Currents:Book Review—Latin America: A ForgottenRegion of Opportunity GILL IAN RICE

Haar, Jerry, and Price, John (Eds.). Can LatinAmerica Compete? Confronting the Challenges ofGlobalization. Palgrave Macmillan, 2008, 336 pp.ISBN 978-1403975430 (hardcover) $84.95.

Morrison, Terri and Conaway, Wayne A. Kiss, Bow,or Shake Hands: Latin America. Adams Media,2007, 256 pp.ISBN: 978-1598692174 (paperback) $14.95.

Reid, Michael. Forgotten Continent: The Battle forLatin America’s Soul. Yale University Press, 2007,400 pp.ISBN: 978-0300116168 (hardcover) $30.00.

“It is only culturally that Latin America makes it-self felt in the world,” declares Michael Reid inForgotten Continent. Latin America’s music, dance,films, novels, and painting are part of the culturalmainstream in the United States and Europe. Anoutsider’s view of Latin America is often heavilyinfluenced by the region’s inequalities and injus-tices, and romanticized struggles against them. Reiddescribes the stereotype as a picture peopled byguerrillas, obscure and quixotic revolutions, mili-tary leaders, and political machismo set against acolorful background of imposing geography, quaintcostumes, grasping foreigners, and grinding poverty.In many parts of the region, however, realities havealtered considerably. On winning Costa Rica’s pres-idential election in 2006, Oscar Arias explained:“The governments of South American and all Cen-tral American nations are strikingly moderate, aradical change from the ideological polarizationI encountered when I was first elected president20 years ago. We may believe in the state’s respon-

sibility to alleviate the crushing poverty that afflicts40 percent of Latin America’s population, but mostof us also affirm that there is no better curefor poverty than a stronger, more globally inte-grated economy.” As China and India have takencenter stage in the world’s economy, Latin Americaappears to have been forgotten.

Forgotten Continent is an evaluation of LatinAmerica’s progress toward democracy, economicsuccess, and global integration. Reid, editor of theAmericas section of The Economist, and former re-porter for The Guardian and the BBC, has lived inBrazil, Peru, and Mexico and has traveled through-out Latin America for over 25 years. His book isan immensely detailed and thoroughly researchedexposition of the political and economic historiesof the major nations of the region over the pasttwo centuries. To understand the present, it isessential to look back. The book is highly readableand filled with anecdotes and illustrations. Examin-ing the record of Latin America, it becomes apparentwhy it is the “forgotten continent,” yet agreementon the reasons for its failure is incomplete. Is fail-ure because of culture (stubborn Catholic conser-vatism, perhaps), dependence on other powers (firstEuropean powers, then the United States), inequal-ity, or policies and institutions?

Can Latin America Compete?—a collection of es-says edited by Jerry Haar (professor of man-agement at Florida International University) andJohn Price (president of InfoAmericas)—containsin-depth analyses of particular issues contributingto the economic performance of the region, perfor-mance that is “good, but not good enough.” Like

c© 2008 Wiley Per iodicals , Inc .Publ ished onl ine in Wi ley InterScience (www.interscience.wi ley .com)

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Reid, in an effort to examine possible reasons forthe lagging performance, essayists (executives, poli-cymakers, and academics) deal with subjects such aseducation, capital markets, financial services, tech-nology, water infrastructure, logistics, labor reform,and crime. The argument in both Forgotten Conti-nent and Can Latin America Compete? is that thereis, of course, not one reason for Latin America’srelative failure, but several.

Reid asks whether the criticisms of the WashingtonConsensus are true. The Washington Consensus wasa recipe of ten major reforms that were adopted inthe 1990s in the name of modernization. Accord-ing to Haar and Price, the return of populism topolitics in Venezuela, Ecuador, Bolivia, and Peru ispartly explained by the wide-scale rejection of ne-oliberal reforms, and undoubtedly includes a healthydose of anti-Americanism caused by the unpopu-lar war in Iraq and the renewed neglect of LatinAmerica. Another argument, however, is that it isnot the reforms themselves that were unpopular butthe way they were implemented—sometimes poorlyor not at all. For example, privatization of state as-sets was pursued vigorously, but too often the bid-ding process was entangled in corruption and nepo-tism. The Washington Consensus indicated that theprivatization proceeds should be invested in educa-tion, health, and infrastructure. Spending actuallydropped in all three areas and, ironically, todayLatin American leaders are calling for more suchinvestments.

Jerry Haar and John Price place special emphasis onpublic safety, which is rarely examined as a com-petitiveness issue. The rising crime rate and gangviolence in parts of Latin America negatively impactthe consolidation of democracy and economic de-velopment. The Inter-American Bank estimates thatper capita GDP would be 25 percent higher if theregion’s crime rate equaled the world average. Busi-ness associations in Latin America rank crime asthe number-one issue negatively affecting trade andinvestment. Crime reduces tourism, increases insur-

ance costs for firms, decreases worker productiv-ity, and reduces commercial transactions in unsafeneighborhoods. Destinations such as Brazil, Colom-bia, Peru, and Venezuela—all countries richly en-dowed with natural and cultural assets—attract lessthat $80 per capita in foreign tourist receipts. Aruba,off the Venezuelan coast, brings in over $7,000 percapita in foreign tourist receipts, and Cuba, with lit-tle access to the U.S. market, attracts over $200 percapita in tourist receipts. Progress in crime reductioncan be made, as evidenced by a program in Medellin,Colombia, which involved investments in parks, li-braries, schools, and museums, as well as financialbenefits, training, and psychological counseling toformer paramilitaries who turned in their weapons.In 2000, Medellin was the world’s most danger-ous city, but in 2006 was safer than Washington,D.C., Mexico City, Sao Paulo, Caracas, and Rio deJaneiro.

Reid emphasizes that perhaps the most importantmissing commitment on the Washington Consensuswas that for achieving equity: dramatically reducingpoverty and inequality. This has become the rhetoricof presidential declarations—a greater emphasis onequity and the role of the state in obtaining it. Notall governments in the region subscribe to the newconsensus, however. The rule of Hugo Chavez inVenezuela is less democratic, open, and pluralisticthan that of his predecessors. In countries such asChile and Brazil, governments are following othermodels, which combine social democracy and mar-ket liberalism. Their policies appear more effectiveand sustainable than those of Chavez, but, observesReid, Chavez shouts louder than his neighbors, andhis voice is heard abroad.

The most successful Latin American country isChile. It is ranked as the 23rd most competitivecountry by the World Economic Forum, ahead ofany other Latin American country. Chile is succeed-ing by using its natural resources, often by addingvalue to them; it has created new export industriessuch as fish farming, wine, fruit, and furniture. For

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example, Vitro Center Chile, a joint venture betweena Dutch firm and Fundacion Chile, a public-privateagency, is a biotechnology laboratory that producespartially fattened lily bulbs. Although it began ona small scale in 2004, employing 43 people, itsfounders plan to export lily bulbs to Holland andto establish a new high-tech flower export business.Chile’s success can be attributed to its effective eco-nomic policies, political consensus and stability, andsolid institutions.

The latter are highlighted by both ForgottenContinent and Can Latin America Compete?Mexico is challenged by a lack of solid institutions.Unlike in Chile, the end of authoritarian rule inMexico was not accompanied by a concerted ef-fort to shape new democratic political institutions.Power has slipped away from the presidency to stategovernors, mayors, congress members, party lead-ers, and an independent media. That is democraticand positive, but Reid sees a problem in that thereare no rules to encourage cooperation among thesedifferent actors. Institutional problems, the lack ofregulations or weak enforcement, the lack of capital,and corruption all adversely affect entrepreneurialactivity. For example, manufacturing start-ups inMexico average 58 days versus three days in theUnited States.

In Sao Paulo, a city of over 18 million, the world’sthird-largest civilian helicopter fleet ferries business-people to and from gleaming skyscrapers abovethe congested streets. With increasing urbanizationacross the entire region has come more access to ed-ucation. Reid relates the story of Felipe Copaja, aman of Aymara descent in Bolivia. He now owns asmall workshop on a side street in El Alto but wasborn in an Indian village on the Altiplano, where hisparents were peasant farmers. Because of povertythey came to work in El Alto but continued to moveback and forth, selling weaving and handicrafts.Felipe moved to El Alto when he was 10, completedsecondary school, trained as a mechanic, and set

up his own business. Though dissatisfied with cor-ruption and the lack of the rule of law, he consid-ers racial discrimination to be less pervasive thanit once was. His daughter was to study medicineat La Paz’s Andres University, the city’s oldest seatof higher education. His son hoped to follow herto university. The expanding and socially ambi-tious lower middle class in Latin America has muchmore access to consumer goods than its parents had.One study referred to by Reid found that all repre-sentatives of this social class had refrigerators andcolor televisions; nearly half had mobile phones, and29 percent owned a car. Some 30 percent ownedDVD players, and 22 percent planned to buy onesoon. Much of this was financed by high-cost con-sumer loans. Yet the financial services sector inLatin America is undeveloped, according to a chap-ter in the text edited by Haar and Price. Jan Smith,Tricia Juhn, and Christopher Humphrey explainhow in Brazil, the region’s most sophisticated finan-cial market, 70 percent of households have no accessto financial services at all. Many potential bankingcustomers—for example, the working lower- andmiddle-income segments—perceive banks as elite in-stitutions where a certain level of affluence is re-quired a priori to becoming a customer. Banks needto reach out, not just to the under-banked, but tothe never-banked. Citibank has declared its inten-tion to have 50 million customers in Latin Americaby 2025. Banks have lowered minimum deposit re-quirements to open checking accounts and launchedaggressive marketing campaigns to change the imageof banks into “customer-friendly” service providers.By 2006, GE Equity had opened 194 storefront GEMoney outlets in Mexico offering cash loans from$100 to $1,100, credit cards, auto loans, insurancepolicies, and home mortgages. Technology has beenkey to expanding banking services in both urbanand rural areas with a boom in ATMs, card termi-nals, and mobile telephony. Studies by Deloitte andTouche in Mexico and Brazil in 2005 found thatsufficient presence of cards and terminals increasedsales of large-ticket items such as white goods in

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supermarkets, while contributing to higher savingsthrough faster turnover of inventory and lower han-dling costs of cash.

Both Forgotten Continent and Can Latin AmericaCompete? use broad themes to analyze the politicaleconomy of a vast region. Both provide plenty of il-lustrations of the diversity and contrast and comparepolicies and successes across the region. Why arethese books relevant to foreign executives? Indeed,why do executives need to study foreign ways? Thisis addressed by Terri Morrison and Wayne Conaway(intercultural communications consultants) in Kiss,Bow, or Shake Hands: Latin America. Executivesneed an edge over their counterparts from compet-ing firms. That edge is very often knowledge. For-eign business partners who place emphasis on re-lationship building rather than merely on businesstasks appreciate efforts on the part of those seekingalliances to learn something about their countries’histories and culture. Along with the importance ofstudying backgrounds and cultures, in an appendixto their book, Morrison and Conaway stress thevalue of language study. Speaking with prospectsin their own language demonstrates a great dealof respect for that culture—it establishes a level ofcredibility for the executive and builds trust andbridges the cultural gap. Morrison and Conawayquote a Spanish proverb, “una persona que hablados lenguas vale dos personas” (“a person whospeaks two languages is worth two people”). Theyrefer to international executives from countries suchas France, Austria, and Korea who dedicate yearsto learning languages and note that their clientsrespond.

Kiss, Bow, or Shake Hands: Latin America con-tains chapters covering 18 Latin American coun-tries. These are essentially primers on how to dobusiness in a particular country. The focus is onhistory, culture, and how to behave politely. Thepurpose is not to provide details of regulations andspecific opportunities in certain industries, informa-tion that changes relatively often and which is easily

obtainable from government Web sites. Each chap-ter starts with three quick questions to gauge thereader’s knowledge of the country. These are fol-lowed by some tips on doing business in the coun-try and the country background (demographics, his-tory, type of government, language, and importantperspectives from the country’s viewpoint). Natu-ral and human hazards with advice on what to doabout them are included: for Latin American coun-tries, these hazards often comprise altitude sickness,corruption, and crime. Kidnap insurance is advisablein some countries, and executives should be cautiousabout street crime and erratic drivers. For example,Venezuelans tend to have casual attitudes toward therules of the road, and it is often stated that they re-gard traffic lights as “suggestions.” A cultural orien-tation in each chapter gives an anthropologist’s viewof the country. The concluding sections are businesspractices (punctuality, appointments, local time, ne-gotiating, and entertaining) and protocol (greetings,forms of address, gestures, gifts, and dress). In gen-eral, Latin American societies tend to be formal andconservative, with Ecuadoreans being less formal inbusiness meetings than most. Sport will always bean excellent choice of conversation as sport appearsto be universally popular across the region. Poli-tics are to be avoided and so are any comparisonsbetween the foreigner’s home country and the localLatin American country. Executives from the UnitedStates would do well to remember that the phrase“in America” should not be used when referring tothe United States. Brazilians, for example, considerthemselves Americans also.

The details of the various chapters highlight muchdiversity between countries. In the Spanish-speakingcountries, the same word might have a differentmeaning in a different country—for example, evenbetween neighbors Argentina and Chile. Uruguayhas a particular local dialect that even fluent Span-ish speakers may take a while to learn. Venezue-lans refer to their language not as Spanish, but as“Castellano.” Chileans use laws and morality to givestructure to their worldview, which can be seen in

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how Chileans wait in orderly lines, as opposed tohow some other Latin Americans crowd and pushinstead of queue. Many women are professionallyadvanced in Chile (indeed Chile elected MichelleBachelet, its first woman president, in 2006), anda businesswoman will have better success here thanin most other Latin American countries. Chileansoften invite foreigners into their home and so doColombians; this may not be the case in other coun-tries such as Argentina or Brazil.

Several trips are often required for negotiations. InChile, the initial visit should be by an upper-levelexecutive, accompanied by midlevel executives. Themidlevel executives are the ones who will makesubsequent visits to conduct more detailed negoti-ations. In Brazil, if the negotiating team is changedin any way, this might undermine the entire con-tract. Brazilians value the person they do businesswith more than the firm name. Peruvians also valuepersonal relationships and relate more to an individ-ual business associate than to a corporation. Acrossthe entire region, it is important to use formal titlesand some professional titles such as Ingeniero for anengineer. Foreign executives should wait for theircounterparts to initiate the switch to first names.Mexicans and Venezuelans tend to be especiallystatus-conscious, and it behooves foreign executivesto express something about their own status, theirdegrees obtained, and so on.

Colombians are known for their long greeting rit-uals. Every conversation seems to begin with longinquiries as to the health, welfare, location, and sta-tus of the speakers and their relatives. Visitors who

attempt to cut this greeting short are considered im-polite. The pace of negotiations is moderate to slowand certainly much slower than that in the UnitedStates. Many executives are accustomed to the busi-ness practices of their major trading partners, how-ever. For example, most Uruguayan executives willbe experienced and sophisticated and they probablystudied overseas.

The vast region of Latin America contains manyidiosyncrasies and many business opportunities. Insome locales, these opportunities might be harder torealize because of political and institutional circum-stances. However, for the patient executive willingto learn and develop relationships, Latin Americanmarkets and partners are valuable. Most trade(about 48 percent) is still conducted with the UnitedStates. Trade with China has risen sharply, althoughthis constitutes only about 5 percent of the total. Thethree books discussed here are invaluable resourcesfor executives doing or planning to do business inLatin America. It is a region that should not be for-gotten. It must learn to compete. Despite challenges,the region holds the promise of numerous lucrativeopportunities.

Gillian Rice teaches marketing and marketing research atArizona State University. She was a Fulbright Senior Scholarat the University of Bahrain in 1996–1997 and is profes-sor emeritus at the Thunderbird School of Global Manage-ment. She holds a PhD from the University of Bradford.Dr. Rice’s research interests include environmentally relatedconsumer behavior, the fair trade movement, and models ofemployee creativity and organizational innovation. She canbe contacted at Gillian.Rice@asu.edu.

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