Omar Salgado Intenational Manufacturing

Figure 1: Human Development Index vs. Foreign Direct Investment

Although Latin America (LatReg) is a well located region, most people refer it to those countries with Spanish as official language, however if the description is strictly attached to the meaning of Latin, it would integrate also those countries or regions with Latin derived languages such as Portuguese and French. According to this, not only countries with substantial similarities to those of Spanish language like Brazil would be included but also dissimilar territories such as Guyana and Caribbean islands; furthermore, it would not be a comprehensive description of Central America and the Caribbean market region without the inclusion of English speaking countries and territories, especially those with Spaniard origin but with adopted Anglo Saxon culture such as Puerto Rico and Trinidad & Tobago, as well as denying the influence of Africa not only in the Caribbean but also in Central and South American countries such as Belize & Brazil.

The delimitation was done at first instance by selecting region indicators that would give us a hint on one hand, about the human development of citizens and on the other, how open LatReg has been to foreign direct investment (FDI). As an exploratory initiative, this delimitation could be modified along the research as soon as more information is collected.

Human development Index (HDI) is a figure provided by the development programme of United Nations since 1990 with the aim of putting forward critical issues on human development and as an alternative to income-based measures of national and individual well-being (Development Programme). HDI considers life expectancy index, Education index (adult literacy rate, combined gross enrolment ratio to primary, secondary and tertiary education), Gross Domestic Product (GDP) index (GDP per capita). Along with HDI 2007 figures, foreign direct investment as a percentage of GDP 2007 (UNCTAD, 2009) was used to understand the impact of FDI on HDI. Hence, a graph (See: Figure 1) was built interacting HDI vs FDI and four quadrants were created by dividing countries in groups above and below indicators mean. The quadrants are:

• Group ONE (High HDI & High FDI): Countries with high HDI and which economies rely importantly on FDI. These countries are basically Caribbean Island such as: Antigua & Barbuda, Saint Kitts & Nevis, Grenada, Saint Lucia, Dominica, Bahamas and Panama in Central America.
• Group TWO (High HDI & Low FDI): Countries with high HDI but which percentage of FDI on GDP is not as high as group ONE members. These countries are in a gross group of Latin American economies such as: Brazil, Mexico, Argentina, Colombia, Venezuela, Chile, Barbados, Costa Rica, Uruguay, Peru, Ecuador, Trinidad & Tobago and Cuba.
• Group THREE (Low HDI & High FDI): Countries with high FDI but which HDI is below the Latin America mean. These countries are: Belize, Suriname, Guyana, and Saint Vincent & Grenadines.
• Group FOUR (Low HDI & Low FDI): Countries with low FDI and low HDI are probably the least developed nations in Latin America: Dominican Republic, Paraguay, Jamaica, El Salvador, Honduras, Nicaragua, Bolivia, and Haiti.

Figure 2: Human Development Index and Countries’ GDP

However, Group TWO in the above classification is quite heterogeneous in terms of the size of their economies and possibly that is the reason why FDI for Group ONE members accounts high as a percentage in every country GDP; in consequence a second graph (see: Figure 2) was build interacting HDI vs. GDP and it was possible to see that Group TWO splits on three groups:

• Group TWO A (High HDI & very High GDP): these countries are the biggest economies in Latin America which GDP is far larger than the rest of LatReg: Brazil and Mexico.
• Group TWO B (High HDI & High GDP): these countries are the followers of Group TWO A in terms of economy size and it is a quite homogeneous group: Argentina, Venezuela, Colombia and Chile.
• Group TWO C (High HDI & Low GDP): these countries are the rest of Group Two which economies size are below the Latin American mean.

Figure3: Humand Development Index vs. Percentage of Manufacturing activities on countries’ exports

Finally according to the world trade organization (WTO, 2009), Latin American countries based their exports on three types of activities: extraction industry, agriculture and manufacturing; this can give a hint of the type of MNEs found in the region. Hence, a third graph (see: Figure 3) was built to interact HDI vs. the percentage of Manufacturing activities on countries GDP.

References:

Development Programme United Nations Human Development Report [Online]. - UNO. - 20 July 2010. - http://hdr.undp.org/en/statistics/.

UNCTAD Handbook of statistics [Report] / Conference on Trade and Development ; United Nations. - 2009.

WTO Trade profiles [Report] / World Trade Organization. - 2009.