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Latinoamerica: Progress Vs Poverty

Latinoamerica: Progress Vs Poverty

Posted by Bruce McDougall on September 27, 2017

No one can measure precisely the contribution that money makes to human happiness, but everyone can say with certainty that money helps to alleviate ignorance and hunger. For ignorant and hungry people, the world is a dangerous place, and life is a threat not a gift.

In the last 50 years, even as its population has almost doubled, the world has become a more peaceful and prosperous place. But while poverty continues to decline, a recent UN study calculates that almost 1.5 billion people in 91 developing countries, including Ecuador, Brazil, Colombia and Chile, live on $1.25 a day. As the study points out, poverty deprives them of health care and education that most of us in countries like Canada take for granted. Anyone surviving on such a pittance also remains vulnerable to the slightest disruption in the world’s economic and social equilibrium, from financial crises and fluctuations in food prices to natural disasters and violent conflict.

“Reducing vulnerability is a key ingredient in any agenda for improving human development,” says Nobel laureate Joseph Stiglitz in an essay in the UN’s study.

Money from foreign investors provides an opportunity for governments to support their most vulnerable citizens. They may not always take advantage of that opportunity. They may simply horde the money and spend it on big cars and trips to Paris. But the opportunity remains.

In the last 10 years, Canadian companies such as Barrick Gold, Royal Bank, Weston Foods, and Magna International have invested more than $130 billion in Latin American countries such as Brazil, Chile, Mexico, Argentina and Peru. Their investments may not have eradicated poverty in those countries or turned the slums of Lima into a paradise of dancing joy. But a poor person now stands a much better chance of living a healthy and enlightened life in those countries than he did 10 years ago or if he lived under an insular dictatorship such as North Korea’s.

That’s why the agreement earlier this year between TSX Venture Exchange (TSXV) and the Santiago Stock Exchange (BCS), the second-largest stock exchange in South America, is another reason for optimism. The two exchanges have agreed to create a new venture exchange division in 2015, called Santiago Stock Exchange, Venture (BCSV), which will enhance access to global capital and provide a stable and well-regulated financial marketplace for small- and medium-sized businesses in Chile.

“TSX Venture Exchange has been successful in allowing companies to raise capital in the public market while protecting investors,” says Vince Mercier, a partner at Davies Ward Phillips & Vineberg in Toronto. “People are willing to invest in these companies because there is regulatory oversight.”

Operating under the same rules and with the same technological support, the BCSC will give investors the same reassurance as the TSXV when they buy shares in small and mid-sized businesses.

The arrangement also gives mining companies listed on the Canadian exchange greater access to Chilean investors while increasing potential capital investment in Chile and stimulating the development of new projects.

No matter where it occurs, the impact of foreign investment on a population depends on the stability and vision of a country’s domestic policymakers. In Latin America, most of the wealth remains in the hands of relatively few people. “Latin America and the Caribbean region maintain the global high-water mark in income inequality,” says the UN’s report. But the report observes that income inequality poses a challenge to governments in Canada and the U.S., as well. When it comes to the distribution of wealth, no one has the perfect solution. But without wealth, foreign or otherwise, there’s nothing to distribute.

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