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Uruguay -- here represented by capital Montevideo -- is the freest country in Latin America when it comes to political rights and civil liberties, according to Freedom House. (Photo: MxGranger)
Mexico’s legalization of marijuana may result in Mexican domination of the North American marijuana market.  (Photo: Mexican Senate)
Cristina Palmaka, President SAP Latin America & Caribbean. (Photo: SAP)
Tuesday, March 30, 2021
Trade Talk

Kearney FDI Index: Brazil Drops, Mexico Out

 

Second year in a row Mexico excluded from FDI confidence index.

 

BY LATINVEX STAFF

 

Brazil dropped two places on the latest Kearney FDI Confidence Index, while Mexico was excluded for the second year in a row.

 

“Brazil’s fall in the Index mirrors a deterioration in the domestic economic and governance environment,” Kearney said in its report. During the survey period, the country’s vaccine rollout was starting but was slow and uneven. The government was accused of failing to ensure and distribute vaccines while downplaying the threat posed by the virus. All the while, a deadlier, more contagious variant emerged in the country. Popular discontent led to antigovernment protests sweeping some major cities, including Rio de Janeiro and São Paulo.”

 

In terms of economic outlook, Brazil ranked last out of 25 countries.

 

Mexico's exclusion is due to a combination of factors, including low economic growth, a lack of a clear and articulated vision for economic and social development and the sudden change in clear and transparent rules, especially in the energy sector, according to Ricardo Haneine, who leads Kearney’s Mexico office.

 

"The sin of the [Andres Manuel Lopez Obrador] administration is that it doesn't see the energy sector as modern and dynamic, that it has to realize the evolution to sustainable clean energy and where the whole purpose of Mexico to accept investments was because we didn't have the appropriate technology for deep water”  exploration, Haneine told El Universal. 

 

The Kearney FDI Confidence Index is an annual survey of global business executives that ranks the markets likely to attract the most investment in the next three years.

 

The Index is constructed using primary data from a proprietary survey of 500 senior executives of the world’s leading corporations. The rankings are calculated based on questions about the respondents’ companies’ likelihood of making a direct investment in a market over the next three years. 

 

 

FULL DEMOCRACY THE EXCEPTION

The latest Freedom in the World report from Freedom House shows that 13 out of 19 Latin American countries are only partly free or unfree.

 

While Brazil is rated free, Mexico is rated partly free. Meanwhile, Uruguay, Chile, Costa Rica and Panama are also rated free. In fact, Chile, Costa Rica and Uruguay have higher respect for political rights and civil liberties than the United States.

 

“People in a number of countries in the Americas faced violence and other abuses in the enforcement of harsh COVID-19 lockdowns,” Freedom House says. “Police and military units in El Salvador and Venezuela reportedly engaged in arbitrary detentions and torture, while paramilitary groups policed civilian movement in Venezuela and Colombia. Even in Argentina, where democratic institutions are stronger, reports emerged of police firing rubber bullets at alleged quarantine breakers. Separately, the president of Mexico downplayed the harms of the coronavirus, leaving citizens with less access to life-saving information and resources.”

 

And freedom of expression suffered in Cuba and Nicaragua. Cuban authorities unleashed a wave of intimidation, arbitrary detentions, and illegal house arrests against independent journalists and a group of dissident artists with whom the government had at one point promised an open dialogue, while a harsh new cybercrimes law in Nicaragua mandated prison sentences for spreading “false information” online, Freedom House points out.

 

“Flawed voting and political dysfunction prompted concern in some settings, the human rights group says. “In El Salvador, President Nayib Bukele shocked the country by ordering troops into the parliament in an attempt to secure extra funding for security forces. Guyana’s legislative elections were marred by media bias and interference with the tabulation that favored the incumbent government, though a recount ordered by the Supreme Court eventually confirmed an opposition victory. Peru was rocked by the Congress’s impeachment of one president on dubious grounds, followed a week later by the resignation of his replacement under intense public pressure. The chaotic events, which were seen as a blow to anticorruption efforts, resulted in a status decline from Free to Partly Free for Peru.”

 

In a more positive development, the presidential election in Bolivia was administered impartially, and the results were recognized by all competing parties, capping a period of serious political turmoil, Freedom House says.

“And in Chile, following 2019 protests against inequality that featured property destruction and police violence, an overwhelming majority of voters approved the creation of a constitutional convention tasked with replacing the existing charter, which had originally been drafted under the dictatorship of Augusto Pinochet,” it says.

 

 

Latin America: Political Freedom

PR=Political Rights, CL=Civil Liberties

Rank

Country

PR

CL

Total

Status

1

Uruguay

40

58

98

Free

2

Chile

38

55

93

Free

3

Costa Rica

38

53

91

Free

4

Argentina

35

49

84

Free

5

Panama

35

48

83

Free

6

Brazil

31

43

74

Free

7

Peru

29

42

71

Partly Free

8

Dom. Rep.

26

41

67

Partly Free

9

Ecuador

27

40

67

Partly Free

10

Bolivia

27

39

66

Partly Free

11

Paraguay

28

37

65

Partly Free

12

Colombia

29

36

65

Partly Free

13

El Salvador

30

33

63

Partly Free

14

Mexico

27

34

61

Partly Free

15

Guatemala

21

31

52

Partly Free

16

Honduras

19

25

44

Partly Free

17

Nicaragua

10

20

30

Not Free

18

Venezuela

1

13

14

Not Free

19

Cuba

1

12

13

Not Free

Average

26

37

63

Partly Free

Sources: 2021 Freedom in the World, Freedom House; Latinvex (ranking by scores, average)

 

 

MEXICO: NEW NORTH AMERICAN CANNABIS KING?

 

Mexico's lower house recently approved a bill that would legalize the recreational use of cannabis and make the country one of the world's largest regulated markets for cannabis, the BBC reports.

 

Meanwhile, Canadian companies and other multinational investors may also begin cultivating in Mexico because the latter’s climate allows for year-round harvesting, which is less costly than indoor growing operations that take place in the northern climes, according to Gary J. Hale, drug policy fellow and Mexico studies scholar at the Baker Institute and retired DEA Houston Division chief of intelligence.

 

“Mexican providers will likely petition their government to add cannabis to the list of commodities that can be imported into the United States under the USMCA,” Hale told the Inter-American Dialogue’s Latin America Advisor. “If that happens, the market share may be inverted, thereby reducing the U.S. share of a business that is already generating a new wave of investors worldwide, and this shift could suddenly place Mexican entrepreneurs on the top of the heap.

 

SUSTAINABILITY PRIORITY FOR LATAM COMPANIES

 

Forty-five percent of C-Level executives from medium and large companies in Argentina, Brazil, Colombia and Mexico said their organizations already have a sustainability strategy, and 22 percent said they are working on one, according to the “Sustainability on the Agenda of Latin American C-Level Executives,” study sponsored by Germany-based business software company SAP.

 

Six out of every ten Latin American senior executives who participated, believe that sustainability is profitable, according to the report. Sixty percent of respondents affirmed that their company’s sustainability focus is set on the following areas: Gender equality (this is a main concern of companies in the region,) the circular economy (second in relevance for manufacturing companies,) training the workforce for the future (second in relevance among service companies,) social entrepreneurship, and climate change.


“Sustainable practices not only help the environment and our communities; they are also critical to obtaining competitive advantage, improving brand reputation and increasing employee satisfaction,” Cristina Palmaka, President of SAP Latin America and the Caribbean, said in a statement. “Sustainability is no longer optional; it has become a must for businesses, and SAP has a portfolio of technology solutions to help customers best execute and measure their sustainable strategies.”


The C-Level executives who were surveyed also view their workforce as an engine to strongly drive sustainable strategies, with 30 percent of them saying that sustainability is an ‘extremely important’ issue for employees, and 39 percent saying it is ‘quite important,’ especially those from Brazil and Mexico.


Technology is gaining traction as s foundation for sustainability management: 40 percent of organizations who participated affirmed that they use technology to drive their sustainability strategy and obtain effective indicators. Furthermore, the study revealed an important trend: The supply chain will become a driving force going forward, as 19 percent of respondents already consider that having sustainable practices is a key differentiator when selecting suppliers, with Brazil (27 percent) and Argentina (25 percent) having higher-than-average percentages.


The sustainability focus will continue to expand in 2021: 28 percent of survey respondents plan to increase resources allocated to this area, while 25 percent said they will keep the same level of investment they made in 2020 – a noteworthy fact, especially following a year of so many challenges.


The study gathered responses from 450 C-Level executives from organizations in Brazil, Mexico, Colombia, and Argentina.  They included both service companies (in financial services, retail, telecommunications, healthcare, entertainment, and travel industries) and manufacturing companies (in oil and gas, mining, agriculture, pharmaceutical, construction and consumer product industries.)

 


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