Latin America Looks Within For Growth

By: AP
By: AP

CANCUN, Mexico - Latin American leaders vowed to boost trade and investment in the region to withstand a sharp economic downturn in the United States.

"We have to learn to turn on our own motors," Mexican President Felipe Calderon told the closing session of the two-day World Economic Forum on Latin America in Cancun, Mexico. "We have to speed up our own rhythm of growth."

After widespread free-market reforms during the 1990s, the commodity-producing region has harnessed soaring metal and oil prices to grow more than 5 percent in the past five years.

Many countries are now deepening their economies, investing record commodity earnings in public spending while credit, pension and securities markets swell.

Still, many have relied on the U.S. as their main trade partner and source of investment — especially Mexico, which sends 80 percent of its exports to its northern neighbor.

Now that the sub-prime mortgage crisis has slowed growth in the U.S. to just 0.6 percent in the fourth quarter, Latin America faces a new test: Can it maintain growth without a robust U.S. economy?

The answer this week seemed to be a guarded "yes."

Klaus Schwab, founder and executive chairman of the World Economic Forum, said he sensed a "cautious optimism" in the week's meetings, proof of "the resilience that has been achieved in Latin American economic, political and social development."

"The future globalized world belongs to those who can blend a national identity with a regional and global identity and, at the same time, manage all three," Schwab said.

Political divisions still plague the region, and representatives from left-leaning governments, including Venezuela and Ecuador, did not attend the forum. Poverty, lawlessness, corruption and drug trafficking also remain serious problems.

But in meetings on energy security, foreign investment, crime, banking and the rising role of Asia, participants often agreed that integration, trade and legal reforms offer a path forward.

In the past two years, for example, Mexico has passed tax and pension reforms, overhauled its judicial system and pledged record infrastructure spending, in a bid to create jobs and draw investors.

Yet despite participants' emphasis on national and regional development, there was no indication that Latin American countries want to stop doing business with the United States.

President Alvaro Uribe of Colombia used the forum Wednesday to urge the U.S. Congress to back a stalled free-trade deal with his nation, saying it would be "incomprehensible" if Democrats declined to call a vote.

The presidents of Guatemala, El Salvador, Honduras and Costa Rica, and the prime minister of Trinidad and Tobago, also attended the two-day forum — a spin-off of the yearly meeting in Davos, Switzerland.

About 500 business leaders were also present, including top executives from Google, Citibank NA, Merrill Lynch, Goldman Sachs and oil giants BP, Shell and StatoilHydro.

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