Latin America

Latin America

Latin American countries include • • • • • • • •

Mexico Venezula Columbia Peru Brazil Bolivia Paraguay Argentina

Business Environment of Latin America consist of • • • • • •

External Environment Domestic Environment Social Environment Political Environment Policy Environment Legal Environment

External Environment • The booming world economy produced high commodity prices and favourable terms of trade. • Favourable terms of trade. • United States continues to be Latin America’s most important market, so the region is increasingly linked to China India and other emerging economies • Benefited from the expansion of global capital flows

Global Developments • Stronger terms of trade for commodity exporters • Latin America continued to attract greater capital flows and pay lower interest rates.

DOMESTIC ENVIRONMENT • • • • •

Inflation is under control. Local currencies are strong. Domestic capital markets are stronger. External debt burden is declined. Unemployment and poverty also declined.

Economic and Financial Performance • Strong economic growth. • Demand and supply factors threaten to push inflation. • Strong external performance. • Exports experienced a significant increase. • Latin American currencies appreciated against the dollar.

Social Environment • Unemployment and poverty declined. • Economic expansion through job creation and social spending. • Growth in per capita income accelerating. • Crime and threats to personal security largely abated

Political Environment • Limited political re-alignment. • Constituent assemblies seek to consolidate political change.

Policy Environment • Governments are reforming their national tax and social security systems • Labour markets are almost universally resistant to policy intervention.

Legal Environment • Legal environment is mixed. • Effective legal system ensures the enforceability of contracts & reduces the cost of doing business. • Countries that entered into FTA with the U.S. are implementing reforms It should strengthen their justice systems and protections for investors.

NAFTA [North American Free Trade Agreement • Agreement came into effect on 1994 Jan 1. • Agreement was between US, Canada, & Mexico.

Objectives of NAFTA • To eliminate trade barriers and make cross border movements of goods and services easier. • Promote fair trade. • Increase investment opportunities. • Protect intellectual property. • Provide resolution of disputes.

NAFTA covers following areas; • • • • • •

Market access Trade rules Services Investment Intellectual property Dispute settlement

Special provisions of NAFTA • Work right. • Environment. • Dispute resolution mechanism.