Growth in Latin America

Latin America is probably in the best position it has been almost in a hundred years and certainly in the last 60 or 70 years.

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Miguel Kiguel, an economic analyst in Buenos Aires and a former chief economist at the World Bank, said “For the first time since the 1920’s perhaps, the region is experiencing a period of reasonable growth, high commodity prices, relatively low inflation, on average, low debt, external balances and increases in national reserves.” Stoking the furnace, he says, are Brazil and Mexico.

As his officials pointed out, Mexico is expected to rank as the world’s seventh largest economy by 2020. Chile, which has taken a more conservative path than its neighbours, continues to stand out as the continent’s poster child for economic and political stability. In Brazil, meanwhile, there has been some tempering of the economic explosion that made it a founding member of the Bric group of fast-growing nations, together with Russia, India and China. Last year, its GDP growth slowed to 0.9 per cent from 2.7 per cent in 2011 and 7.5 per cent in 2010. But Brazil, as it expands new oil exploration and benefits from high commodity prices, still has its economic house in order. The post-Chavez era may also give Brazil room to assert itself on the diplomatic stage.

On the other hand, Latin America has begun to invest more in education. Traditionally, total public spending on education in Latin America has been low in comparison with OECD economies. These differences, however, have begun to decline. An average of 4% of GDP in the region is spent on education, representing a slight increase since 2000, while the average for the OECD is 5%.

Three factors explain the increase in education spending per student in the region: economic growth, demographic changes and private-sector participation. First, the significant economic growth of the last decade, which has increased GDP per capita in many of the countries of the region, must be taken into consideration. Second, the ageing of the population has led to a decrease in the proportion of school-age population, a factor that is particularly relevant in Argentina, Brazil, Chile and Mexico. Lastly, there has been an increase in private-sector participation in the provision of education services (especially in Argentina and Chile), leading to a higher percentage of students in private schools and freeing up more public resources per studentOn average, public investment in education in Latin America reaches levels similar to those in OECD economies (4% of GDP), with the private sector covering about a quarter of total spending in this area.

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