In the 60’s and 70’s one of the
main reasons used to explain why South American countries where considered
under developed, and dependent on Europe and the US for technology was that they
were too far away, and that transportation costs hurt their chances.
In fact today, Asia
has proven that distance is not really a factor.
The constant military
interruptions to governments and years of dictatorships were also blamed for their
downfall.
Now, most of Latin
America has had democracy for more than a decade….
Big ineffective governments with
their noses everywhere, from phone companies, to airlines also became “the
reason”, yet in the 90’s most governments privatized left and right.
Off course, let’s not forget huge
budgetary deficits as the “source of evil”, but for a few years now, most Latin
American countries have a sound fiscal policy.
We could go on and on with the
list of “reasons”: inflexible labor markets, difficulties for foreign
investments, tough bankruptcy laws, world conspiracies to keep the price of
commodities low, and the list could continue. And still, in most cases those
reasons no longer exist today.
Yet, Latin
America, in most cases has higher unemployment than 30 years ago,
higher poverty rates, life expectancy almost unchanged and worst wealth
distribution indexes.
So why is it? Why can’t Latin America enter the ranks of developed countries,
like some other countries that have started at similar points of development did,
or are well on their way?
Probably they need to look harder
to themselves.
Governments needed to change, and
in many cases they did, maybe not as much as needed, but they did adjust.
Unions needed to adapt to new circumstances, and although some more change
could help, they really have adapted.
But there is another sector in
the economy that needed to change and leave the realm of the under developed,
and that sector is the business sector. Not from a technology standpoint, but
mainly from an “under developed” and “emerging” state of mind.
In most countries of Central and
South America the scenario is similar, their companies will not invest unless somebody assures them
their return, many companies will, at the first sign of growth in the economy
adjust on prices, and not on quantities via investments. Even if the country is
far from full employment of its resources.
Some companies will quickly fire
hundreds or thousands if they think that their profits will be a little lower,
let’s not even talk about loosing money. Companies will hardly invest in
research and development. Powerful firms that are content with the market share
they hold, with no efforts made to growt even further.
Companies are “afraid” of even
trying to get into the US
market. They act as if it was impossible for new companies to break in the
biggest market in the world. But reality says that there are countless of new
successful companies appearing in it every year.
In some of those Latin American
firms, the differences in compensations between the highest paid and the lowest
paid employees of a company, dwarfs that of their European or US counterparts.
And the list could keep going.
In no way we are placing the
blame only in the Latin American businessman / businesswoman, but they
certainly do share it.
They should be the one taking
RISKS, and looking to grow their companies. After all that is what should mean
to be in business right?
And to prove our statement there
are a handful of companies that behaved like most should have, and Latin America should be proud of their international
success.
While the cement company that had
a majority of the market shares in Argentina
for over 50 years (most of them with a strong Argentina) failed at transforming
itself into a real international player and was sold recently for U$D900M.
