Economies of Latin America

Market, Mixed, Command & Socialist

Mexico

• Currency is the peso; equal to .07 dollars• 2nd largest economy in Latin America• Is considered a free market economy• Less than 200 government owned businesses

Mexico & Brazil:Tariffs in the real world

• January 2013: The 4 countries of the Pacific Alliance announced they would lift tariffs on 90 percent of goods before March 31 in a further push to open up their growing markets.

• Unlike the Pacific Alliance, Mercosur, South America’s trade bloc decided in December 2011 to impose tariffs on a host of cheap imports to protect the region from a slowing global economy. There will be a 35% tariff on 100 additional goods until 2014.

Brazil

• Currency is “real”; equal to .50 in dollars• Has a mixed market economy• #1 economy in Latin America• Government controls health care & postal service

Brazil: Quotas in the real world

• A quota is a limit on the number of goods that can be imported.

• To avoid a quota set by the government, Volvo opened a factory in Brazil to produce automobiles.

Cuba

• Currency is peso; equal to $1 dollar• Has a command economy, but is beginning to allow some

private ownership• Government controls all resources and property

Cuba:Embargo in the real world

• Began as a military embargo to stop Soviet weapons from being imported• Economic sanctions until Cuba moves toward democracy and greater

respect for human rights• In 1996, more restrictions kept U.S. citizens from doing business in or with

Cuba, and prevented giving public or private assistance to any successor government

• In 1999 the U.S. forbid foreign subsidiaries of U.S. companies to trade with Cuba

Venezuela

• Currency is a bolivar; equal to .16 dollars• Has a free market economy, but with a socialist bent• Relies heavily on the oil industry (accounts for 95% of its

exports)

Socialism

• Socialism as – economic/political theory supporting group or governmental ownership and administration of production and distribution of goods

• Was very popular during the 19th/20th Century when it meant a society committed to meeting the basic needs of all people

• The collapse of the Soviet Union began the change to more capitalistic societies, other than in Venezuela where Chavez spoke against capitalism

Communism Socialism

Political & economic Only economic

Distribution of goods based on individual need

Distribution of goods based on individual effort

Capitalism can’t exist Can have capitalism

Doesn’t require many people to run Many people can control the economy

Power concentrated in the central government Power concentrated in the workers

NAFTA

• A trade agreement made between the U.S., Canada & Mexico in 1994• Lowered trade barriers to create a free trade zone• Key points:• Eliminate tariffs• Remove investment restrictions• Remove customs barriers between U.S. & Mexico• Establish tough standards in industry• Improve working conditions