Changing Asian and Latin American Relations

by Javier Santiso for The Globalist, September 8th, 2010.

China is fast displacing Japan as Asia’s main partner in Latin America — and the Middle Kingdom’s success in Central and South America is leading to increased investment in the region on the part of other Asian countries. As Javier Santiso writes, this flirtation between the two continents merely reflects once again how global economic relations are being reconfigured.

Relations between Latin America and Asia are changing dramatically. For decades, Japan dominated as the main commercial and financial partner in the region. Now, China is taking over. It is a further reflection of the country’s new status as the second world economic power, behind the United States.

Between 1990 and 2008, trade relations between Latin America and Japan continued to expand, but the pace was much less sustained than with China. 

In 2008, trade between Latin America and Japan totaled some $60 billion (about $30 billion for imports and exports each), while trade with China soared to a total of $140 billion (about $70 billion each for imports and exports).The turning point was 2002 when China, for the first time, overtook Japan as Asia’s main trading partner in Latin America. (continue reading… )

Piñera Pitches Mining Tax amid Miner Rescue

by Levi J. Jordan for Americas Society/Council of the Americas, September 8th, 2010.

Buried almost 2,300 feet below the surface since August 5 and forced to share a 540-square-foot space in 93-degree heat, 33 Chilean miners await rescue. Meanwhile, above ground in Santiago, debate unfolds over safety regulations and taxing profits on an industry considered the backbone of the Chilean economy. The government of President Sebastián Piñera has introduced a bill with an eye to helping earthquake reconstruction by increasing taxes on the mining industry, already responsible for making Chile the world’s largest copper-producing country. But Congress already rejected a similar bill in July.

The Piñera administration unveiled this week the revised mining royalty bill, which could generate as much as $1 billion in revenue. The legislation would increase taxes on mining profits for the next two years by raising both the minimum tax rate (from 3.5 to 4 percent) and the maximum tax rate (from 7 to 9 percent). As much as 30 percent of the funds would be used to boost recovery of areas affected by the February 27 earthquake. In exchange for adopting the voluntary tax increases, Piñera’s proposal offers incentives such as government assurances of tax stability until 2018, when rates are slated to rise to between 5 percent and 9 percent. While rejection of a similar proposal earlier in the year was the first real political setback for the newly inaugurated president, his government now hopes to push through the revised bill before Chile’s bicentennial celebrations on September 17. Piñera, whose popularity has soared as a result of his government’s handling of the mine collapse, could make use of his newfound political capital to push through the revised bill. (continue reading… )

 

Educational Gaps Limit Brazil’s Reach

by Alexei Barrionuevo for The New York Times, September 4th, 2010.

When Luiz Inácio Lula da Silva was sworn in as Brazil’s president in early 2003, he emotionally declared that he had finally earned his “first diploma” by becoming president of the country.

One of Brazil’s least educated presidents — Mr. da Silva completed only the fourth grade — soon became one of its most beloved, lifting millions out of extreme poverty, stabilizing Brazil’s economy and earning near-legendary status both at home and abroad.

But while Mr. da Silva has overcome his humble beginnings, his country is still grappling with its own. Perhaps more than any other challenge facing Brazil today, education is a stumbling block in its bid to accelerate its economy and establish itself as one of the world’s most powerful nations, exposing a major weakness in its newfound armor.

“Unfortunately, in an era of global competition, the current state of education in Brazil means it is likely to fall behind other developing economies in the search for new investment and economic growth opportunities,” the World Bank concluded in a 2008 report. (continue reading… )