February 2003
Left to its own devices
The days of large foreign investment flows to Latin America appear to be over. Companies and countries in the region are therefore going to have to find new ways to achieve sustainable growth.
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Foreign investors cutting ties to Latin
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Latin America is being left to its own devices.
Foreign direct investment is falling, privatizations have
largely run their course, country-risk levels have risen to
the point at which most investments make little sense, and
no-one talks any more of Latin countries following Spain's
smooth transitional path from second world to first
world.
If anything, several countries in the region are
moving in the direction of wealth destruction rather than
wealth creation. Television pictures show malnourished
Argentine children dying of starvation, and Venezuela and
Colombia have been hugely damaged by, respectively, a general
strike that has crippled the oil industry and a civil
war.
And in the developed world, the boom years are over, closing the
door on the wilder shores of foreign investment. Corporations that
a few years ago were either swimming in cash or able to raise it at
dirt-cheap rates are now pinched,...
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