As the United States and Europe continue to fight long term stagnant economic growth amid crushing national debts, another region is shining bright. Latin America, an area once referred to as the “development of underdevelopment,” has emerged from the global financial crisis as a model of growth for emerging markets. A group of Latin American countries managed to not only survive the financial instability that rocked global markets, but actually grow during this period, and the World Bank forecasts that the region’s economy will grow 4.5 percent this year. This regional success was fueled by a block of countries in Chile, Mexico, Peru, and Columbia, dubbed the ‘Pacific Pumas’, which have positioned themselves through sound policy and open trade to become drivers of Latin American economic growth in the burgeoning Pacific markets.
Led by the continued emergence of Chile as a regional economic power, each of these Puma countries has enacted pro growth policies to liberalize free trade agreements and open markets and diversified their economic base to ensure stability. Mexico has signed more free trade agreements than any country in the world, and today, “Mexico exports more manufactured products than the rest of Latin America put together.” Even as the global economic crisis resulted in a weaker demand for Mexican exports, this was largely offset by an increase in domestic demand and private consumption. This fact suggests the 4-5 percent growth which Mexico has seen over the past 10 years is sustainable. Many of these developing countries have long been predominantly dependent upon export revenues for economic growth. This same economic model would have been crushed by the global financial shock begun in 2008, yet Mexico has been able to diversify itself from not just being an export nation, but also a consumer on the global market.
Similar results have played out in Chile. Ranked the ‘most free’ economy in Latin America and 7th in the world, Chile has averaged 4 percent growth annually since 2009, and the lack of trade barriers has seen direct foreign investment quadruple in the country since 2004. The country has booming exports, while still effectively diversifying its economy to avoid the over-reliance on export commodities that have afflicted “oil-cursed” neighbors such as Venezuela.
Columbia joins fellow Puma countries Chile and Mexico on the Forbes India ‘7 hottest emerging markets to live and work in’ due to its sustained 4-5 percent growth over the past decade, expanding free trade agreements with the EU and low corporate tax rates which have attracted growing foreign investment.
And finally there is Peru-a country that has averaged 7 percent growth over the past eight years, and is set to lead Latin American growth over the next five years. Cited as “one of the most open economies of Latin America,” governmental regulations are low, and consumer confidence is high, with Peruvian businessman found as the most optimistic among 44 surveyed countries.
With an eye towards the future of Pacific markets, this group of Puma countries is poised to see continued growth moving forward. This Pacific alliance “is born not only as a group of countries seeking economic integration and free trade, but also designed to project Latin American countries as a whole toward the Asia-Pacific economy.” The Asia Pacific region offers great potential and growing markets to a Pacific alliance which has achieved its success in large part due to free and expanding trade. But the marriage between the two is not perfect.
With economic power underlying all geopolitics, matters of trade are by nature highly politicized. Latin America’s growth largely reflects a deepening engagement with Asia, where China and other countries are also growing fast. Despite all the talk of the US welcoming China as an economic superpower, it is clear that America’s ‘Pivot to Asia’ is designed to prevent Chinese hegemony in the Pacific and ultimately promote US interests and influence in the Asia-Pacific region. This Pivot to Asia has both military and economic components, one of the latter being the pursuit of a US led free trade agreement in the Pacific known as the Trans Pacific Partnership (TPP). The TPP does not include China. It does include Puma countries Mexico, Peru, and Chile, with Columbia reportedly expressing interest. But each country has its own set of interests to pursue and must hedge its bet on the future of Pacific power in the 21st century.