MEASURING WELL-BEING IN A CONTINENT OF CONTRASTS

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A few days ago, Forbes magazine released the 2014 list of World’s billionaires. Seven Latin American billionaires made the top 100, with Mexican telecom tycoon Carlos Slim, in the second spot. In total, there are almost 100 billionaires in the continent and their combined fortunes add up to US$500 billion.  But on the other hand,  Latin America is still home of 160 million of poor, equivalent to 35% of the population in the region (World Bank data), despite intense governmental efforts to reduce poverty.

Furthermore, the OECD in the report How’s life in 2013 noted that countries, such as Mexico and Chile are way below the OECD average of GDP per capita and gini coefficient. However, the report also mentions that despite economic difficulties faced by the population, Brazil, Mexico and Chile have higher spreads of life satisfaction. In fact, out of range from 1 to 10, Mexico scored 7.3, Brazil got 6.7 and Chile scored 6.5 just below the 6.6 OECD average score.

The How’s life in 2013 report shows a new approach to quantify and understand poverty. At first well-being of population was measured only on the basis of material resources reflected on the GDP per capita. In the early 1990s, the UNDP Human Development Index (HDI) incorporated health and education. Today, several countries are shifting to more comprehensive forms of measurement. This new methodology seems to take on board the approach based on capabilities (functionings) that Amartya Sen fiercely defended.

In 2008, Mexico started using this method in its poverty measurements and included six basic social rights in the Law for Social Development. Also, Colombia, El Salvador and the Brazilian state of Minas Gerais have included multidimensional approaches to measure poverty. These governments sought to a better assessment of the capabilities and potential of citizens.

But what exactly is a multidimensional approach of poverty? Poverty itself has several aspects. Poverty measurements should include elements that could cause or further increase the situation of deprivation populations. El Salvador, for instance, identified eight dimensions to be observed and addressed as part of its poverty measurements: employment, housing, education, security, recreation, health, nutrition and income. Colombia chose to evaluate social and health conditions by measuring the following five conditions: education, childhood and youth, labour, health and access to household utilities. While Mexico selected educational, access to healthcare, social security, housing quality, access to basic services and nourishment. In turn, based on these elements the Mexican government classified deprivation in three categories: 1) food insecurity (extreme poverty), 2) obstacles to development of capabilities (access to education and health) and 3) material deprivation (access to adequate housing and transport).

This trend is not unique to Latin America; Bhutan, Malaysia and some areas in China have also adopted it. The most commonly known is the Gross National Happiness Index of Bhutan that includes nine dimensions.

The importance of a multidimensional poverty approach is based in the fact that it highlights aspects that are lagging behind and that require intervention. In other words, by having measurements of different dimensions of deprivation, decision-makers are able to identify elements that need immediate attention of public policies. Policy-makers can also observe progress of social policies and can reassess the continuation or reformulation of current strategies.

While developing countries have made significant efforts to better understand and find solutions to address poverty, results are meager and governments still face enormous challenges. The multidimensional index is a photographic representation of the reality of poverty. To change the socio-economic landscape of the continent of contrasts, coordinated public and private efforts, along with civil society engagement, are in most need to eradicate poverty and reduce inequality.

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LESSONS FROM MEXICAN ECONOMIC REFORMS.

John Kehoe, from the Australian Financial Review, published today an op-ed on the economic reforms undertaken by Mexican President Peña Nieto.  Kehoe highlights the political agreement reached among the three major parties (PRI, PAN, PRD) that have enable the current administration to pass the much needed reforms (previous post). Despite outstanding challenges to overcome, such as violence and corruption, Mexico earned ‘A’ grade sovereign rate from Moody’s credit rating agency as a result of such reforms.

 

Kehoe further notes Australian Treasurer Joe Hockey comments, on Mexico’s efforts to undertake domestic reforms to cope with global volatility. Last weekend in Sydney, G20 Finance Ministers and Central Bank Governors committed to promote a resilient financial system and to foster a conducive investment environment. The author concludes that Mexico, along with other developing countries, is in a much better position to fulfill the G20 commitments.

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Peña Nieto on the front cover of TIME magazine

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Last 16 February, Mexican President Enrique Peña Nieto made the front cover of TIME magazine. This issue spark off a heated debated in social media in Mexico, criticising Michael Crowley, the author, and TIME for allegedly “selling out” themselves to the Peña Nieto government.

As Crowley rightly points out, Peña Nieto only won the presidential election with 38% of the votes and therefore it is evident that his detractors react this way. I agree that perhaps the title of the story would have been better with an interrogation mark at the end: “SAVING MEXICO?”, but I must concede that the author presents both sides of the same coin. He highlights achievements and strengths of the country, but also points out the numerous challenges that the current government still has to overcome.

At the same time, I must recognise the sharp Mexican humor to transform the cover into this one.

In any case, I strongly invite you to read the article (or Spanish version) and make your own judgement.

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Looking back on 20 years of NAFTA: critical perspectives from Mexico

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On February 19th, the presidents of Canada, the United States and Mexico will meet in Toluca, Mexico (Peña Nieto’s heartland) to look back on the twenty years of the North American Free Trade Agreement (NAFTA, or TLCAN in its Spanish acronym). At the time, Mexican President Salinas had promised his citizens that with this agreement Mexico would finally take its place in the “First World.”

The Mexican Treasury (Secretaria de Hacienda) has published an overview of NAFTA, highlighting its positive aspects. According to its information, every minute, $2 million USD is traded between the three member countries of the agreement. But how much of this comprises Mexican products made in Mexico? Enrique Galvan Ochoa, a prominent Mexican commentarist, recently provided an overview on this issue on morning news radio MVS in Mexico. To start with, Galvan Ochoa highlights that Mexico still continues to export petroleum without processing it, and points out that in 20 years of NAFTA, Mexico has not built one refinery on its soil. Any refinery that is built in coming years will likely be done so with ownership by a foreign company, given the recent constitutional reform regarding PEMEX. Petroleum aside, the figures show that Mexico exports $328 billion USD worth of products each year. However it is important to note that of this total, only a third of these products are produced in Mexico, wheareas the rest of the earnings come from products that have been re-assembled using mostly foreign parts, and with some Mexican value-added. This sector, which is mostly made up of the ‘maquiladora’ style factories that populate the Mexico-US border, is the one that has grown the most from the NAFTA agreement.  According to the argument of Galvan-Ochoa, in order to remain as a developing country exporting crude oil and assembled factory products it was not necessary for Mexico to enter into NAFTA.  

When Mexico signed the NAFTA agreement, it meant opening its borders to imports from Canada and the US.  Mexico stands in 3rd place worldwide as an export destination for the US, and 5th for Canada. One of the interesting aspects regards food. Mexico now imports most of its food and sends its best quality corn to the United States, receiving sub-quality corn in return. 20 years ago you would have noticed that all the tacos in Mexico were made with white corn which is high in nutrients. These days you will find Mexicans often eating yellow corn tacos which are much less nutritious. The diets of Mexicans have changed radically with the advent of NAFTA, with processed products, red meat and soft drinks becoming a daily part of the Mexican diet, to the point where Mexico has now overtaken the US as the most obese country in the world. UN Special Rapporteur on the Right to Food, Olivier De Schutter, on a recent visit to Mexico in 2012, described Mexico as having been subjected to a “Coca-cola-nization” in the last 20 years.  

For other interesting commentaries on NAFTA, Jeff Faux from the Economic Policy Institute has published this critical article in the Huffington Post relating NAFTA to the escalation of Mexico’s drug war.  

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Excellent article on current troubles in Brazil’s Foreign Ministry

Brazilian academic Guilherme Casarões has just published an excellent article on the current troubles in the Brazilian foreign ministry, Itamaraty. It is carried by the Cairo Review of Global Affairs.

 

Itamaraty has had a bit of a rough year, which has resulted in sustained pillorying in the press, almost substantive criticism in Congress (this is highly unusual), some rather divisive internal arguments, and relations with the presidency that are best described as ‘professional’. Debate on what is going on, why it is happening and where things are headed rages in Brazil. Casarões’s article is one of the best yet (particularly in English) contextualizing the current institutional ructions in Rio Branco’s House. Very worth a read.

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Brazil finally settles on an advanced fighter jet; US loses big

After over twelve years of prevarication Brazil has finally decided to buy thirty-six Saab Grippen NG fighter jets as the Brazilian Air Force’s new FX-2 multi-purpose jet aircraft.

Reach back into the dim recesses of memory and the start of Brazil’s fighter jet saga can be recalled from the dying days of the Fernando Henrique Cardoso presidency. As long ago as 2001 it was abundantly clear that the Brazilian air force needed a new set of fighter jets to maintain a presence over the entirety of the country, particularly the drug smuggling air routes in the Amazon. But the price tag was high and financial crisis threatened as Lula roared towards electoral success in 2002. In 2003 Cardoso’s aides were clear that they’d put off the fighter jet decision because it was going to leave a serious debt obligation to whomever won the 2002 presidential election and, in the interests of democratic accountability, they thought the decision should be left to the new president. Lula took up the issue fairly quickly with a long string of vague statements that played Sweden, the US and France off against each other to bring a raft of technology transfer agreements and agreements to smooth out a string of irritating disputes. For Lula the personal highlight may well have been an invitation from Sarkozy to be guest of honour in Paris at Bastille Day in 2009. All of this courting aside, a decision never came, and with the recent decision to recondition part of the Air Force’s existing fleet it appeared that nothing was going to happen.

Why the decision to buy Swedish and not the French Mirage or the American F-18 Hornet? The French jet reportedly cost too much and, well, getting caught spying apparently has a real price; buying the F-18 Hornet became politically impossible as soon as Snowden’s files on US espionage activities in Brazil became public. There were also some questions about technology transfer, an issue that has been hotly contested with the US due to Washington’s past decisions to bloc Brazilian aircraft manufacturer Embraer from selling Super Tucano light prop-driven fighter aircraft to the Venezuelan military. Recent apparent shenanigans that saw the US military cancel and re-tender contracts already awarded to Embraer won’t have helped the Hornet’s case, either.

Expect to see some substantial technology transfer from Sweden to Brazil as part of the Grippen purchase. An expansive view of national security advancement has been an intrinsic part of Brazil’s recent foreign defence purchases, with joint production and technological collaboration being key parts of deals with France on submarines and Eurocopter on helicopters. Brazil’s National Defense Policies are clear that the government’s vision is for an inter-operable cooperative continental security vision, which naturally (in Brazil’s view) will be heavily led by Brazilian officers and, more importantly for national development ambitions, equipped with Brazil-manufactured kit. The five to six billion dollar Saab deal is the latest strut in this strategy.

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Oxford University Summer School — Democratization in Latin America

Scholars at the University of Oxford wrote a good chunk of the book on democratization in general and Latin America in particular. Applications are now open for a summer school program at Oxford that lets students delve into one of four areas with the University’s leading scholars:

    • Democracy and Authoritarianism in Russia and the Former Soviet Union
  • Democratisation in Latin America
  • International Relations of the Asia-Pacific
  • Political Transformation in the Contemporary Middle East

Courses are designed for:

  • Graduates with a subject-relevant academic background
  • Teachers in schools and colleges
  • Professionals in the field of international politics
  • Senior undergraduates who have studied a relevant academic discipline – ie history, politics, international relations, political or social science, economics or law – at university for a minimum of two years

Scholarships are available and application details can be found at: http://www.conted.ox.ac.uk/courses/details.php?id=O14I110JDR

 

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