Diversification from oil could remain a pipe dream
This is not just because of geography but also because they are in some respects so similar. Their economies are, above all, just too reliant on exports of primary goods – not to each other but to Asia, Europe and the US.
Both regions have, nevertheless, played a vital and linked role in the globalization of finance, as well as goods, over the last five decades. Over 50 years, Euromoney has followed this every step of the way.
During the Arab Gulf’s first oil boom in the 1970s, petrodollar flows helped the budding international capital markets to flourish, as banks recycled much of the Middle East’s oil revenues into Latin American debt markets. How much good those flows have done to each region is a matter of debate, given the inconstancy of the Gulf’s oil flows and Latin Americas’ inability to manage those debts.
But today, once again, Latin America and the Gulf face similar challenges: how to boost growth and therefore jobs, at a time of lower commodity prices. Comparisons between the two regions are rare but, in this context, instructive.