely that the sector will lose money. It will be interesting to see how this situation develops.