Geopolitical movements in Latin America have made a significant impact on the region when we consider economic and social perspectives. While many local economies in the continent remain ‘emerging’, these economies are still able to make their mark on the global scene. Yelian Garcia, an investor, MBA and CFA candidate, examines the economic and geo-political movements that are making a definite impact on international trade and international relations.
14 of the 18 Latin American countries held presidential elections between 2017 and 2019. However, these democratic expressions have not gone off without some glitches; Venezuela and Brazil come immediately to mind, but it is fair to say that various leaders from other countries are attempting to secure power outside their respective constitutional guidelines.
Historically, Latin American countries with a solid democratic attempt could expect support from the United States; however, the current administration has sought to diminish its globalization efforts and has largely turned inward as it appears rather preoccupied with a seemingly never-ending series of scandals, investigations, and off-putting tweets.
Many of the hurdles faced by the various attempts at democracy have come in the form of the mis-use of communication technology and social medial as well as technical vulnerabilities within the information technology platforms that have facilitated elections.
The technology economy is having an increasing impact on the Latin American market. Special mention should be given to Mexico, Colombia, Brazil, and Argentina as they all show a huge potential for growth in e-commerce. Global companies like Amazon and local suppliers and producers will be able to carve out slices of this growing market as Latin America continues embrace the online and e-commerce experience.
In the Latin American financial markets, technology has begun to have a major impact. Foreign exchange or FX trading has become popular in the retail markets in the region. The volatility of certain Latin American currencies like the Mexican peso has drawn investors, particularly tech-savvy millennials, to place their bets on the market. FX trading can be a rewarding activity, but it carries significant risks.
Blockchain is beginning to make an impact on the Latin American financial markets as well. With long histories of corruption and volatility, Latin American currencies are often perceived as more risky investments than crypto-currencies. At the same time, Latin American investors are more accustomed to risk and volatility than developed economy investors. They are more willing to take risks for a potential reward.
The population of Latin America remains underbanked by Western measures. Crypto offerings can help the average consumer bridge this gap and at least in their mind find a secure place for their money. Cryptocurrencies thus far appear largely unable to facilitate large scale transactions with ease and efficiency, but this fact has not abated the Latin America appetite just yet, especially among millennials.
Many people are familiar with disinformation or “fake news” thanks to controversial and historical 2016 United States presidential election. The “fake news” phenomenon has made its way into Latin America as well and has undoubtedly left its mark.
It is relatively inexpensive and essentially hassle-free to manufacture and disseminate information and mis-information aimed at achieving all sorts of political aims. These inexpensive, effective and readily available tools have proven too tempting for Latin American leaders, governments, and their opposition to ignore.
Shifts in Technology and Politics
According to LATAM financial enthusiast Yelian Garcia, the region remains a volatile market; but volatility implies great profit potential if one is positioned well, able, and willing to stomach the volatility. Information technology and e-commerce continue to take hold in the region contributing to both investment opportunities and volatility.