Transcript Economics-Political

Latin America
Economic and Geopolitical
Climate
GCU 122 – World Regional Geography
Jason Donoghue
Chandler-Gilbert Community College
Economic and Geopolitical Climate
Latin America
• Agricultural Industry
– Vegetation and Soils
– Agricultural Zones
– Agricultural Methods
• Mineral Deposits
• Occupational
Structure
– Standards of
Education
– Standard of Living
• Industry
– Types, Locations, and
Problems
• Governmental
Systems
– Geopolitical Climate
– U.S. Involvement
• Current Events
– Core Issue Paper
A Harsh Environment
• Large diversity and prevalence of pests and
diseases weaken and kill plants, animals and
humans in the tropics.
– Latin American populations would have to use
technology and social organization to adapt the harsh
environments to their needs.
• Even though these conditions exist some areas
are much more productive than others.
– Flatter river valleys, with annual renewal of soils by
sediment deposition and easy access to water.
– Regions where ash from volcanic activity provides
nutrients to the soil.
Agricultural Zones
• Wide belt of commercial
agriculture not unlike the midwest in the U.S. stretches
through the Argentine pampas.
• Surrounding major urban
centers in Argentina, Brazil
and Uruguay are zones of
mixed farming, including
production of vegetables and
specialty goods.
• Irrigated agriculture is
practiced along the arid
coastal plain of Peru and
northern Chile, as well as on
the other side of the Andes in
the pampas.
Altitudinal Zonation
• Tierra Caliente
– “hot lands” – Bananas, sugar
caner, cacao and pineapples.
• Tierra Templada
– “temperate lands” – corn,
beans, squash, green
vegetables, wheat and coffee.
• Tierra Fria
– “cool lands” – wheat, fruit
trees, root vegetables,
cabbage, broccoli.
• Tierra Helada
– “frozen lands” – some grains,
root vegetables.
Agricultural Methods
• Slash and Burn
– Used to clear the rain
forest to create fields for
farming and grazing.
– At times destructive
farming practices are used,
causing the soil to become
exhausted of minerals.
• Terraced Farming
– Technique for growing
crops on hillsides or
mountain slopes.
– Particularly effective in the
highland regions.
– Protects from soil erosion.
Hacienda vs. Plantation
• Hacienda
– Spanish Institution
– Not efficient, but promoted social prestige
– Workers lived on the land
• Plantation
–
–
–
–
–
Northern European origins
Export oriented monocrops
Imported capital and skills
Seasonal labor
Efficiency is key
Agricultural Institutions
PLANTATION
•PRODUCTION FOR EXPORT
•SINGLE CASH CROP
•SEASONAL EMPLOYMENT
•PROFIT MOTIVE $$$
•MARKET VULNERABILITY
Agricultural Institutions
PLANTATION
•PRODUCTION FOR EXPORT
•SINGLE CASH CROP
•SEASONAL EMPLOYMENT
•PROFIT MOTIVE $$$
•MARKET VULNERABILITY
HACIENDA
•DOMESTIC MARKET
•DIVERSIFIED CROPS
•YEAR ROUND JOBS
•SMALL PLOT OF LAND
•SELF-SUFFICIENT
Agricultural Institutions
PLANTATION
HACIENDA
•PRODUCTION FOR EXPORT
•SINGLE CASH CROP
•SEASONAL EMPLOYMENT
•PROFIT MOTIVE $$$
•MARKET VULNERABILITY
•DOMESTIC MARKET
•DIVERSIFIED CROPS
•YEAR ROUND JOBS
•SMALL PLOT OF LAND
•SELF-SUFFICIENT
EJIDO
•SMALL SURPLUSES
•LAND “OWNERSHIP”
•COMMUNAL VILLAGE
•COLLECTIVE
Location of Natural Resources
• Gold, silver, iron, copper,
bauxite, tin, lead and nickel.
– All minerals that are found in
abundance in Latin America.
• In addition mines throughout
the region produce precious
gems, titanium, silver and
tungsten
• Oil, coal, natural gas and
uranium are all plentiful in
Latin America
– Venezuela and Mexico both
have large reserves of oil.
Natural
Resources Mexico
Mexico - A major
oil producer About 3.5 million
barrels per day.
Saudi Arabia
produces about 9
mil bpd.
Potosi Silver Mine - Bolivia
• Still in use today, and
producing tin and silver.
• Was once the most
productive silver mine in
the world.
• Average life expectancy
for workers is 40 years
old.
– Estimates state that nearly
8 million indigenous
workers lost their lives
working the mines.
Educational Standards
Classroom in Mexico
Economy of Latin America
• Cities are
centers for
manufacturing
(secondary),
services
(tertiary)
• Most are coastal
in location
Tourism
Orientation to Water Influences Economy
Panama Canal – Huge Impact on Trade
Standards of Living
• Estimates show that nearly 1/3 of children
living in Latin America are economically
active because most families need their
income.
• U.N. reports nearly 15,000 homeless
children are on the streets in Mexico
alone.
• Rural-Urban migration is common among
young adults in Latin America.
World Wide Income Levels
Poverty
• Home to the
poorest
countries of
the Americas:
– Honduras
– Nicaragua
Primary Sector Dependence
• El Salvador
– Agriculture accounts for 24% of GDP and 40%
of the labor force and contributes to 60% of
exports.
– Economic losses because of guerrilla sabotage
total $2 billion since 1979.
• Honduras
– Agriculture accounts for more than 25% of
GDP, employs 62% of the labor force, and
produces two-thirds of exports.
– Economic loss because of natural disaster
HIPC
• Honduras and Nicaragua are on the HIPC
list
– Heavily indebted poor countries
– The Initiative is designed to reduce debts to
sustainable levels for poor countries that
pursue economic and social policy reforms,
– Used specifically in cases where traditional
debt relief mechanisms will not be enough to
help countries exit from the rescheduling
process.
The Weight of Debt
• Nicaragua's external debt currently stands at 6.7 billion
dollars.
- 25% of the Nicaraguan budget is spent on debt
payments
– Contrast to … 14% on health care
– 11% on education
• Almost half the population falling below the poverty line.
• High levels of infant mortality and maternal mortality, and
a high level of infectious and parasitic diseases.
• Malnutrition is widespread with around 20 per cent of
children under five being chronically malnourished or
stunted
Economic Integration
• Mercosur
– Launched in 1995
– A Southern cone common market
– Includes Brazil, Argentina, Uruguay, and Paraguay
• Andean Community
– Initially formed in 1969 (Andean Pact)
– Restarted in1995
– Members are Venezuela, Colombia, Peru,
Ecuador, and Bolivia
Economic Integration
• Group of Three (G-3)
– Formed in 1995
– Includes Mexico, Venezuela, and Colombia
– A free trade association which aimed to phase out
all tariffs by 2005
• NAFTA
– Launched by the U.S., Mexico and Canada in
1995.
– Seeking to expand into South American to include
Chile.
Maquiladoras
Tijuana
Nogales
Ciudad
Juarez
Chihuahua
Monterrey
Reynosa
Matamoros
GDP per Capita Along the US/Mexico Border
Maquiladoras
• Initiated in the 1960s as coupon houses
• Assembly plants that pioneered the migration of
industries in the 1970s
• Today
– >4,000 maquiladoras
– >1.2 million employees
Maquiladoras
• Modern industrial plants
• Assemble imported, duty-free components/raw
materials
• Export the finished products
• Mostly foreign-owned (U.S., Japan)
• 80% of goods reexported to U.S.
• Tariffs limited to value added during assembly
Maquiladoras
• Maquiladora products
•
•
•
•
•
Electronic equipment
Electric appliances
Auto parts
Clothing
Furniture
Maquiladoras
• Advantages
– Mexico gains jobs.
– Foreign owners benefit from cheaper labor
costs.
• Effects
– Regional development
– Development of an international growth
corridor between Monterrey and Dallas - Fort
Worth
NAFTA
• Effective 1 January 1994
• Established a trade
agreement between
Mexico, Canada and the
US, which:
– Reduced and
regulated trade
tariffs, barriers, and
quotas between
members
– Standardized
finance & service
exchanges
NAFTA
How has Mexico
benefited from NAFTA?
Mexico and NAFTA
• Foremost, it promises a higher standard of
living.
• NAFTA creates more jobs for Mexicans as
US companies begin to invest more heavily in
the Mexican market.
• Mexican exporters increase their sales to the
US and Canada.
• Is that the entire story?
U.S. Trade With Canada and
Mexico
• Canada remains as the United States’ largest
export market.
• Since 1977, Mexico has moved into second
place (displacing Japan).
• 85% of all Mexican exports now go to the
United States.
• 75% of Mexico’s imports originate in the United
States.
• What does that mean?
Geopolitical Climate
• Most countries in the region save for
Cuba, have some sort of multiparty or
democratically elected government.
– Mexico – Institutional Revolutionary Party
(PRI) ruled the country for 71 years, and was
unseated by a coalition led by Vincente Fox.
– Venezuela – Hugo Chavez – elected by
popular election – fundamentalist views could
be a sign of changes in store for Latin
America.
Internal Wars
• Nicaragua
– Sandinistas v. Contras
• Panama
– Remember Manuel Noriega?
• Honduras
– Drawn into conflicts in Nicaragua and El Salvador
• El Salvador
– 12-year civil war ends in 1992
• Guatemala
– A peace agreement in 1996 ends a 36-year civil war
• Costa Rica?
– The only stable country
– Best standards of living in the region
• Intel comes to town …
A History of American Involvement
• 1981 – U.S. funds
contras to fight Sandinista
gov’t
• 1983 – U.S. Marines in
Grenada to overthrow
gov’t allied with Cuba
• 1989 – U.S. paratroopers
enter Panama to
overthrow gov’t and
arrest Manuel Noriega
Corruption
• Virtually every country in the
region has had some form of
political corruption in recent
years.
– High level government officials
moving money to banks
outside their nations, which
has robbed many Latin
American countries of much
needed investment capital.
• International Drug Trade
– Major factor contributing to
corruption, violence, and
subversion of the democratic
process in Latin America.
Core Issue – Case Study
• Due next week (2/5) – 3 page case study
on one of the core current issues that is
facing any country or region in Latin
America.
• Examples:
– Deforestation of Amazon
– Pollution in Urban Centers – Mexico City
– Mitigation of the Effects of El Nino