How’s your wife? It depends — compared to whom?
That’s a frequent dialogue among witty Spaniards. I imagine that women could respond the same way. We husbands fare badly when compared with Brad Pitt, much better if contrasted with Eduardo Gómez, the super-ugly doorman’s father in the comedy series Nobody Can Live Here on Spanish TV.
The same happens with countries and regions. To understand where we stand, we have to know where the others are and at what pace we move.
All this becomes relevant apropos the recent report on the most successful countries in Latin America. According to the news, the three wealthiest economies in Latin America are Chile, Panama (which has been growing at the rate of 8 percent for almost a decade) and Uruguay.
Argentina is relegated to fourth place, a fact perhaps explained by its lack of transparency. The government of Cristina Kirchner adulterates the rate of inflation to conceal the results of its poor performance. It cheats.
Despite its limitations, the clue to instantly understand the level of prosperity remains the per-capita GNP. It’s the result of the sum of all the goods and services produced by a nation, divided by its population. For that figure to mean anything, it needs to be adjusted to what can be acquired with it. That’s called Purchasing Power Parity, or PPP. What’s the use of earning $20 per hour when a bottle of water costs $50?
Roughly speaking, the planet has 7 billion inhabitants and produces about $83 trillion per year ($83 million millions). That, in round figures, is $12,000 per capita. In some very prosperous societies, like the United States, the amount rises to $50,000, while in very poor societies, like Haiti, it barely reaches $1,700.
Let’s stick to the world average, however: $12,000.
Several Latin American entities produce more than that, in fact: Chile, Panama, Uruguay, Argentina, Mexico, Venezuela and Costa Rica. Brazil is right on the money: $12,000.
But most produce less than the world average: Peru ($10,800), Colombia ($10,700), Cuba ($10,200), Dominican Republic ($9,600), Ecuador ($8,800), El Salvador ($7,700), Paraguay ($6,100), Guatemala ($5,200), Bolivia ($5,000), Honduras ($4,600) and Nicaragua ($3,300).
From that data, we can extract some conclusions:
The swift growth of Chile and Panama, two of the region’s most open economies, indicates that theirs is the shortest route to the First World. It is likely that in 2020, if they stay on course, those two nations will have a level of prosperity equal to the average for the European Union, which today stands at $34,500.
At the other end of our reasoning, the countries that practice the so-called 21st-Century Socialism (Cuba, Venezuela, Ecuador, Bolivia and Nicaragua) are all below the world average, with the exception of Venezuela, which continues on its relative decline. That should tell them that they’re traveling in the wrong direction.
Venezuela, which at one time was at the head of Latin America, today ranks sixth in per-capita income, with only $13,200, despite the river of petrodollars flowing through it. It must be Latin America’s worst-managed country.
Brazil continues to be the country with a bright future that never arrives. The volume of its economy is big because it is a nation of 200 million people, but its real performance leaves much to be desired. In the past, Brazil was known as “Belindia,” a nation where a developed segment lived as in Belgium, but where most people lived as in India. That cruel metaphor still applies.
To sum up: How’s Latin America? It depends. In my opinion, its performance is mediocre. It could be a lot better.