2008 Buenos Aires Conference: Latin America and the Changing Global Economy

Speakers:

• Sergio Massa, Chief of Cabinet
• Carlos Fernández, Minister of the Economy
• Lino Barañao, Minister of Science, Technology and Innovative Production
• Martín Redrado, President, Central Bank of Argentina
• Thomas A. Shannon, Assistant Secretary of State for Western Hemisphere Affairs, U.S. Department of State
• Earl Anthony Wayne, Ambassador of the U.S. to Argentina
• Héctor Timerman, Ambassador of Argentina to the U.S.
• Armando Mariante Carvalho Jr., Vice President, Brazilian Development Bank (BNDES)
• Lucas Papademos, Vice President, European Central Bank (Read his remarks)
• Osvaldo Librizzi, President, Starwood Hotels & Resorts Latin America
• Juan Martín de la Serna, Country Manager, Argentina, Mercadolibre.com
• Paula Guerra, Senior Vice President, Managing Director, Argentina & Southern Cone, MTV Networks
• Luiz A. Sette, Associate General Counsel, Microsoft Corporation
• John H. Welch, Former Senior Managing Director, Bear Stearns
• Carlos de la Vega, President, Cámara Argentina de Comercio
• Susan Segal, President and CEO, Americas Society/Council of the Americas

Summary

On August 27th, 2008, AS/COA hosted its fifth annual Latin American Cities Conference in Buenos Aires, entitled “Latin America and the Changing Global Economy.” The conference was organized in association with the Cámara Argentina de Comercio and the support of the Corporación Andina de Fomento (CAF).

Speakers focused on ways to enhance diplomatic and commercial ties between the United States and Argentina, discussed the dynamics of current global economic turbulence and its effects on the emerging markets, and examined examples from some of Argentina’s most dynamic sectors today. Topics also included regional trade, foreign investment, and the state of technological development and innovation in Argentina. The conference was opened by recently appointed Chief of Cabinet, Sergio Massa.

The Global Economy

The shifting global economy affects both advanced and emerging economies, said Vice President of the European Central Bank Lucas Papademos. He named two principal factors as determining the health of the global economy: the persistent rise in the price of oil and commodities and the financial market crises that have plagued developed countries over the past year. Financial market turbulence has led, among other things, to stricter credit standards for borrowing countries while the increase in commodity prices has led to higher incomes for commodity-exporting economies. Former Senior Managing Sirector of Bear Stearns John Welch commented that he did not see a “financial contagion in emerging markets…[but] a rebound in commodity prices seems unlikely,” thus leaving some, but not all emerging markets vulnerable. Welch went on to explain that one of the major risks for emerging markets lies in “a possible fall in the terms of trade and slower world growth” and added that “countries with diversified trade and tight monetary and fiscal policies” will best absorb current external shocks.

Argentina’s Minister of Economy Carlos Fernández underlined the necessity of maintaining current fiscal policies as a way of strengthening the domestic market. He also called attention to the reduction of Argentina’s debt burden, which has decreased from 140 percent of GDP in 2003 to a manageable rate of 53 percent of GDP. He advocated continuing these policies, which include promoting foreign investment in Argentina and supporting regional integration policies—defining them as “vital for our future.” After speaking on the current stability of the Argentine economy, Central Bank President, Martín Redrado praised the economic policies of the last five years, which focused on “sustained economic growth coupled with social inclusion.” Redrado warned, however that Latin America will not remain immune to the impact of the international situation, even if the region is not at the center of the global market turmoil. Cabinet Chief Sergio Massa declared a budget surplus between 3.15 and 3.20 percent for 2009, and announced an annual growth rate above the traditional 4 percent.  Massa also ensured that “Argentina will meet each and every one of its obligations.”

Vice-president of the BNDES, Armando Mariante Carvalho Jr. spoke of the Bank’s credit policy, highlighting the flexibility of its lines of credit in comparison with private banks’ offerings as an important component of the country’s growth over the administration of President Lula. He also spoke of the importance of increased regional integration and the role of the Argentine market as a destination for Brazilian products.

Remarks by Assistant Secretary Thomas A. Shannon

Assistant Secretary Shannon highlighted the importance of free-trade agreements in strengthening relations between the United States and other countries in the Americas. In addition, he lauded regional blocs like Mercosur and NAFTA for their roles in fostering a climate of integration and multilateralism in the Americas. Shannon referred to the Americas as a place that presented both opportunities and challenges to Washington, which must proceed with a “strategy of patience” and address the region’s current period of political transition with “great care and respect.” Regarding the upcoming U.S. presidential election, Shannon admitted there were stark differences between the two main candidates but reminded the audience that whoever wins in the near future will still have to deal with the same challenges the United States faces.

Argentina and the United States

U.S. Ambassador Wayne and Argentine Ambassador to the U.S. Héctor Timerman engaged in a discussion on bilateral relations between the two countries, moderated by Susan Segal. Ambassador Wayne commented positively on the state of relations between both countries, citing a great deal of cooperation with regards to anti-drug trafficking operations and the defense of democracy and human rights. He alluded to disagreements regarding the Doha Round of free trade negotiations as the only significant point of contention between the two countries. Wayne said his government would “work with Argentina to reach a consensus among developed and developing nations,” regarding regional trade policies. Ambassador Timerman underlined that bilateral relations between the two countries was strengthened by its diversity of points of agreement and allowed the two countries to work through various diplomatic and structural issues. He also pointed to the important role of trade and investment to relations between the countries.

Investing in Argentina

In his presentation, Minister of Science, Technology and Innovative Production Lino Barañao stressed the importance of investing in technology, but also in personnel training and further research and development to increase the value added to the country’s products and services.  Minister Barañao also pointed to the current and potential impact of small and medium sized enterprises in Argentina, given their important social role and utilization of technology.

Speakers from the panel on investment in Argentina explored areas ranging from tourism to entertainment to online marketing opportunities. Osvaldo Librizzi, president of Starwood Hotels and Resorts Latin America, commented on Argentina’s quickly growing tourism industry. The Vice President of Mercadolibre, Juan Martín de la Serna, stressed that online companies offer a flexible medium through which to buy and sell products to the growing number of Internet users and consumers, small businesses, and large companies. De la Serna reminded those in attendance that up-to-date electronic commerce regulation laws were still needed, as were a greater number of computer engineers. He added that a substantial increase in broadband connectivity would enhance the online market in Argentina. Paula Guerra, the senior vice president of MTV Networks in Argentina and the Southern Cone, described Argentina as a competitive environment, rich in creativity and human capital, and an important center for the production and dissemination of regional pop culture and music.