BOGOTA, COLOMBIA — Latin America began 2008 riding a commodities boom, and there were expectations that first-world status was in sight for at least some countries. Better times down south fueled demand for U.S. goods and services and lessened the flow of illegal immigration. An increasingly prosperous Brazil even broke into the ranks of the top 10 U.S. trading partners.
But as the region heads into the new year amid a global economic downturn, the future is cloudy. The United Nations recently forecast that economic growth in the region will slide to 1.9% in 2009, down from 4.6% this year.
We asked Sebastian Edwards, a professor at the UCLA Anderson School of Management and former chief Latin American economist at the World Bank, what's ahead for Latin America in 2009, how relations with the U.S. might change under the incoming Obama administration, and for his assessment of social gains in the hemisphere.
Edwards, 55, got his doctorate in economics at the University of Chicago, but says he is not "one of the Chicago boys," referring to the conservative market-driven orthodoxy of Milton Friedman. He is the author of 12 books, including a suspense novel that was a bestseller this year in his native Chile. Among his 200 scholarly papers is a study of the vagaries of the art market.
In a conversation this week, Edwards discussed the region's missed opportunity to invest in human capital and the fallacy of those who thought the region had "de-coupled" from the economies of U.S. and Europe. He urged President-elect Barack Obama to "end a decade of neglect" in U.S.-Latin America foreign relations and to make overtures to Cuba and Venezuela.
Has this been a good decade for Latin America?
It started horribly and then improved. It was good after the commodities boom began in 2003 until it ended a few months ago. As with past booms, people thought it would last forever. I gave a speech in Chile in July at which the speaker before me predicted oil would end the year at $250 a barrel. The notion that prices would stay high and prosperity remain unstoppable was silly. What people didn't understand was that this boom in copper, oil, soy and the rest was a short-term illusion, one as fragile and transitory as the housing bubble.
But the region saw significant social and economic gains. Poverty declined from 44% to 32%. Millions of jobs were created.
