Latin America’s Moment

Despite the standstill in Congress on immigration reform, state and local governments have been very active in passing their own immigration legislation. In this article for Foreign Policy, I look at what different states and cities are doing regarding immigration and the effects of their policies. You can read the beginning of the piece below:  With all the mudslinging and acrimony in Washington over unaccompanied minors and unauthorized immigrants, you might have missed it. Immigration reform has already happened -- in fact, hundreds of times. With the federal government incapacitated, states, cities, and municipalities have stepped into the fray. In 2013 alone, forty-five of the fifty state legislatures passed over four hundred laws and resolutions on everything from law enforcement and employment to education and public benefits. Among this flurry were a few in the Arizona SB 1070 style -- bills making life more miserable for undocumented immigrants. These laws ranged from blocking access to health care and schools to criminalizing common activities such as driving cars or buying homes. But the majority are actually designed to find ways to integrate undocumented immigrants -- funding English language and citizenship classes and providing access to medical care and other social services. You can read the rest of the piece here on ForeignPolicy.com.

In 2013, foreign direct investment (FDI) in Latin America reached $185 billion according to the latest ECLAC report, continuing the slight upward trend of the last three years. Brazil maintained its number one position as the largest FDI destination, raking in $64 billion (over one third of all regional FDI). Mexico came in second, with some $38 billion (boosted by the $13 billion purchase of the rest of Modelo by Belgian based Anheuser-Busch InBev, a company run by Brazilians). Mexico’s Pacific Alliance partners—Chile, Colombia, Peru—also had a fruitful year, with a combined $47 billion in investment. And despite its economic woes, Argentina garnered $9 billion. Regionally, more than 38 percent of the total flow went to the service sector—including finance, telecommunications, and electricity. Manufacturing ranked a close second with over a third of the inflows, and the remainder going to natural resource production (26 percent). These flows varied by country. For example, 70 percent of FDI in Mexico went into manufacturing, while in South America, excluding Brazil, most of the flows targeted natural resources. For those hoping FDI will drive employment, productivity, and improve well-being more generally, the “quality” of FDI matters as much as the quantity. Investments in natural resources have fewer economy wide benefits when compared to those in manufacturing, technology, or some services. For instance, a 2012 study by ECLAC estimates that construction, commerce, and certain types of manufacturing create some seven jobs on average for every US$1 million invested, while mining and petroleum FDI generate just one job for every US$2 million invested. On this front, the news is somewhat positive. Within the manufacturing sector, FDI for medium level technology projects grew–comprising roughly 84 percent of total investment (flows into low-tech areas shrunk, while those into high-tech remained relatively flat). ECLAC also measured the accumulated foreign direct investment. Here Latin America fares well vis-à-vis other emerging markets, with its 32 percent of GDP average besting Russia (25 percent), India (12 percent), and China (10 percent). Chile tops this list, with its FDI stock totaling 77 percent of GDP. This deep foreign investment base also means that outward flows of profits are significant. In 2013 they averaged 81 percent of the value of FDI inflows–meaning transnational corporations with operations in the region have gotten back almost as much in profits as they invested. Perhaps one of the most striking trends in Latin America in recent years has been the amount of investment among neighbors. In 2013, Ecuador’s largest outside investments came from Uruguay, while El Salvador’s emanated in Panama. Mexico was among the top four countries investing in Brazil, Costa Rica, Ecuador, Honduras, Nicaragua, and Paraguay. While the majority of Latin America’s FDI still comes from the United States and Europe, of the top twenty mergers or acquisitions in the region, seven of the buyers were from Latin American countries. ECLAC, "Foreign Direct Investment in Latin America and the Caribbean," 2013. This trend reflects the growing influence and power of Latin American countries upon their neighbors’ economies. Historically, analysts have looked to the United States, Europe, and more recently China for needed funds in Latin America, in part due to lackluster domestic savings rates near 18 percent (versus 52 percent in China). But as these trends show, it is increasingly Latin American nations that may shape the direction of jobs and ultimately growth in the region.

In the lead-up to the World Cup and through the first games, Brazilians have taken to the streets in protest. In this post for Daniel Altman on ForeignPolicy.com, I look at why these demands for change could help Brazil overcome its many domestic problems. The post begins: World Cup controversies in Brazil are supposed to be about team selection and tactics, but this year they’ve focused on much bigger issues: jobs, poverty, public services, and corruption. Past tournaments have been a boon for governments hoping to distract their people—and the world—from exactly these kinds of issues. Could this one be different? Major sporting events in Latin America have a history of both illuminating and eliding larger homegrown problems. The 1968 Olympics in Mexico City was preceded by massive protests and the ignominious slaughter of hundreds of students in the capital’s downtown, revealing the ugly authoritarian side of the Institutional Revolutionary Party’s (PRI) regime. And the 1994 World Cup hadn’t even finished when Andrés Escobar, having scored an own goal in a match against the United States during Colombia’s brief campaign, was murdered upon his return to Medellín, then the world’s cocaine capital. You can read the rest of the article here.