Latin America is experiencing strong economic growth and its social conditions are improving at a rapid pace. Incomes are rising, the middle class is expanding and consumer demand is increasing.

This is reflected in the 2007 Pew Global Attitude's 47-nation survey that says Latin American opinions on national conditions have improved. Among the highest rates of all countries surveyed, a full 76 percent of Mexicans, 63 percent of Brazilians and 59 percent of Argentineans questioned said they are satisfied with their lives. By comparison, 65 percent of Americans said they are satisfied.

Support for free markets also is increasing across the continent, even in Venezuela, the report says. "Clear majorities in five of the seven Latin American countries surveyed say that most people are better off in a free market economy and views are mixed in the other two."

The Numbers

From 2004-2005, Latin America gross domestic product (GDP) growth rates surpassed the world average for the first time in 25 years, the United Nations (UN) reports. Will this continue? The Economist Intelligence Unit says from 2007-2011, Argentina's average annual growth rate is projected to slip below 5 percent; Brazilian and Mexican rates will remain just under 4 percent.

Among developing countries, in 2005 China was the largest recipient of global foreign direct investment (FDI), followed by Singapore, Mexico and Brazil, the UN reports. On a historical-cost basis, from 2000-2006 the U.S. direct investment position in Latin America rose 51 percent to $403 billion, the Bureau of Economic Analysis says. Although impressive, this was overshadowed by the doubling of the U.S. investment position to $432 billion in the Asia Pacific region.

What will the future hold? The Economist predicts the U.S. will rank first, China third, Brazil 14th and Mexico 17th in terms of capturing FDI through 2011.

Big Picture

Much of Mexico's ability to attract investment lies in its relationship with the U.S. Privileged access under NAFTA and its proximity has given Mexico an edge in the production of automotive, heavy manufacturing and other industries where low transport costs and just-in-time logistics are crucial to competitiveness. Plus, Mexican industry is beginning to shift into higher technology manufacturing activities, while maquiladoras are employing more skilled workers to assemble complex products, such as medical supplies, aerospace and telecom components.

Rising commodity prices continue to boost Brazilian and Argentinean growth. Much Argentinean inbound FDI flows into its oil and gas, arable land and mineral resource sectors. Additional attractiveness stems from its large pool of inexpensive, yet skilled workers, and its potential base for manufacturing, the EIU says.

As the fifth most populous country, Brazil is the world's third largest agricultural exporter and a major producer of commodities and processed goods, such as iron ore, steel and aluminum. The country's broad industrial base, which ranges from heavy engineering to consumer goods, is anticipated to open new inward paths for FDI.

At $530 billion in 2006, U.S. merchandise trade with 20 Latin American Republics increased slightly faster than overall U.S. trade since 2004. Several U.S. bilateral trade agreements contributed gains. If passed, U.S. trade agreements soon up for a Congressional vote with Peru, Columbia and Panama, as well as further North-South economic integration will help Latin America become more globally competitive and further improve its standard of living.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




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