Romney's Latin American Trade Plan: The Devil is in the Details

Kevin Gallagher

During the last presidential debate, Mitt Romney put the spotlight on an aspect of his five-point economic plan that has received little scrutiny.  Romney said forging trade deals with Latin American nations would be a cornerstone of his plan to revitalize the U.S. economy. “The opportunities for us in Latin America we have just not taken advantage of fully. As a matter of fact, Latin America’s economy is almost as big as the economy of China,” he said.

Like the other parts of the plan, Romney’s Latin American trade plan is short on details. There are two details that should make Americans think twice about whether more trade deals with Latin America can lead to prosperity.  First, the U.S. already has trade deals with most of the major Latin American countries. Second, the outstanding countries, most notably Brazil, would likely not negotiate a trade deal on Romney’s terms.

If any U.S. president wants to significantly increase trade with Latin America, he will have to change the template for U.S. trade deals so that they can truly make the U.S. and its trading partners better off.  Time is running out.  China has quickly become the largest trading partner for many South American nations and Chinese trade deals are much more amenable to Latin Americans.

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Romney’s Latin American Trade Plan: The Devil is in the Details

Kevin Gallagher

During the last presidential debate, Mitt Romney put the spotlight on an aspect of his five-point economic plan that has received little scrutiny.  Romney said forging trade deals with Latin American nations would be a cornerstone of his plan to revitalize the U.S. economy. “The opportunities for us in Latin America we have just not taken advantage of fully. As a matter of fact, Latin America’s economy is almost as big as the economy of China,” he said.

Like the other parts of the plan, Romney’s Latin American trade plan is short on details. There are two details that should make Americans think twice about whether more trade deals with Latin America can lead to prosperity.  First, the U.S. already has trade deals with most of the major Latin American countries. Second, the outstanding countries, most notably Brazil, would likely not negotiate a trade deal on Romney’s terms.

If any U.S. president wants to significantly increase trade with Latin America, he will have to change the template for U.S. trade deals so that they can truly make the U.S. and its trading partners better off.  Time is running out.  China has quickly become the largest trading partner for many South American nations and Chinese trade deals are much more amenable to Latin Americans.

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Africa’s $1.3 Trillion Gone "Missing"

Léonce Ndikumana

News about Africa’s economic prospects has been quite upbeat recently. Now seen as a “continent on the rise“, Africa has earned the labels of “an economic dynamo” and the next “global growth pole“. Investors see it as the next investment frontier and believe it’s now “Africa’s turn“. It is indeed true that the continent has been able to attract higher volumes of investments especially since the turn of the century, which have contributed to its recent growth acceleration.  Paradoxically, the growth surge and the increase in private capital inflows have accompanied an upswing in capital flight from the continent. As Africa has received more capital, its political and economic elites have siphoned more capital out towards safe havens.

Over the last four decades between 1970 and 2010, the continent has lost an estimated $1.3 trillion from capital flight (in constant 2010 dollars). Our new report on Capital Flight from North African Countries finds that net unrecorded capital outflows from four North African (Algeria, Egypt, Morocco and Tunisia) exceeded $450 billion. This is equivalent to 87.9 percent of their combined GDP in 2010. With a combined population of 159 million, this translates into a capital loss of $2851 per capita. Over the same period, capital flight from 33 sub-Saharan African countries amounted to $814 billion. This exceeds official development aid ($659 billion) and foreign direct investment ($306 billion) received by these countries.

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Africa’s $1.3 Trillion Gone “Missing”

Léonce Ndikumana

News about Africa’s economic prospects has been quite upbeat recently. Now seen as a “continent on the rise“, Africa has earned the labels of “an economic dynamo” and the next “global growth pole“. Investors see it as the next investment frontier and believe it’s now “Africa’s turn“. It is indeed true that the continent has been able to attract higher volumes of investments especially since the turn of the century, which have contributed to its recent growth acceleration.  Paradoxically, the growth surge and the increase in private capital inflows have accompanied an upswing in capital flight from the continent. As Africa has received more capital, its political and economic elites have siphoned more capital out towards safe havens.

Over the last four decades between 1970 and 2010, the continent has lost an estimated $1.3 trillion from capital flight (in constant 2010 dollars). Our new report on Capital Flight from North African Countries finds that net unrecorded capital outflows from four North African (Algeria, Egypt, Morocco and Tunisia) exceeded $450 billion. This is equivalent to 87.9 percent of their combined GDP in 2010. With a combined population of 159 million, this translates into a capital loss of $2851 per capita. Over the same period, capital flight from 33 sub-Saharan African countries amounted to $814 billion. This exceeds official development aid ($659 billion) and foreign direct investment ($306 billion) received by these countries.

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La Via Campesina: Food Sovereignty and the Global Feminist Struggle

Esther Vivas, Guest Blogger

La Via Campesina

Via Campesina is the world’s foremost international movement of small farmers. It promotes the right of all peoples to food sovereignty. Via Campesina was established in 1993 at the dawn of the anti-globalization movement, and gradually became one of the major organizations in the critique of neoliberal globalization. Its ascent is an expression of peasant resistance to the collapse of the rural world caused by neoliberal policies, and the intensification of those policies as embodied in the World Trade Organization (Antentas and Vivas, 2009a).

Since its founding, Via Campesina has promoted a “female peasant” identity that is politicized, linked to land, food production and the defense of food sovereignty—built in opposition to the current agribusiness model (Desmarais, 2007). Via Campesina embodies a new kind of “peasant internationalism” (Bello, 2009), that can be viewed as a “peasant component” of the new international resistance presented by the anti-globalization movement (Antentas and Vivas, 2009).

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Without Women There is No Food Sovereignty

Esther Vivas, Guest Blogger

In the countries of the Global South women are the primary producers of food, the ones in charge of working the earth, maintaining seed stores, harvesting fruit, obtaining water and safeguarding the harvest. Between 60 to 80% of food production in the Global South is done by women (50% worldwide) (FAO, 1996). Women are the primary producers of basic grains such as rice, wheat, and corn which feed the most impoverished populations in the South. Despite their key role in agriculture and food however, women, together with their children, are the ones most affected by hunger.

For centuries, peasant women have been responsible for domestic chores, the care and feeding of their families, the cultivation, exchange and commercialization of household gardens; charged with reproduction, production and community—all the while occupying an often invisible domestic and social sphere. The main economic transactions in agriculture have traditionally been undertaken by men in markets, with the purchase and sale of animals, and the commercialization of large quantities of grains in the private and public sphere.

This division of roles, assigning women as the caretakers of the house as well as the health and education of their families, and granting men the “technical” management of land and machinery, maintains the assigned gender roles that have persisted in our societies through the centuries and into the present (Oceransky Losana, 2006).

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Misleading Orthodoxy: Barter and the Origin of Money

Alejandro Nadal

Economic theory has a serious and embarrassing problem: it does not appear to have a rigorous and well-defined concept of money. This is why orthodox textbooks, when introducing money have to resort to a descriptive sleight of hand and state that “money is what money does”. They typically go on to say that it is the unit of account, the means of exchange and a reserve of value. But they fail to add that these functions are not exclusive of money.

That money poses a serious problem for mainstream economic theory is best exemplified by the fact that the most sophisticated account of interdependent markets (general equilibrium theory) does not tolerate the introduction of money (Hahn 1982). That’s an amazing headline story, one that should be taught in Economics 101.

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The Walmart Strikes

Barry Eidlin, Guest Blogger

For the past two decades, retail giant Walmart has served as a model for corporate America to emulate. Now, by forcing unions to break out of old habits, its workers might be showing the way forward for labor.

Walmart stores and critical parts of its distribution chain have been hit by a series of strikes in recent weeks. These strikes are remarkable for three reasons. First, the workers involved have no union protection. While their strikes are technically legal, they are taking huge risks by walking out. Second, many are not technically employed by Walmart. Rather, they work for a variety of sub-contractors that Walmart can replace at will. Third, despite items one and two, these workers are winning, and the strikes seem to be spreading.

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Development’s Last Giant?: Remembering Alice Amsden

Kevin P. Gallagher

Development economics, and development thought in general, is in the midst of a revival.  Some of this is due in part to the legacy of Alice Amsden.  This new wave of work would do well to learn lessons from Amsden’s work going forward.

On October 19th,  scholars, students, family, and friends gathered at the Massachusetts Institute of Technology (MIT) to pay homage to Alice Amsden.  Participants discussed her work, her legacy and our responsibility to carry on her tradition.

The two hottest waves in development at the moment are “growth diagnostics’” and behavioral approaches to evaluating development programs.  Both have elements of Alice Amsden in their work.

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Importing Risk into Insurance

C.P. Chandrasekhar

On October 4, in a cabinet decision that had been predicted by the media and expected by the stock market, the United Progressive Alliance (UPA II) government announced hikes in the ceiling on foreign equity ownership from 26 to 49 per cent in units in the insurance sector and from nil to 49 per cent in the pension fund industry.

The immediate motivation for approving these measures was the government’s declared intent of winning the approval of international rating agencies and foreign investors. To that end, the insurance reforms were presented as part of a set of decisions, including clearance for FDI in multi-brand retail and civil aviation, hikes in diesel and LPG prices and changes to the forward contracts regime, announced end-September and early-October.

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