How Latin America Misplayed Its Commodities Boom

Latin American countries have used a decade-long revenue boom to boost prosperity and stabilize their economies. But there is a *productivity problem*.

On the right track now?
On the right track now?
Ramiro Albrieu, Andrés López and Guillermo Rozenwurcel


BUENOS AIRES — Economic growth, which was somewhat elusive for Latin America in the 20th century, finally returned at the beginning of this one. In the last decade, poverty decreased by half, and income distribution improved moderately. As a result, the middle class expanded significantly, and by 2009 encompassed a third of the population.

So, are we done? Have we made it? The temptation is to say yes, but not everything that shines is gold, as they say. Maintaining prosperity requires persistence, and potential pitfalls and frustrations lurk along the roadside.

The region's excellent economic performance in the past decade was firmly tied to the bonanza in prices of commodities and natural resources. For an economic development strategy based on raw materials to work, many factors must be considered: an adequate analysis of global dynamics, proper estimates of available natural resources, the monitoring of fiscal revenues, and so on.

To complicate things, a single weak link can cause the entire effort to collapse. In other words, crucial to success is how well we correct the worst of our mistakes so far.

We've analyzed a number of factors for South American countries and have reached some of the following conclusions about the last decade:

Successes and failures

• The region faced another lengthy cycle of expansion in the world economy, though it's been mitigated by the mortgage crisis and readjustment in China. This strongly fueled the global market in natural resources, with greater exchanges and relatively higher prices. In terms of quantity, it had a strong impact on agricultural goods. And in price terms, the effect was significant in areas of fuel and minerals.

• South America has not been particularly capable (or lucky) in transforming its resource potential in natural wealth, and this is particularly true of non-renewable assets. The portfolios and quantities of natural assets differ from country to country.

• The level of natural resource exploitation has markedly increased. Have countries made up for this relative capital loss with the creation of other assets? In general, yes. Genuine savings, which compensate for the loss of one set of assets with the accumulation of others, has increased this decade. On the other hand, using the strictest "strong sustainability" criteria, the human impact on biological capabilities remains relatively low in this region, though again, this varies from country to country.

• While productivity has increased and is advancing toward generating quality jobs, it hasn't been enough to increase aggregate productivity (the ratio of everything produced to its costs). We see a general pattern of low investment in human capital, know-how, infrastructure and technology.

• South American countries show a high recurrence of foreign trade shocks, particularly those that specialize in energy and metals. This meant that the last period of inflated prices fueled a trend in currency revaluation — more or less pronounced depending on national policies — as well as a rise in labor costs and external trade deficits. But current moves toward regional financial integration involve fewer risks than before.

• Governments have significantly increased their ability to absorb part of the profits from the commodities bonanza, both by directly imposing fees and through indirect mechanisms. Where has the money gone? In various directions, but certain countries appear to have spent more than they should have while others have saved it. But deficiencies remain with all of them in areas like basic infrastructure and human capital. So while the forecast is brighter than before, too many dark patches remain.

Lessons have been drawn both failure and success, and innovative new companies have emerged that have a better awareness of environmental risks.

Still, systemic productivity hasn't increased enough, nor has the supply of public goods improved enough. In many cases, the commodities boom appears to be mistakenly perceived as irreversible. It looks like we still have quite a way to go.

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What It Means When The Jews Of Germany No Longer Feel Safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond.

At a protest against antisemitism in Berlin

Eva Marie Kogel


BERLIN — If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for a democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

The incident at the cemetery

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

There are so many incidents that get little to no media attention.

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Photo of the grave of Jewish musicologist Max Friedlaender

The grave of Jewish musicologist Max Friedlaender

Jens Kalaene/dpa/ZUMA

Crimes against Jews are rising

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Jewish life needs to be allowed to step out of the shadows.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

Germany needs to take its antisemitism seriously

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

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