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Orthodoxy and Geography

Author: Julia E. Sweig, Nelson and David Rockefeller Senior Fellow for Latin America Studies and Director for Latin America Studies
June 3, 2013
Folha de Sao Paulo


Originally published in Portuguese on Folha de Sao Paulo:

Reading the regional and international press coverage of the Pacific Alliance, one might conclude that Latin America's problems are over, at least for its member nations. Yes, the free movement of people and capital, the integration of supply chains, and the expansion of international trade are essential to prospering in a global economy. And yes, every country in the world needs a strategy to cope with China's ups and downs.

But let's take a deep breath before assuming that Latin America's latest brand somehow represents either a permanent "continental divide" or the panacea for still numerous structural impediments to secure, middle class democracies.

Trade agreements really are investment strategies—that's why the business community, at least the modern business community, loves them. But they are not intrinsically designed to substitute for public policies key to human development, citizen security, or fiscal solvency.

In fact, Mexicans, Chileans, Colombians and Peruvians know full well that trade alone cannot substitute for a smart state and that growth without social inclusion and strong institutions is a recipe for violent conflict and instability. By comparison to the growth-at-all-costs gestalt of just a few years ago, the relatively strong consensus among the citizens and leaders of Pacific Alliance countries around investing in the education and wellbeing of people, and in strategies to reduce poverty and inequality, reassures this skeptic.

More unsettling is the frequent suggestion that the Pacific Alliance is the 21st century cool-kids fraternity of capitalist freedom, while Mercosur has become the club of stuffy socialist militants who would rather read Lenin and Galeano than Hayek and de Soto. And the rush to pick regional winners, whether in economic or diplomatic institutional settings, shows that in Latin America the irresistible appeal of the beauty contest is still alive and well.

And therein lies the question: whither Brazil? The economic boom of 2003-2010 has ended. Inflation is creeping up. Within Latin America, Brazil seems to have made the decision to try to seek maximum commercial benefit from its own internal market, from within the highly imperfect yet expanded boundaries of Mercosur. Across the Atlantic, as the President's trip to Africa just demonstrated, await huge new opportunities.

And yet the inescapable new normal seems to be that Brazil, even with one of its own leading the WTO, sits on the sidelines of several new constellations of international trade blocs. To be certain, autonomy in foreign policy has deep roots in Brazilian history. But for a nation that relishes its tolerance for heterodoxy— in the economic, political, ideological, and diplomatic, might the trade orthodoxy at times hurt? On the other hand, if in fact we are witnessing the logic of geography re-writing the geo-economics of Latin America, is that really so terrible?

This article appears in full on CFR.org by permission of its original publisher. It was originally available here.

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