The tables have turned in Latin America

Posted By Joshua Keating Monday, November 23, 2009 - 7:35 PM Share

In a new Financial Times column, FP Editor in Chief Moisés Naím looks at the Brazil-Mexico power shift:

The political and economic reforms in Mexico in the 1990s were exemplary. Suddenly the country shed its prickly nationalism and jumped into the international arena with talent and verve, successfully negotiating the North American Free Trade Agreement with the US and Canada and joining the rich countries’ club, the Organisation for Economic Co-operation and Development. With a remarkable lack of violence, the party ruling the country for seven decades left power through competitive elections. Mexico’s rapid recovery from the 1994 financial crash, the subsequent economic stability, its oil potential, its tourist attractions, and its size (Mexico is the world’s 11th largest economy) made Mexico the promise of Latin America and a model for other underdeveloped countries.
Meanwhile Brazil was bogged down in political scandals, with a bloated government, a frail economy, a lousy business environment and far too much violence and extreme poverty.
Today their fortunes have reversed. Last year the Brazilian economy grew 5 per cent, while Mexico grew a paltry 1 per cent. Brazil is, together with China and India, one of the countries least battered by the global economic crisis. Mexico is one of its main victims. In Brazil, employment has already grown back to pre-crisis levels. Its finances are also stunning: this year Brazilian banks provided 60 per cent of loans made in Latin America, and its stock market has soared. The financial magnetism of Brazil is such that the government, seeking to stem the tide of capital flowing into the country, has levied a tax on foreign investment.

EXPLORE:LATIN AMERICA

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