Doing Business in Central and South America

Causes of Underdevelopment

  • Recurring debate since 19th19^{th} century; blamed Iberian legacy, native demographics, land inequity, imperialism, weak governments
  • Experience of 1980s1980s “lost decade” showed no single cause; elites’ values hinder collective progress

Latin America Overview

  • Region spans Mexico to Cape Horn, incl. Caribbean islands
  • Great diversity in history, economy, governance, yet common threads: Catholic influence, strong family, defined gender roles, widespread Spanish (Portuguese in Brazil)
  • Large Amerindian populations; heritage of Aztec, Maya, Inca

Trade Blocs & Integration

  • Key agreements: NAFTA, Andean Group, MERCOSUR, CAFTA; aim to lower tariffs & boost free-market growth
  • Emerging “Second World” swing states (e.g., Bolivia, Colombia, Venezuela) attract investment from China, EU, Japan, USA

Latin America Profile (Exhibit 11.111.1)

  • Population >!400\,000\,000; land ≈8 million mi2\approx8\,\text{million mi}^2
  • 2020 mainland countries, 11 commonwealth (Puerto Rico), 1212 West Indies states
  • Cultural inputs: Amerindian, Spanish/Portuguese, African, Asian
  • Persistent issues: elite dominance (<5%5\%), social unrest, shift from agriculture toward industry & energy

Central America

  • 77 nations between Mexico & Colombia; ≈35 million\approx35\,\text{million} people
  • CAFTA members lowering U.S./Canada tariffs: Costa Rica, Nicaragua, Honduras, El Salvador (+ Panama prospect)
  • Integration needed to overcome poverty, crime (maras), infrastructure gaps; China investing in ports & factories

Caribbean Trends

  • Cuba: ∼11.3 M\sim11.3\,\text{M} people, literacy 96%96\%, GDP pc $1 700\$1\,700, communist
  • Dominican Republic: literacy 82%82\%, GDP pc $5 700\$5\,700; Haiti unstable under U.N. peacekeepers

South America Overview

  • 1212 countries, land ≈6 million mi2\approx6\,\text{million mi}^2; triangle from Amazon to Cape Horn
  • Themes: spectacular resources vs. inequality; Catholic heritage; rise of Evangelical “Evangelico” (projected majority by century’s end)
  • MERCOSUR (Argentina, Brazil, Paraguay, Uruguay, Venezuela) + associates (Chile, Bolivia, Colombia, Ecuador, Peru); >250\,\text{M} people, output $1.1 T\$1.1\,\text{T}

Brazil Highlights

  • Largest Latin nation: >3\,\text{million mi}^2, population young (half <2020)

History & Politics

  • Portuguese colony 15001500–18221822; republic since 18891889; cycles of military & civilian rule
  • President Lula (20032003–20102010): Zero Hunger, Bolsa Familia (cash 95 reais95\,\text{reais}/mo to 46 M46\,\text{M} poor)

Economy & Development

  • “Brazilian Miracle” growth ≤11%\le11\% (1960s–70s); current strengths: ethanol/biofuels, agribusiness, deep-sea oil (Tupi field 5$–8 billion bbl)
  • Amazon 40\% of territory; Amazon Fund targets deforestation & carbon emissions

Social & Business Culture

  • Class more salient than race; wide color spectrum, favelas vs. elite
  • Family (parentela) paramount; loyalty highest duty
  • Business: personal relationships, Portuguese language, punctuality flexible, long negotiations
  • Etiquette: handshake + cheek-kisses (women), maintain eye contact; dress formal but stylish; avoid finger-snapping for waiters
  • Common gestures to avoid: “OK” sign (obscene), raised middle finger, horns (infidelity)

Argentina Highlights

  • 8^{th} largest country globally; pampas, Andes, Patagonia; Spanish & Italian heritage 97\% of population
  • History: independence 1816;Peroˊnera; Perón era1946––55;returntodemocracy; return to democracy1983; current reforms tame inflation, restructure debt
  • Social norms: formal greetings, punctuality less strict, European table manners; beef central cuisine

Shared Cultural Themes

  • Personalismo: individual & family first
  • Machismo vs. evolving female roles (e.g., Presidents Bachelet, Fernández)
  • Fatalism & “get-rich-quick” mindset amid economic volatility
  • Hospitality, dignity, formality; titles & handshakes matter

Business & Communication Etiquette

  • Start meetings with small talk (family, weather, soccer); avoid direct negatives
  • Time: offices 08{:}00––12{:}00 & 15{:}00––18{:}00;dinners; dinners20{:}00–late;guestsarrive–late; guests arrive+30$$ min
  • Decision-making centralized; deals concluded face-to-face; quality business cards in local language

Pan-American Cooperation Challenges

  • Inflation, fiscal deficits, and internal politics hinder full synergy
  • Ongoing efforts: OAS, Inter-American DB, PADF, proposed South American Community of Nations
  • Key managerial tasks: joint resource management, technology transfer, corporate social responsibility