Brazil & Mexico: Latin America's Two Biggest Economies Are Surprisingly Similar

Brazil is portrayed as the poster child for Latin American potential, while Mexico is the symbol for what's gone wrong. But with near identical growth rates and similarly ambivalent trading relationships with China, Brazil and Mexico share simila

Mexican President Felipe Calderón meets his Brazilian counterpart Dilma Rousseff (Roberto Stuckert)
Mexican President Felipe Calderón meets his Brazilian counterpart Dilma Rousseff (Roberto Stuckert)
Rodrigo Lara Serrano

Over the past decade, the respective global perceptions of Mexico and Brazil have grown ever more divergent. Mexico is portrayed as the caricature of a failing Latin American state, on the verge of being controlled by drug lords. Brazil, meanwhile, is seen as something like China's happy little brother.

But the truth is far more complicated, and it shows that the two countries, with Latin America's two largest economies, are not quite as different as some might think. Just look at their expected growth numbers for 2012: 3.3% for Mexico and 3.6% for Brazil.

In fact, a closer look shows that the two countries share the same problem: the impossibility of accelerated development; and the same challenge: overcoming that impossibility. Both countries find themselves at a historic crossroad in their development. They can either choose to take advantage of both recent difficulties and successes to change themselves. Or they can miss this unique opportunity. Though Brazil does seem to be much more ready to take the leap than Mexico, all the cards have yet to be played.

Rubens Ricupero, Brazil's former Finance Minister, says that: "The economies of Mexico and Brazil are oriented differently, but their growth rate is very similar. That shows that both have structural problems, although those problems are probably different."

For example, says Ricupero, Brazil's economy is essentially the opposite of China. "Our investment rate is 19% (China's is 40%), our savings rate is 16% (China's is 40%), and consumer goods make up about 63% of our production, while for China that number is 34%." With those numbers, even a growth rate of 6% is nothing but a dream.

One of Brazil's strengths is agriculture, with major exports of both soy and corn. But the high amount of fertilizer needed to produce soy in the nutrient-poor tropical soil, and the resulting rising costs of agricultural production, mean that Brazil cannot depend on the agricultural sector to continue powering growth.

Chinese dumping, domestic demography

While Mexico is the world's largest exporter of avocados, it is also a net food importer; and even under ideal conditions, it would remain dependent on the United States agriculturally. That means that Mexico has to step up other areas of production, especially in industry and services, to make sure that it continues to be able to pay for its food imports.

But like Brazil, Mexico's trade relationship with China is both an asset and a liability. China's purchases from both countries are overwhelmingly raw materials, which carries a risk of the so-called Dutch Disease, or excessive reliance on a few raw material exports. Brazil has accused China of "dumping" in around 70 cases. China is Mexico's second largest supplier of imports, but only its seventh largest customer. In both countries, there is a risk that Chinese industries will overwhelm domestic production of many goods, leaving the economies' competitiveness crippled.

Both countries face demographic challenges in the coming years. Brazil is already feeling the crunch of an aging workforce and generous pensions. Mexico, with a higher birthrate and higher retirement age, still has a perfectly healthy ratio of workers to retirees, but loses a large proportion of its most qualified workers to emigration. Such a "brain drain" can be just as detrimental to the country's long-term growth as Brazil's lower birth rate.

These are just some of the two countries' challenges. They both also have a poverty rate that is far too high, an undereducated population and serious infrastructure problems. In both places, though, a solid tourist industry helps stabilize the economy.

As the Brazilian philosopher Roberto Mangabeira Unger says, all Latin Americans share a vitality and love of life and creativity. The challenge for all of the governments and companies in the region is to abandon doctrines and prejudices to free up this great resource. When they do that, Mexico and Brazil are, luckily, quite different. That is good. Prosperity, freedom and equality taken together give birth to flourishing creativity. For the world does not need any more twins.

Read more from AméricaEconomía in Spanish

Photo - Roberto Stuckert

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!
Feed The Future

COP26 Should Mark A Turning Point In Solving The Climate Crisis

Slow Food calls for an action plan to significantly reduce and improve the production and consumption of meat, dairy, and eggs by 2050.

A new dawn?

If, as the saying goes, we are what we eat, the same also goes for the animals that end up on our plate. How we feed our own food can have knock-on effects, not just for our own health but also for the planet. We are now aware of the meat and dairy industry's significant carbon footprint, responsible for more than a third of global anthropogenic greenhouse gas emissions.

Large-scale cattle productions that favor pure profit over more sustainable practices also add to environmental woes through biodiversity loss, deforestation and pesticide use — with some of the world's richest countries contributing disproportionately: The five biggest meat and milk producers emit the same amount of greenhouse gases as the oil giant Exxon.

The good news is that we could meet — if we would — some of these challenges with an array of innovative solutions, as the fields of farming, breeding and nutrition look at ways to shift from centralized intensive agro industry toward a more localized, smaller-scale and more organic approach to production.

Cows fed corn and grain-based diets may grow larger and are ready to be processed at a younger age — but this requires significant energy, as well as land and water resources; in contrast, grass and hay-fed cows support a regenerative farming model in which grazing can contribute to restoring the health of soil through increased microbial diversity. Compared to highly processed GM crops, natural-grass diets with minimal cereals also lead to more nutrient-rich livestock, producing better quality meat, milk and cheese. Farmers have started focusing on breeding native animal species that are best adapted to local environmental contexts.

This new approach to agricultural practices is closely linked to the concept of agroecology, where farming works in tandem with the environment instead of exploiting it. If mowed a few times a year, for instance, natural meadows produce hay that is rich in grasses, legumes and flowers of the sunflower family, like daisies, dandelions, thistles and cornflowers. These biomes become reservoirs of biodiversity for our countryside, hosting countless species of vegetables, insects and birds, many of which are at risk of extinction. Until recently, these were common habitats in meadows that were not plugged or tilled and only required light fertilization. Today, however, they are becoming increasingly threatened: in the plains, where the terrain is used for monocultures like corn; or in hills and mountains, where fields are facing gradual abandonment.

It is worth noting that extensive agriculture, which requires smaller amounts of capital and labor in relation to the size of farmed land, can actually help curb climate change effects through carbon dioxide absorption. Researchers at the University of California, Davis determined that in their state, grasslands and rangelands have actually acted as more resilient carbon sinks than forests in recent years. Through a system of carbon uptake, these lands provide a form of natural compensation, going as far as canceling the farms' impact on the planet, rendering them carbon "creditors."

In the meantime, grasslands and pastures allow animals to live in accordance with their natural behavioral needs, spending most of the year outside being raised by bonafide farmers who care about animal welfare. A recent study by Nature found that allowing cows to graze out of doors has both psychological and physical health benefits, as they seem to enjoy the open space and ability to lie on the soft ground.

Some might worry about the economic losses that come with this slower and smaller business model, but there are also opportunities for creativity in diversifying activities, like agro-tourism and direct sales that can actually increase a farm's profit margin. This form of sustainable production goes hand-in-hand with the Slow Meat campaign, which encourages people to reduce their meat consumption while buying better quality, sustainable meat.

Others may assume that the only environmentally-conscious diet is entirely plant-based. That is indeed a valuable and viable option, but there are also thoughtful ways to consume meat in moderation — and more sustainably. It also should be noted that many fruits and vegetables have surprisingly large carbon footprints: The industrial-scale cultivation of avocados, for example, requires massive amounts of water and causes great hardship to farming communities in Latin America.

But forging a broad shift toward more "biodiversity-friendly" pastoralism requires action by both those producing and eating meat, and those with the legislative power to enact industry-wide change. It is urgent that policies be put into place to support a return to long-established agricultural practices that can sustainably feed future generations. Although no country in the world today has a defined strategy to decrease consumption while transforming production, governments are bound to play a key role in the green transition, present and future.

In Europe, Slow Food recommends that the Fit for 55 package include reducing emissions from agriculture activities by 65% (based on 2005 levels) by 2050. Agriculture-related land use emissions should also reach net-zero by 2040 and become a sink of -150 Mt CO2eq by 2050. But these targets can only be met if the EU farming sector adopts agroecological practices at a regional scale, and if consumers shift to more sustainable diets. If we are indeed what we eat, we should also care deeply about how the choices we make impact the planet that feeds us.

Keep up with the world. Break out of the bubble.
Sign up to our expressly international daily newsletter!