Latin America’s GDP($1.9 Trillion or 6% of World GDP)
Brazil
Argentina
Mexico
Share of Region = 31%
Share of Region = 15%
Share of Region = 33%
Latin America’s Population(480 Million People or 8% of World Population)
Brazil
Argentina
Mexico
Share of Region = 36%
Share of Region = 8%
Share of Region = 20%
Latin America – GDP Growth
2001200019991998199719961995199419931992
6
5
4
3
2
1
0
Percent
Latin America Ranking Low onCapital Access Index
ZambiaTurkey
ColombiaBrazil
MexicoPeru
ArgentinaChile
CanadaU.S.
UKHong Kong
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
Score
Latin America - Budget Balance
2001200019991998199719961995199419931992
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
Percent
Financing In Latin America
IIIIVIIIIIIIVIIIIII200120001999
15
10
5
0
-5
-10
-15
US$ Billions
Bank BorrowingSecurities Issued minus Repayments
Financial Markets Promote Growth
High Income
Upper Middle Income
Lower Middle Income
Low Income
Latin America
Population 17.8 11.4 37.0 33.8 8.3
GDP 80.5 9.7 7.2 2.6 6.2
Bank Assets 93.2 4.5 1.3 1.0 2.2
Equity Market Capitalization 93.4 4.0 2.0 0.7 1.6
Bonds Market Capitalization 96.8 2.1 0.7 0.5 0.8
Total Financial Assets 94.3 3.6 1.4 0.7 1.1
Structure of Financial Markets
Bank Assets(% of GDP)
Equity Market Capitalization(% of GDP)
Bank Assets / Equity
(%)Argentina 40.4 20.4 198.3Brazil 54.7 6.6 835.4Chile 153.5 120.8 127.0Colombia 29.4 9.6 307.6Costa Rica 39.5 81.8 48.3Ecuador 42.1 38.0 110.7El Salvador 60.8 116.8 52.0Mexico 35.4 3.8 934.4Panama 240.9 284.4 84.7Peru 37.5 36.4 103.1Venezuela 19.1 5.6 341.1
Latin America’s Market Structure(Bank Assets / Equity Market Capitalization)
Costa RicaEl Salvador
PanamaPeru
EcuadorChile
ArgentinaColombia
VenezuelaBrazil
Mexico
1000
800
600
400
200
0
Percent
Latin America’s Bank Ownership(Percent of Total Bank Assets)
Government-Owned
Foreign-Owned
Argentina 27.4 71.3Belize 0.0 38.3Bolivia 0.0 7.4Brazil 43.2 23.8Chile 14.1 46.5El Salvador 9.7 2.9Guatemala 17.7 48.3Guyana 1.1 2.2Honduras 35.9 0.0Mexico 0.8 14.0Nicaragua 11.4 60.5Panama 12.7 78.2Paraguay 2.5 39.5Peru 22.3 20.7Suriname 31.4 55.8Uruguay 19.7 9.6Venezuela 7.7 30.8
Capital Flight From Argentina
20012000
6
4
2
0
-2
-4
Percent
Argentine Bank Deposits Rate of ChangeUruguayan Bank Deposits Rate of Change
Latin America’s Income Inequality
Gini Coef.
Between Country
Within Country
Latin America 0.56 0.04 0.51
Developed Countries 0.33 0.07 0.26
U.S. 0.39 N/A N/A
20001998199619941992199019881986
7
6
5
4
3
2
1
0
US$ Billions
Mexico
El Salvador
Dominican Republic
Remittances from the United States
0098969492908886848280
30
25
20
15
10
5
0
Percent
Remittances as Percent of GDP
Nicaragua
Dominican Republic
El Salvador
Latin American Human Capital Flight
$8.25 Trillion from 1985-2000
Brazil’s GDP
0098969492908886848280
800
600
400
200
0
US$ Billions
Argentina’s GDP
0098969492908886848280
300
250
200
150
100
50
0
US$ Billions
Mexico’s GDP
0098969492908886848280
600
500
400
300
200
100
0
US$ Billions
Trade with U.S. as Percent of Total
MexicoBrazilArgentina
100
80
60
40
20
0
Percent
ExportsImports
Latin America’s Top 10 Banks(US$ Billions)
CountryBank Assets(2000)
Market Capitalization
(2001)Banco do Brasil Brazil 70.8 8.1Banco Bradesco Brazil 48.5 8.2Banco Itaú Brazil 35.6 8.8Banamex Mexico 34.9 N/AUnibanco-União de Bancos Brasileiros Brazil 26.3 4.9Grupo Financiero Santander Mexicano Mexico 23.2 2.8BBVA Bancomer Mexico 22.5 N/ABanco de la Nación Argentina Argentina 19.1 N/ABanco de Galicia y Buenos Aires Argentina 16.1 1.2Banco de la Provincia de Buenos Aires Argentina 15.0 N/A
Latin America’s Bank Ownership(Percent of Total Bank Assets)
PanamaChile
VenzuelaArgentina
MexicoBrazil
80
60
40
20
0
Percent
Government-OwnedForeign-Owned
Latin America – Foreign Direct Investment
2001200019991998199719961995199419931992
80
60
40
20
0
US$ Billions
Latin A
merica’s Inform
al Econom
y
706050403020100 Percent of GDP
Bolivia
Panama
Peru
El Salvador
Guatemala
Paraguay
Uruguay
Honduras
Brazil
ColombiaEcuador
VenezuelaMexico
Costa Rica
Argentina
Chile
Average
US
Latin A
merica’s Inform
al Econom
y L
abor Force26242220181614 Percent of Population
Bolivia
Panama
Peru
El Salvador
Guatemala
Paraguay
Uruguay
Honduras
Brazil
Colombia
Ecuador
Venezuela
Mexico
Costa Rica
Argentina
Chile
Average
How Many Mexicans Own Assets That Are “Dead Capital”?
• That is, assets that cannot move freely in national and global markets, that cannot be leveraged to produce capital in the form of collateral to guarantee credits, shares to secure investment, or as accountable terminals for the easy collection of debts, rates or taxes.
Includes over 6 million unregistered micro, small and medium-sized businesses, which:•Produce approximately 35% of the GDP•Employ 47% of the economically active population
Business Assets
Urban: 11 million housesRural: 137 million hectares
Real estate assets
Dead capital includes:
80% of the population
78 Million
How Much Is the Poor and Middle Class’ Dead Capital Worth?
315 billion dollars which is:• 62 times greater than CEMEX annual sales• 31 times greater than foreign direct investment• 26 times greater than federal public investment• 10 times greater than the capital market’s annual operations• 7 times greater than the asset value of PEMEX
70Business assets
315Total
245Real estate assets
Billions of US$
Why Are the Majority of the Mexicans Unable to Transform Their Assets into Live Capital?
Many assets are untitled. Moreover, where title deeds, certificates or authorizations do exist, in the best of cases, these can only be used to identify the owner, but they cannot be used to transform their assets into live capital. The legal and administrative mechanisms for creating live capital either do not exist or their costs greatly exceed the monthly incomes of the average Mexican citizen.
Some examples of costly mechanisms for: Time(months) Steps Cost
(US$)Building under the condominium regime 10 105 12.280
Creating a mortgage 24 38 7.100
Foreclosing a mortgage 43 68 11.920
Subdividing a piece of land of 3.000 sq. m. 12 144 8.310
Selling a house which is worth US$ 11.000 24 38 2.580
Regularizing a construction 8 79 2.300
Obtaining legal access to business in society 17 126 12.700
Major Areas of Future Interdependence
• Democracy Getting Entrenched
• Coordination of Monetary Policies
• Increased Currency Stability
• Growing Dependence on Foreign Direct Investment
Foreign Investors Distinguish Among Countries
• Argentine Crisis Appears Isolated
• NAFTA Provides Benefits to Mexico
• Brazil, the Major FDI Recipient
• Venezuela: Localized Political Crisis
Argentina Did Not Hurt the Brazilian Real and the Mexican Peso
8.5
9.0
9.5
10.0
10.5
11.012
/31/
00
1/31
/01
2/28
/01
3/31
/01
4/30
/01
5/31
/01
6/30
/01
7/31
/01
8/31
/01
9/30
/01
10/3
1/01
11/3
0/01
12/3
1/01
1/31
/02
2/28
/02
3/31
/02
4/30
/02
1.75
2.00
2.25
2.50
2.75
3.00
Mexican Pesos per USD (lhs)Brazilian Reals per USD (rhs)
Even the Equity Markets Have Ignored It!
(MSCI EMF LA Index - U.S. Dollars)
0
200
400
600
800
1000
1200
1400
Jan-88
Jul-88
Feb-89
Sep-89
Apr-90
Nov-90
Jun-91
Jan-92
Jul-92
Feb-93
Sep-93
Apr-94
Nov-94
Jun-95
Jan-96
Jul-96
Feb-97
Sep-97
Apr-98
Nov-98
Jun-99
Jan-00
Jul-00
Feb-01
Sep-01
Foreign Direct Investment Flows toLatin America: 1987 – 2002F
(Billion U.S. Dollars)
3.77.4 7.2 7.2
11.6 13.5 12.0
26.2 27.4
41.0
60.565.3
81.5
69.7
62.6
50.0
0
10
20
30
40
50
60
70
80
90
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
E
2002
F
Latin A
merica O
penness Ratio:
1987 –2002F
(Exports+Im
ports/Nom
inal GD
P)
18.6%
18.6%
21.3%
19.6%
19.7%
19.5%
20.5%
19.5%
21.8%
23.4%
23.9%
27.6%
32.1%
29.6%
36.9%
44.5%
0% 5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001E
2002F
Latin America Total Exports:1987- 2002F
(Billion U.S. Dollars)
86101
112124 124
133143
166
203
229
255 249
267
325312
327
0
50
100
150
200
250
300
350
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
E
2002
F
Latin America - Capital Formation
2001200019991998199719961995199419931992
15
10
5
0
-5
-10
Percent