Trending toward collectivism in LatAm?

Ed Marsh | Jun 6, 2011


What's Happening?

It looks like Humala is headed to victory over Fujimori in Peru's run-off election on Sunday 5 June.  The race is close, and could turn out differently, yet the fact that it is close is of import itself.





In May, Ecuador's "Correa noted in a TV interview that it was the eighth straight electoral victory "of this dream that is called citizens' revolution."" prompting many to question whether the shift represented a more deliberate move toward a Venezuelan model.



Recently RiskWatchdog opined that political risk is rising throughout LatAm as elections loom.



Honduras recently had a coup, and Ortega is running for office in Nicaragua.



Where's it Headed?

Against this backdrop Chavez continues his pattern of appropriation and nationalization of various industries.  Launched explicitly in 2007 and focused exclusively on the oil industry - and only companies with American links, this program has morphed into a much broader grab to retain power and influence and has now toppled even French retailers and British owned cattle.



But certainly for an american company, exporting to LatAm is an appealing prospect.  So how can you select countries upon which to focus?

No "Cart before the Horse"!

Obviously appropriate markets for your product are the key discriminator.  No point in seeking friendly environments if they are poorly suited to your "sweet spot."  Once you have the list compiled of perfect targets in a "perfect world" then sort them according to the criteria established to screen for markets which support your global priorities (in addition to revenue growth many companies consider other factors such as diversification, complementary sourcing, innovation and even R&D) Then reviewing that list, consider potential risks, uncertainties and complications which might render an otherwise appealing target somewhat less so - you need to consider the political risk element - as well as currency, physical security and other risks.