Atividades Realizadas
ESSAY
OPPORTUNITIES FOR CLOSER ASIA & LATIN AMERICA ECONOMIC RELATIONS
or
RELATIONSHIP RULES THE WORLD
Joal Teitelbaum, President of South America Integration
Routes Committee – CRIAS
EMERGING MARKETS FORUM Fifth Global Meeting
October 11-13, 2010 Warrenton, Virginia, USA
I – INTRODUCTION
“The opening years of the 21st century have been a shattering experience for companies that have been slow to recognize and deal with the fundamental changes
in the economic and social demands but it has been a continuing opportunity for those organizations that make management innovation a foundation of their business.” - ARMAND V. FEIGENBAUM
We could fulfill this Essay with dozen of statistics references to bring once again to evidence the potential and degree of importance to have a strong commerce among Latin America and the Caribbean with Asia, including countries like China, India, Japan and all the sub region Southeast.
But all these statistics data and economic analysis are at your computer just through one simple touch.
Our option was in a different way.
Sometimes concepts are meaningful than numbers or graphics.
We will try to present under the standing point of view of the South America Integration Routes Committee, an institution from the private sector created in March 1996 that congregates in its events participants from Government, Foment Institutions, Academy and individuals with notorious knowledge, what has to be done and some suggestions on how to do to get to the aim to bring the commercial relations between the two sub regions closer.
There is no doubt that we are in front of a high potential but comparing with the global indicators, the results are very modest.
To build and conquer a continuous and sustainable relationship it will be indispensable to lead with the best practices and at the same time bring investments to infrastructure.
At the same time that we look to the political scenario, there is no doubt that the countries of the two sub regions have different various forms of government, but the reality of this 21st Century shows also that a harmonic and sustainable development depends on the private entrepreneurship.
Just to fix ideas and if Archimedes ruled the World, remembering his quotation “ Give me a point of support and with a lever I will move the Earth” he would make an adaptation to “ Give me a point of support and with a lever I will transform physical distances into economic proximity”.
II – SOME SCENARIOS AND CONSIDERATIONS : QUESTIONS AND
ANSWERS
More than 67% of the Earth population lives in Asia, Latin America and the Caribbean, and 60% is in Asia.
On the other hand the GNP of Latin America and the Caribbean may me estimated around US$ 4, 5 trillions and only China has around US$ 3,5 trillions to a World total richness of some US$ 80,0 trillions.
Nowadays China and India contribute to around 30,0 of the GNP World growing.
Here comes a very strong paradox. China with this US$ 3,5 trillions GNP is going to invest in infrastructure at the west part of the country around US$100,00 billion dollars in roads, energy plants, railways and airports. On the other hand we know how poor are the investments in infrastructure in Latin America. The average when it is a good one, goes to 1,5% of the GNP and represents respectively 1/8 and ¼ that China and India do.
Where from comes today’s resources to invest in Infrastructure?
They come mainly from positive result in export.
How are Latin America and the Caribbean area in its export scenario?
According to ECLAC bulletins from this September in 2010 Mercosur is going to export + 23.4% more, the Andean Countries + 29.5%, Central America + 10.8%, Mexico + 16.0%, Panama + 10,1% and Chile alone + 32.6%. Caricom – Caribbean Common Market is a good surprise also : from – 43.6% in 2009 it is estimated to export + 23.7% in 2010.
The increment of exportation to China calls the attention : from – 2.2% at the first trimester of 2009, in 2010 at the same period the number is + 44.8%.
But there is not only good news.
Latin America and the Caribbean Countries aren’t diversifying the exports as economic principles always indicated. Brazil is the country where diversification is growing faster, but in the main context the sub region exports mainly natural resources – raw materials - and import industrialized products. At a midterm process this has to change and come at an equilibrium point. This depends mainly in pave the road to sustainable innovation.
When analyzing Physical Infrastructure , this point will come again.
If the focus comes again to China and India considering the population and needs to grow their own Human Development Index, importing raw materials it is fundamental. Not only to feed but to allow their industries going on.
Shall not be forgotten the amounts in dollars that are being taken into consideration. Let us take Japan example. According to ECLAC in 2009 this country imported from Latin America and Caribbean area around US$ 18,6 billions and US$ 246,4 billions from Asia.
This example brings again the reference has been done to Archimedes : It is essential to Latin America and the Caribbean countries to transform physical distances into economic proximity.
Concluding this item it is indispensable to strongly register that the growing of economic relations and building new opportunities in commerce between Asia and Latin America and the Caribbean Countries is a main task to both areas.
III - PHYSICAL INFRASTRUCTURE AND SCIENTIFIC LOGISTIC : THE ECONOMIC AND SURVIVING ENGINE TO LATIN AMERICA AND THE CARIBBEAN REGION
Even the region being rich in natural resources or is entering at industrialized process if the physical infrastructure gets poor, selling or buying prices may get out of the road.
From the production zone to the port - export process – or from the port to the consumer – import process, the physical infrastructure net and its logistics must be first class.
As has been already referred one of the most important funding to construct physical infrastructure comes from the export and import system.
There are other vectors like the Foment Banks as CAF, IDB, EDB, BNDES and outside investments from countries like China and Japan, that are looking to a dual action : not only building their own infrastructure but also with a portfolio of selected projects to invest in foreign areas in order to output new transportation dimensions and improve relationship at the same time.
Spite the fact of the improvement of Infrastructure and Logistics at Latin America an Caribbean countries, there are lacks at the transportation system and there are some billions of dollars waiting for good and sustainable projects for those nominated organizations.
A new equation can be elaborated :
PI = P + (ER + FR)
Where PI means Physical Infrastructure, P is Project, ER is Export Resources and FR means Foreign Resources, and through a new branch of action : Public and Private Partnership, well known as PPP. No doubt persists that PPP is the fuel to upgrade the Infrastructure Engine.
About the “P” is indispensable to structure at the sub region a Factory of Projects amalgamated with Development Poles.
Looking at the Latin America and Caribbean area sub region it is necessary to take into consideration three main streams: The Puebla – Panama Initiative, the Caribbean Initiative and the South America Initiative, named as IIRSA, that means in Portuguese Iniciativa da Integração da Infra Estrutura Regional Sul Americana or South America Regional Infrastructure Integration Initiative, created by the twelve countries Presidents in September 2000.
To have ideas fixed it seems significant to give an idea about the last 15 years at the evolution of infrastructure in South America.
In the year 1996 by an initiative from the Public and Private sector of Brazil and Chile was created the South America Integration Routes Committee, CRIAS, with the following Modals:
- Airports
- Communications
- Energy
- Railways
- Ports and waterways
- Roads
- Logistics
Many technical works and projects have been elaborated through CRIAS and one of the most significant is the one from the year 1999 named Development and Irradiation Poles.
CRIAS congregates at its events the private sector with participants from public sector, foment organizations, academy and personalities with notorious knowledge with a range to all twelve South America countries. It is probably a strong example of PPP in the field of planning and management of physical infrastructure and logistics. To learn more about consult the site www.rotasintegracao.org.br.
In the year 2000 as already said, the governments of the twelve countries of South America created IIRSA, that has the support of foment institutions like CAF, IDB, Fonplata and BNDES, this one indirectly.
It is well understood that the harmonic development of South America depends on its Infrastructure.
In August 2009, during the 7th International Congress of Integration promoted through CRIAS, this organization presented a project that was consensus at the event with fundaments to a Strategic Planning.
In this way the three main protagonist would act simultaneously : IIRSA as a technical arm, UNASUR – Union of the South America Nations – as the political arm and the Civil Society, converging to develop an Infrastructure Master Plan and harmonizing Public Policies in Economic, Social, Environment, Cultural and Educational fields. It is scheduled at the 8th International Congress, November 9th next year of 2011 to do an evaluation of the scenario.
It is important to have in mind that the twelve countries have a consensus about the Development Axes that are represented in the IIRSA map at the next figure.
If in nowadays there is a flourish commerce between a faraway Asia and Latin America and the Caribbean area it is mainly because Physical Infrastructure, Logistic, Communications and Energy had improved consistently at this sub region.
IIRSA MAIN AXES
Guyana Shield - Amazonian - Inter Oceanic Central – Paraguay Parana Waterway - South Andean - South Axes (Talcauano – Concepción – Neuquén – Bahia Blanca) - Mercosur Chile – Capricorn (Porto Alegre – Asunción – Jujuy – Antofagasta) – Andean – Peru Brazil - Bolivi.
What is necessary is Public and the Private Sector come to be convergent and congruent on the Physical Infrastructure Project, which will bring to South America a stronger development with a better competitiveness and sustainability scenario.
IV – FINAL WORDS OR HOW RELATIONSHIP RULES THE WORLD.
There is no doubt that infrastructure upgrade, spite the fact that it was at a modest level, helped Latin America to cross the boundary of the 2008 – 2009 world crisis and it allowed to come back to economic growth in its relation with Asia.
Even that Physical Infrastructure and Logistics are essential, they are necessary but not sufficient.
Everyone knows there is a world of opportunities in economic relations between Asia and Latin America and the Caribbean area.
The same way that Quality was the must of the second half of the 20th Century, the 21st Century will be moved through Sustainability, Creativeness and Innovation.
There are many fields in which both sub regions can work together and compete using technology, cultivating best practices, collaborating strategically and leading with what they have the best.
These actions shall be done by cultivating trust and transparency in a convergent and congruent way, covering the fields of policies on economic, social, environment, education, culture, science and technology which will bring to a real brave new world.
At this particular scenario joining Asia and Latin America and Caribbean area. physical Infrastructure will bring us closer to confirm that relationship rules the World.
Thank you all.
To organize this Essay the author
consulted the documents from the
South America Integration Routes Committee 1996 through 2010
CRIAS notes from IIRSA
ECLAC Bulletin, UN, September 2010
SOUTH AMERICA INTEGRATION ROUTES COMMITTEE
Rua Tobias da Silva 253 – 5ºandar – 90570.020 – Porto Alegre – BRASIL
www.rotasintegracao.org.br ccibcrri@terra.com.br
Phone 55 51 32 22 45 70
EMERGING MARKETS FORUM – October 11 – 13 2010 Warrenton. Virginia, USA
