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Losing Latin America

When is the United States going to wake up to what is happening in Latin America? The growing influence of Venezuela’s leftist president, Hugo Chávez, is casting a dark shadow over the region. Some countries – Chile, Columbia, and Costa Rica, for example – remain committed to progressive growth-oriented and democratic regimes. But over the past year, allies of Chávez have come to power in countries like Ecuador and Bolivia, and just missed winning in a few others. In Mexico, Chávez’s admirer Andrés Manuel López Obrador would have seized the presidency, possibly for life, had he convinced just a quarter percent more Mexicans voters to support him.

With almost everyone else in the world successfully pursuing more flexible market-oriented economies, why is Latin America veering dangerously in another direction? Is it because some voters do not realize that the region has been enjoying greater economic stability than it has in decades? Is it because they don’t appreciate having single-digit inflation, down from a regional average of more than 300% 12 years ago?

Fortunately, at least half the voters in the region appreciate these improvements; otherwise, the situation would be far worse. Nevertheless, a growing schism between left and right has led to a distressing level of policy paralysis.

This is nowhere more apparent than in Mexico, the region’s second largest economy after Brazil. Despite its enviable location next door to the rich and booming US, Mexico’s growth has ranged from poor to tepid since its economic crisis a decade ago. Why hasn’t Mexico benefited more from the 1992 North American Free Trade agreement?