August 3, 2023
There's something about focus, staying specialized, etc. However, it's a shame that Latin America practically flew under my radar.
I know relatively little about the region, but interesting things are happening, the history is just as rich.
A host for developing and developed nations, stricken by brain drain, criminally governed, and afflicted by ecological degradation, among others. A melting point of culture that I only experience through vibrant anecdotes and romanticized cinematic depiction. What's going on here? What should I know?
I know I don't know much, but that can change.
They remained resilient throughout the pandemic and have done relatively better than their counterparts during the Russian-Ukraine war. The European Commission is investing heavily in the region, drawing up some synergies with Chinese efforts to invest in Africa aggressively. A thesis of working on building up the underdeveloped as a 0-1 approach to building their economies and benefiting the richer as a result.
Although inflation has generally been slowing down, Argentina and Venezuela (although less so) are massive outliers, and the rest of the world has looked to them to see how they respond. Argentina printed more money in response to the pandemic, but without enough strategic effort it curtailed a start devaluation of their currency. Argentinians cope with interest-free credit, a cashless society via crypto and the more archaic 'barter or swap' economy and classic overspending. Solutions are difficult to muster and there a case study for what to do under these extreme circumstances, with Zimbabwe also being another classic. Demonetization is the proposed solution, one that I subscribe to, but what this actually means in practice is much harder to articulate.
Perhaps it's my Western media consumption, but I just don't hear much and haven't gone out of my way to stay particularly informed. I recently learned about the European Union working to build partnerships with LA and the Caribbean: with a pledged 45B euros rivalling China's Belt and Road programme which has pushed a lot of funds into (largely) Africa to build roads, rails and improve energy infrastructure. There's been disputes about the benefits of China BandR programme, it's arguably exacerbated climate change in impoverished nations that still largely rely on non-renewable sources of energy and has caused many already poor african countries to be saddled with enormous debt (however there have been Chinese efforts to counteract this claim through loan forgiveness and eliminating interests on these agreements). China grew exceptionally fast over the past 50 years with it's annual GDP averaging ~9% from 1989 until 2023.
So, first on Brain Drain. The term is almost mimetic at this point. Are high-skilled people leaving their (developing) countries of origin bad for the home country. In sub-saharan nations in particular, brain drain is a semi-positive occurence, talented individuals leave, take advantage of better educational systems, find higher paying jobs and send remittances back home and sometimes come back to the local labor force with far more resources and knowledge than the counterfactual. This paper explores how SAA is a net-winner when it comes to the mobilization of their talented people.
Latin America (on average) has a better existing educational infrastructure that is 1) able to better identity their top talent 2) be taken advantage of to build productive workers within their society. In SSA, brain drain is better termed "brain gain", but in Latin America things are slightly different. There's a concept of "brain waste" in which immigrants entering nations where there credentials are not recognized have ultimately had their training put to waste and are not able to contribute to the labour market. A study shows that migrants from Latin American regions still suffer from brain waste, but still outperform Americans with Latin credentials. Latin America has generally changed its notions around immigration: attempting to implement policies that "maximize migration benefits" and using them as drivers for local development.
Something quite unique to Latin America is the disproportionate amount of criminal governance. Gangs in the United States is a complex topic, but there was a time when the Italian Mob scene was the most notable, since then the Latin gang scene has remained the most intact over an even longer period of time. Beyond the border, in the homeland, we get a closer look at what the culture is like in the nations where they established themselves.
Criminal groups have more influence than police control and state presence. Beyond the surface, they arguably work harmoniously, allowing illicit but important economies to stay working, while mitigating crime to the extent to which that's possible. Blattman spends a lot of time thinking about these things, but perhaps this is why news from the region hasn't been something I especially explored. Is Latin America in some sort of equilibrium? A study led by Blattman tested how gangs responded to state presences using a "geographic discontinuity" (separated by region). When state presence was increased, gangs increased their governance services, especially when they had prolific drug operations.
LA is interesting. The above are some very initial thoughts on looking very generally at the region.