Speakers:

Hernando de Soto, President, Institute for Liberty and Democracy (Lima, Peru)

Sebastian Edwards , Henry Ford II Chair in International Management, Professor of Business Economics, The Anderson School at UCLA

Robert Mundell, Nobel Laureate, Economic Sciences; Professor of Economics, Columbia University (New York)

Luis Pazos, Congressman (PAN), Republic of Mexico; Director General, Research Center for Free Enterprise (CISLE) (Mexico City)

Komal Sri-Kumar, Managing Director, Chief Global Strategist and Chairman–Comprehensive Asset Allocation Committee, Trust Company of the West (Los Angeles)

Moderator:

Glenn Yago, Director, Capital Studies, Milken Institute

Summary:

In the opening remarks, Sebastian Edwards was asked whether "From Despair to Hope" should be renamed "From Hope to Despair." Despite the recent economic and political instability in Argentina and Venezuela, the panelists at today′s conference were surprisingly optimistic about the future of Latin America.

Panelists blamed Argentina′s recent demise on irresponsible government deficit spending, but overwhelming believed that there would be a minimal contagion effect in the region. Sri-Komar cited the stability of Brazilian and Mexican currencies amidst the turmoil in Argentina, yet cautioned that the situation may worsen with social and political instability in the country.

Free trade and hemispheric integration was another theme emphasized. Luis Pazos stressed the importance of both reducing U.S. agricultural subsidies and gradually opening the southern border. Pazos explained that Mexico buys more from the U.S. than Europe and Asia combined, and the free movement of human capital is necessary to the growth of Mexico. He dismissed fears of a mass exodus of Mexicans by citing the recent integration of Europe. As Pazos stated "Spain remains Spain, and Germany remains Germany."

Edwards did not limit discussions of free trade to Mexico. According to the economist, with the exception of Brazil, there are few countries in the region that are not currently in favor of free trade. Edwards blamed the slow advancement in this area on the U.S.′s country by country approach.

However, Hernando de Soto, Robert Mundell, Edwards and Pazos all agreed on one aspect that has been hindering the growth in prosperity in the region: excessive government bureaucracy. As de Soto explained, with the average two years it takes to legally incorporate a business in Mexico, it is not surprising that the informal economy represents $215 billion dollars, or 31 times greater the amount of foreign direct investment. This excessive bureaucracy often leads to corruption. de Soto stated that if these institutional matters were resolved, the region′s biggest challenges — drugs, criminal behavior and terrorism could be erased. The panelists agreed that substantial measures must be taken to reduce the bureaucracy in most Latin American countries, and that this would require great political change.

de Soto closed by noting that Latin America is on the verge of change; it is just a question of how long it will take for that change to take place.

Background Info:
2001 Global Conference Latin America panel summary
2000 Global Conference Latin America panel summary

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