MercoPress. South Atlantic News Agency

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  JoseAngeldeMonterrey

  The World Bank, the Cepal, and other institutions deny that the commodities boom we are seeing in Latin America is not going to cause the infamous “resource curse”, with the ensuing deindustrialization and economic problems. The example provided, Potosi, it´s not very telling of what it´s happening now with commodities in South America, there were no economies of scale there like the ones we are having now.
  
  However they insist on saying that the region will not get a severe case of “resource curse” IF and only if the countries exercise “good governance”. I wonder who are they talking to. Who asked the big question?
  
  There is indeed a problem with commodity dependence in LatAm. Augusto de la Torre mentions a gold mine in Peru, yet another patetic example, everyone knows that mining, of any kind, is a vertically integrated economic activity, in other words, a monopoly, with marginal wealth dispersion at the bottom and an offensively high accumulation of wealth at the top, the example Augusto provides is vey telling: 10% increases in orders from the mine meant 1.7% increase in local incomes, and we are talking about Gold here, imagine if we take a highly volatile commodity as copper, it will result in less than .05% increase in income per every 10% increase in orders in the same mine!
  
  Chile, Mexico and other countries have known some very hard years when oil or copper prices dropped down dramatically in global markets. Today the region thrives enjoying a high demand for commodities from China, India and other countries in the east. History tells us that this not going to last forever. The only sure way out of economic dependence is to develop an industrial base capable of competing in world markets with value added goods.

  Sep 15th, 2010 - 03:30 am - Link - Report abuse 0
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