The South-American Situation on Globalization and Competitiveness The objective is to elaborate a database with an analysis of each of the countries within each country, but not to compare indicators between them. Thus, the work becomes a reference of information for all those interested in consulting the situation in a given country of Latin America in terms of globalization and competitiveness in the year 2015.

On the other hand, the database can be used in following researches as a starting point for other students interested in perform the analysis and the respective This document corresponds to an comparisons between the results implementation in Globalization and obtained in the present study. Competitiveness, one of the classrooms of the Faculty of Economics at This paper is the result of the guidance, Institucion Universitaria Politecnico editing and coordination is responsibility Grancolombiano, of the methodology of Professor Julio Cesar Botero R, leader developed under the research project: A of the Globalization and Regional divided Integration: An analysis of the Integration Processes research group. implications for integration of the Latin American sub regional integration Elaborated by: processes. Daniel Céspedes Daniel Barbudo The methodology used for the project, Diana Vaquero consisted in to review the situation of the Diana Linares countries of South America in terms of Natalia Segura indicators of globalization and Natalia Pedraza competitiveness built by the KOF institute and the World Economic Forum.

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Country Page

Argentina 3

Bolivia 19

Brazil 37

Chile 56

Colombia 84

Ecuador 111

Paraguay 133

Peru 155

Uruguay 169

Venezuela 185

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Argentina persisted despite numerous challenges, the most formidable of which was a severe economic crisis in 2001-02 that led to violent public protests. Argentina served a nonpermanent seat on the UN Security Council from 2013 to 2014. This report is intended to address the level of globalization and competitiveness in Argentina by analyzing factors and strengths, weaknesses, opportunities and threats facing the world and its continuous development, for in this way with the collected information, suggest recommendations that focus on maximize their strengths and opportunities to cancel or decrease his weaknesses against the international market and growth of globalization to find greater viability in the event of external investment and competitive Country description: dynamics. The United Provinces of the Rio Plata declared their independence from Spain (CIA) in 1816. The area that remained after Population of Argentina: the separation of Bolivia, Paraguay, and Uruguay became Argentina, Their 43,024,374 (July 2014 est.) culture and population were heavily shaped by immigrants from throughout Population growth rate: Europe, with Italy and Spain providing 0.95% (2014 est.) the largest percentage of newcomers from 1860 to 1930. Up until about the Major urban area: mid-20th century, much of Argentina's history was dominated by periods of BUENOS AIRES (capital) 15.024 internal political conflict between million; Cordoba 1.504 million; Rosario Federalists and Unitarians and between 1.367 million; Mendoza 999,000; San civilian and military factions. After Miguel de Tucuman 899,000; La Plata World War II, an era of Peronist 835,000 (2014) populism and direct and indirect military interference in subsequent Government: governments was followed by a military Argentina republic: junta that took power in 1976. Government type: republic

Capital: Buenos Aires

Legal system: The Democracy returned in 1983 after a failed bid to seize the Falkland Islands It is a system of civil law based on (Islas Malvinas) by force, and has Western European legal systems.

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International Law Organization (associate), PCA, SICA (observer), UN, participation: UN Security Council (temporary), UNASUR, UNCTAD, UNESCO, has not submitted an ICJ jurisdiction UNFICYP, UNHCR, UNIDO, Union declaration; accepts ICCt jurisdiction. Latina (observer), UNTSO, UNWTO, UPU, WCO, WFTU (NGOs), WHO,

WIPO, WMO, WTO, ZC Political leaders in Argentina: (CIA) Civic Coalition or CC (a coalition loosely affiliated with Elisa CARRIO) Economic: Argentina possesses rich natural Dissident Peronists (PJ Disidente) or resources, also people with high rate of Federal Peronism (a sector of the literacy, fortress in the agricultural Justicialist Party opposed to the sector which is oriented to export and Kirchners) has a diversified industrial base. Front for Victory or FpV (a broad Although Argentina was one of the coalition, including elements of the PJ, country’s most rich 100 years ago, UCR, and numerous provincial parties) suffered from the economic crisis in the [Cristina FERNANDEZ DE greater part of the 20th century, on a the KIRCHNER] current account deficit, high inflation, a growing debt, the flight of capital, great Peronist (or Justicialist) Party or PJ depression, borrowing public and [Eduardo FELLNER] external, at that time and at the beginning of the present century the Radical Civic Union or UCR [Ernesto President a.i. Adolfo Rodríguez SAÁ SANZ] declared the largest external debt of the Republican Proposal or PRO [Mauricio Government in December of that year MACRI] and abruptly He resigned a few days after taking office. His successor, Socialist Party or PS [Hermes Eduardo DUHALDE, announced the BINNER] end of pin 1-to-1 Decade of the weight with the U.S. dollar at the beginning of Renewal Front (Frente Renovador) 2002. The economy touched bottom that [Sergio MASSA] year, with the GDP real 18% lower than in 1998 and almost 60% of Argentines International organization under the poverty line. Real GDP participation: rebounded to grow by an average of AfDB (nonregional member), Australia 8.5% annually in the following six Group, BCIE, BIS, CAN (associate), years, taking advantage of previously CD, CELAC, FAO, FATF, G-15, G-20, loose capacity industrial and labor, a G-24, G-77, IADB, IAEA, IBRD, restructuring of the audacious debt and ICAO, ICC (national committees), reduced debt, excellent international ICCt, ICRM, IDA, IFAD, IFC, IFRCS, financial conditions, and expansionary IHO, ILO, IMF, IMO, IMSO, Interpol, monetary and fiscal policies. Inflation IOC, IOM, IPU, ISO, ITSO, ITU, ITUC also increased, however, during the (NGOs), LAES, LAIA, Mercosur, Government of President Néstor MIGA, MINURSO, MINUSTAH, KIRCHNER, which responded with NAM (observer), NSG, OAS, price on business restrictions, as well as OPANAL, OPCW, Paris Club to export restrictions and taxes from

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2007, with data of underestimating compensation agreement with Repsol inflation. Cristina Fernandez DE for YPF expropriation and submit a KIRCHNER succeeded her husband as proposal to pay its arrears to the Paris President in late 2007, and the rapid Club. However, the Government in July economic growth of the previous years 2014 dwells again on its external debt began to slow sharply next year as since it was unable to reach an government policies to retain exports agreement with us creditors of retention. and the world economy fell into a The delay of the Government to reach recession. The economy in 2010 an agreement and the continuation of recovered strongly from the recession of interventionist policies are contributing. 2009, but it has slowed down since the end of 2011 as well as the Government (CIA) continued to rely on expansionary fiscal GDP (purchasing power parity): and monetary policies, which have kept inflation in the double digits. The $927.4 billion (2014 est.) Government extended the State intervention in the economy throughout $943.4 billion (2013 est.) 2012. In may 2012, the Spanish Congress approved the nationalization $916.5 billion (2012 est.) of oil company Repsol YPF. The GDP (official exchange rate): Government extended the formal and informal measures to restrict imports $536.2 billion (2014 est.) during the year, including a requirement for prior registration and prior approval GDP - real growth rate: of imports. In July, 2012 the -1.7% (2014 est.) Government also tightened further currency controls in an effort to bolster 2.9% (2013 est.) foreign reserves and halt capital flight. In 2013, the Government continued 0.9% (2012 est.) with a mix of fiscal and monetary expansionists and controls to limit the GDP - per capita (PPP): drain outside the Central Bank's $22,100 (2014 est.) reserves, foreign exchange and imports that however fell US $12 billion during $22,700 (2013 est.) the year. GDP grew by 3% and inflation remained stable at 25%, according to $22,300 (2012 est.) private estimates. In October 2013, the Government placed the international GDP - composition, by sector of arbitral disputes long (including three origin: signatures of United States) dating from agriculture: 10.4% before and after the Argentina financial crisis of 2001-02. In early 2014, the industry: 29.5% Government adopted some Orthodox economic policies. Depreciated weight services: 60.1% (2014 est.) 20%, they substantially tightened Agriculture - products: monetary and fiscal policies, and took steps to mend ties with the international sunflower seeds, lemons, soybeans, financial community, including: grapes, corn, tobacco, peanuts, tea, engaging with the IMF to improve its wheat; livestock. economic data reporting, reach a

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Agriculture is their main strengths and Soy beans and derivatives, petroleum areas for export, for this reason is and gas, vehicles, corn, wheat invested large amount of gross domestic product. Exports - partners:

Industries: Brazil 21%, China 7.1%, US 5.5%, Chile 4.6% (2013) food processing, motor vehicles, consumer durables, textiles, chemicals Major exports in Argentina are derived and petrochemicals, printing, from industry and Agriculture and its metallurgy, steel export framework focuses mainly to neighbours in Latin America, mainly We can see that Argentina is currently Brazil and continental framework, its one of the most important links in the main partner is China in the field of world for the global value chain in the natural resources and food products. automotive sector, since in this country are manufactured motors and other Imports: industrial materials. $65.9 billion (2014 est.) Labor force: $70.54 billion (2013 est.) 17.31 million Imports - commodities: Labor force - by occupation: machinery, motor vehicles, petroleum agriculture: 5% and natural gas, organic chemicals, plastics industry: 23% Imports - partners: services: 72% (2009 est.) Brazil 27.8%, US 14.5%, China 12.4%, Unemployment rate: Germany 4.6% (2013) 7.7% (2014 est.) Reserves of foreign exchange and gold: 7.1% (2013 est.) $26.6 billion (31 December 2014 est.)

Population below poverty line: $30.53 billion (31 December 2013 est.) 30% its main imports are focused on machinery to apply in your industry and Inflation rate (consumer prices): improve its processes, natural energy such as oil and gas, demonstrating the 36.4% (2014 est.) comparative advantage in the absence 20.7% (2013 est.) of these inputs, in this case its partners change a little continental framework it Exports: is mainly Brazil and States only and intercontinental framework still to $76.47 billion (2014 est.) China this time with Germany also. $81.53 billion (2013 est.) Foreign investment: Exports - commodities: Stock of direct foreign investment - at home:

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$116.7 billion (31 December 2014 est.) - political context: the national has been replaced by the global, as it is $109.9 billion (31 December 2013 est.) evident in many countries of America, since the autonomy has deteriorated country comparison to the world: 40 have been limited to the international Stock of direct foreign investment - context by adjusting its internal policies abroad: with the intention of global development and being continuously $35.98 billion (31 December 2014 est.) intervened by global policy. $34.33 billion (31 December 2013 est.) - economical context: in this sector has had enough improvements taking (CIA) into account freedom financial and capital flows, since between countries has been canceled many trade barriers and facilitated doing business and have enabled countries such as Argentina Introduction: exploiting potentially their resources and competitiveness economic offered

these to plunging dynamically in the Before we talk about the effect of economy and global trade, but are also globalization in Argentina, it is subject to changes and structures necessary to define it as the imposed by the global economy, which intensification of aspects socio-cultural, sometimes affects the entire American political and economic global market and lost competition with framework. Considering that developed countries which means that globalization is a phenomenon that has in the aspect of economic globalization more repercussion in America, since the has a synonymous with capitalist expansion in trade and economic has its -socio-cultural context: global values, bases in the production of raw material have been imposed to which are subject in America, as well as the all over the world and which determine diversification of resources, as they are some internal aspects of the country also the workforce, that in the last related to economic factors as decades has had enough growth on this production, this is explained in continent, led by United States, then Argentina and Latin-American Mexico, after some countries in Latin generally as the social ability of America such as Chile, Brazil and individuals which is insufficient in mainly Argentina. terms of cooperation, since the benefit As the American continent mainly in by own growth premium and this stalls full development receives mostly the development of these countries, all impacts that bring globalization on all down to the wealth of resources that aspects of positive or negative form. exists in America, it is regarded as the future source of resources around the Below to see some of them presented in world , but with so much wealth, fault most Nations Americans, mainly in distribution of these same by internal Argentina, usually explaining the factors such as corruption, that is influence of globalization on the pillars present in almost all Latin America, more important, that they are political, factors such as education are still under economic, social and cultural development by which not have been able to adapt completely to the system,

8 but once to achieve this objective, the -its landscapes and tourist sites, are grow community with better values, mostly visited Latin America in the which give them a sense of belonging world and cooperation for development Therefore this is a disadvantage, as - Argentines are normally regarded as countries developed in the field of strong economic difficulties to education, Latin America is way individuals and are the knowledge they behind. have acquired in the industrial production of quick adaptation in other The incorporation of new cultural and countries. , thanks to be link in the ideological patterns of domination in production of machinery around the America built new meanings and create world focused on the automotive sector. a particular cultural sense about how we represent the Latin American project. Weaknesses: Globalization meets a general process - there is a lack of sense of belonging in derived from the development and marks of global products from contradiction of world hegemony that Argentina, which does not provide the very focus includes ideology as respective prestige livelihood unavoidable economic reality that was imposed under the name of -there is a strong State policy, since this neo-liberalism. Log out, then, those is changing and loses consistency in oppressive and suffocating cultural changes of Government. elements that embodies the globalization is a necessity if same of -There are problems in the attraction of the near future investors that Argentina is no longer guaranteed legal certainty. All these factors that incorporates the globalization currently make each country to take measures to adapt to this changing, so Argentina has not been back, and though it is a still developing country seeks alternative to bring it to mitigate the disadvantages that Threats: globalization presents to you in the same form their advantage to grow and - The Argentine domestic market is enter the global economy , then we will threatened by the displacement of do a Swot analysis on the situation in domestic production that could lead to Argentina, where we will observe their the increase of imports, as in the strengths, opportunities, weaknesses Brazilian market, the loss of preference, and threats in front of globalization because of the lack of quality and given its competitive aspects: production costs of inputs, these deficiencies increase imports.

- Agriculture concentrates the quasi- Strengths: totality of the higher tariffs (inside of this sector, food of temperate Argentina has a good positioning in the agriculture). Which much hinders the world regarding the consumer sector, potentiation of Argentine exports, since thanks to its industrial and productive they focus on the agricultural sector and agro sector which is one of its largest these barriers hinder their growth. sources of competitive advantage (CEI, 2004) 9

Oportunities: - The liberalization of trade among developing countries helps both to Agentina and the majority of Latin American countries, since it facilitates the exchange of goods and services and provides the use of the comparative advantages of countries in order to achieve growth in their economies - 50% of Argentine exports currently enter free rights. Another 22% do so with tariffs < 10%.lo which causes a large increase in the volume of its (report, 2015) exports focusing in the industrial sector and agriculture, products that have minor restrictions. (svarzman) Analyzing the situation of Argentina at We can see that the strengths and the pillars of the global competitive opportunities of Argentina are found index found that the passage of several mainly in economic liberalization and years Argentina has acquired stability its agricultural production and this last couple of years 2014-2015, industrial, on the other hand, after coming several years very low, weaknesses and threats are barriers and although in the same way it is in a very Government corruption that grind to a low position because of internal halt the development of the country, and problems that have stalled a little his carelessness in its market inner that competitiveness and progress. The promotes increase of import and you is situation specified in Argentina in front find it difficult to compete with of each pilar: products from foreign markets as of Brasil. 1. Institutions: suffering from weakness in its institutions due to government With this we can analyze that Argentina inefficiency, which defines it as one of requires a restructuring internal the pillars but weak in terms of governmental framework, which better Argentine developing. distribute investments and allocate them to the development of the country in 2. Infrastructure: In this pillar is stable, this way making it more competitive. because despite the governmental problems, good investments are aimed (CEI, 2004) at the infrastructure of the country. Global Competitive Index: 3. Macroeconomic environment: conditions are very adverse in this pillar, it is one of the main concerns, since building its economic resilience in a changing global economic context characterized by prices lower commodity that can drastically affect the Argentina economy which affects

10 the access of health and primary to this sector, not have been destined so education. technologically Argentina is backward. 4. Education : it is the pillar high for 10. Market size: a pillar high in Argentina despite not being fully Argentina, since its market size is very developed, has focused good large, thanks also to the diversification investments to the sector of education of the same emphasized to the farming and health, thinking long term and and industrial sector, where it has much human development, to take care of potential, that does not reach to be fully their future generations and provide developed by the corruption. guarantees basic, something that has been difficult in Latin America. 11. Business sophistication: given the barriers that hinder the development of 5. High education: is another stable Argentina, market has not been possible pillar, high in the context of Argentina, to be sophisticated since it has not with a Tin enrollment University, but invested effectively with this intention many people who are in these studies or and the market is reduced to basic have acquired them effectively, taking common exchange of goods and into account also the large population services. from other countries who come to Argentina to specialize in university 12. Innovation: innovation Argentina studies. stays late, because of the corruption which no large investments earmarked for the sector of research and development, by which great innovative 6. Goods and market efficiency: another dynamics in Argentina has not been low pillar in Argentina by the inefficient observed. functioning of labor market not potentiates due to unfavorable (report, 2015) conditions macroeconomic and internal competition with imports products. Competitiveness: 7. Labor market efficiency: a pillar that With the earlier pillars, defined is the same level of the former given the practically in each area the situation of inefficiency at work in the internal competition in Argentina, where we environment, since Argentina has not observed that in several of the aspects focused on their markets but thinks more important for this subject, are low, more in international context, such as institutions, innovation, dedicating its production mainly to this sophistication of business, technology, market development. financial development and efficiency in the market. Which this linked 8. Financial: a pillar of very inefficient, specifically to the administration of the since financial markets in Argentina Government and the distribution of have become an obstacle to the investments in each area, which makes development and the potential of the clear the high corruption that tight to country caused mainly by government Argentina, the problem of not investing inefficiency and high corruption. in these sectors, cause the country to lose enough competitiveness with the 9. Technology: it is good preparation in dynamism of Latin America, where it sense technologic know designing has not taken good advantage of the industrial products, thanks to the self- resources of this country and to its link in production, but good investments diversified portfolio , since without

11 government support, for a company in competitiveness up to the year 2014 of Argentina, is difficult to integrate into the post 70 to 104 what clearly is related the global market and be competitive. to its internal problems and both economic and political stagnation. Since it is very difficult to achieve While the graphics have a growing growth without even receiving domestic trend, must remember that this is support, policies not conducive even to negative, since the increase of the local businesses, not to mention that not number place, evidence that Argentina by the same regulations, Argentina lose increasingly will come. But it is clear attraction for foreign investment, but that in the competitiveness index has when it reaches another company from been declining from 2012 of 3.99 to the outside is very difficult to its 3.76, and its point most high was in domestic producers to compete with the 2007 with 4.02, this same evidence the prices of those goods or services , since problems mentioned above. they are not properly subsidized by the Government, as is happening now same Then find an analysis made by Daniel with the arrival of Brazilian companies Sticco, who is an Argentine Economist in Argentina, the production of these at prestige, explaining through 5 same have become as mentioned above specific factors, which are the reasons one of the greatest threats existing in for the low competitiveness that exist in Argentina, on the theme of the market. Argentina. Despite these negative factors, we find that in the analysis of competitiveness, The first factor that explains is high Argentina has grown gradually in recent inflation in Argentina, which is guilty of years, which shows that his situation almost one-fifth of the difficulties of was even worse before in terms of local firms to trade with the rest of the competitiveness. world, because that policy would also change this passive with regard to the prices, therefore there is uncertainty when calculating with which trade prices. The second factor makes reference to the regulations would change with 16.6% incidence in the index of competitiveness relating to authorizations for payments of imports, by the high dependence of the national production of supplies and parts that are not produced in the country. Since purchases abroad are to the national industry, to complete its manufacturing cycle, is automotive, food and even more drugs. (Datosmacro.com, 2014) In the third place, mentioned in financial access by the consequence of

the political decision not to attend the In this table and graph we find that from international credit markets such as the the year 2007 Argentina has given International Monetary Fund, positions in the ranking of committing itself only for use of the

12 reserves of the central bank and cost a Countries need markets for its growth, little higher to the Government of but also need to State institutions so that Venezuela. markets thrive." "Without an effective State, says J. Wolfensohn - is Sticco defines this as "live with ours is impossible to achieve the goal of expensive". sustainable economic and social development". the fourth factor, this is clearly linked to the high corruption present in Argentina This suggests a rethinking State, as mentioned above has great negative revitalizing and focusing on the impact on the business of the companies institutions to achieve a sustainable with the rest of the world. market, we find that this is one of the biggest problems in Argentina, since by And finally the fifth factor refers to the factors such as corruption and improper high tax pressure in Argentina affected distribution of investment to the sectors mostly by withholding and not updating concerned, the institutions in Argentina what's in balance by inflation and rising suffer from this defect that stalls your taxes at the municipal level rises. growth, so it is necessary to prioritize (Sticco, 2014) this type of investment institutions making it a follow-up to energize them.

The market may be global, but the State Now we will deepen in the influence of is and will remain national. And this is globalization on aspects socio-cultural, so by virtue of that State is a natural and political and economic of Argentina, for necessary institution, is the legal and in this way analyze their effects in the political expression of a nation, which inner landscape of the country: ensures their decisional autonomy and sovereignty, which guarantees the order Globalization in the economy: and the common national good. For this the economic transformation that took reason the State should promote the place in Argentina at the beginning of institutional growth either directly or the 1990s, the country was opening up indirectly, the Argentine State must to the global world which resulted in the adapt to this globalized world, in which incorporation of foreign investment, mercantilism which materializes in new technologies, new efficiency and recurrent and widespread competitive production-activity parameters, and the protectionism in defense of industry and achievement of higher levels of growth. national technology. All of these events had high economic The political leadership which is and social costs, but it is more important handling the country already is very to emphasize is that the institutional and important that these can’t resist the cultural shortcomings of current forces and the economic interests of the Argentina that impact today on day in hegemony on the world market. the country, affecting the development All this growth because of the global of the nation exposed. economic opening had high cost for the They bring three fundamental issues commercial and productive structure that affect this Argentine panorama: Argentina not to have a high degree of development not could cope with The wrong conception of the State: international competition, but should opt for an opening more gradual. This

13 began also the structural crisis in small that has Argentina for trade This and medium-sized enterprises in inner evidenced the lack of local and outer frame, which caused missing strengthening that there in Argentina several of them requiring support from and prevents its development and local public and private. economic growth, is due to political or own companies, since after not being In a time of competitive protectionism, supported or receive good investments Argentina left to fend your panorama of the State, they do not make much out international as opposed to countries as of economic stagnation. Germany or China in which witnessed, that long-term sustainable development The identity crisis: cannot be achieved without protecting their industries and national companies The identity is the set of factors that in Argentina this could not be done determine the individuality of a because of a lack of a conductive State character or object in particular, this allowed that prevailing economic being a country, which leads to cultural interests in the global marketplace identity, which sets general aspects for severely been the path of development the members of a community that and they commit themselves in the same describes its behavior in different way its economic and political situations. In the world has been able to sovereignty. not exist factors that spread the behavior of all Nations, since they are internally National project: very different conditions and not all can adapt to the same economic system or An of the big flaws of Argentina, is the political, as in the case of capitalism, lack of a project or protocol which are where the country is in full handled in the medium and long term development, is at a disadvantage since goals, this makes that viability is lost not to reached features maximum since are not channeled sectorial potential as opposed to the great power interests economic, synonymous with a purchasing fully industrialized great delay front global trade countries. While objectives have been development. set to achieve stability in the development of countries, such as There can be no global projection if it is education, health, among others, in the not from the local and national; same situation, some countries as Therefore, the way in which a country Argentina, are newly developed these articulates its own resources, its markets factors, requiring large investments in and its internal technologic –productive their seeds. The crisis of identity is structure with the new dimensions of created when a country like Argentina the external context, will be one not less looks for another economic model aspect in order to realize a development which apply to its economy, this is strategy. something very complicated, with All these factors have led Argentina to internal variations, such as gross be dependent on international markets, domestic product and inflation effects, specifically the financial, which makes Argentina has tried to compete with them lose autonomy in conjunction with countries like the United States, its low rating from its own resources, to imitating the value of its currency promote its market internal and whether compared with the American, which is this causes the patrimonial not suitable for the different exchange internationalization, where also there is rate conditions and economic of the two use geographical potential opportunities countries. When Argentina find their

14 own identity and factors that determine the aim of hiding, under the ideological their qualities around the world, solving and economic privilege become visible and adapting their markets, it could the divisions of class and the deep achieve tremendous growth and degree of conflict that reaches all development. (Lacquaniti) sectors of Argentine society. That is, while on the one hand cultural devices Globalization in Argentina politic: of globalization pursued the purpose of abruptly "represent" social divisions to Argentina has an important participation hide a real context of unification at the political level worldwide in between the subaltern sectors, on the conjunction with bilateral organizations, other hand, involved a process of although without allowing his homogenization that attempts to impose interventionism in the political or a uniform cultural behavior in the economic popular sectors to exploit its socio- Argentina, along with other countries of cultural practices. Here is where should South America, part of the Mercosur is the question, which led to the crisis in and the Union of South American Argentina was a rearrangement of social Nations. He participated in every phase classes, a restructuring of its of the operation in Haiti, and it has also membership that globalization takes contributed to peacekeeping in different advantage of dynamically to act and parts of the world operations. In intervene in a cultural and economic recognition of their contributions to restructuring that is adequate to the international security and peace, U.S. ideological guidelines of reproduction President Bill Clinton designated of social inequality. With the double Argentina as an important ally extra- aim of integrating and distance to the OTAN in January 1998. social classes in capitalist development, cultural globalization takes advantage of Globalization in the socio - culture of the transformation process happened Argentina: between the sectors of national society as a result of the structural crisis in the Globalization acts modifying socio- Argentina to reorganize them under a cultural structures and penetrates in logic of symbolic production that keep peripheral societies to produce joints subordinate its ability to transformation. and differentiations between the social classes to replace the bases of cultural On this meant that the own needs of identification of a nation. I.e., the contemporary capitalism In addition of peripheral countries introduced a set of the actual "economic", are also the cultural homogenization and "imaginary", i.e. the cultural differentiation mechanisms to deal with reproduction of social inequality. in particular its influence according to the relations of class and the global Transculturalization of culture or inclusion established in peripheral cultural globalization produces cultural countries. The intention of the processes differences between higher social of globalization in the cultural field is to sectors and the rest. Now, one of the generate differentiations where "cultural most formidable elements of this social impact" unleashed by the crisis reproduction that uses cultural provoked a certain unification among globalization is the compulsive the working classes in order to break distribution and production in mass of them, divide them and split them, while certain cultural property, resulting in a it induces a process of homogenization process of massification, differentiation, there where these cultural clashes with equalization, and new social

15 differentiation. The clearest example of globalization on the economy of this reproduction is in "fashion". But Argentina have been mainly negative, there is something else. as do not take much advantage of conditions, given globalization and the And the transfer of cultural goods which ease of trade such as the reduction of the core countries turn over on the barriers and obstacles to the exchange outskirts in the "globalized" capitalism. of goods and services already as Here the cultural subjugation process mentioned before Argentina this very works not as social differentiation in the stagnant by internal factors mainly interior of the national society, but as macroeconomic and Government as national differentiating between the high inflation and corruption, hindering dominant and the peripheral countries. that Argentine companies can trade It is that imitations of cultural idioms of abroad effectively linked also to the centers are in contradiction with unfavorable policies change in the national traditions of the periphery, country, for this reason the where the resulting general of this competitiveness of Argentina for the process is the production on the world is low and very restricted, periphery of a guy late for their national therefore we can say that globalization cultural behaviors or an inappropriate provides many benefits for developing subject naturally to achieve a proper countries helping to its introduction into social hierarchy. Until the social the global economy , but at the same outbreak loosed in December 2001, time are disadvantaged compared to the across hegemonic globalization world powers, which have the first machinery does not recognize place in the capitalist world, in terms of limitations and was only with the competitiveness with other countries emergence of social movements that the also is evident that Argentina is at a idea of a national project thrives and disadvantage when they enter foreign where the formation of a national and industries and compete with its popular within the framework of the domestic production. globalization of world culture emerges as part of the process of independence Which pillars of the global and national resistance. competitive index influence mostly in view of globalization for Argentina? (Tragarelli) As mentioned above the pillars that have major implications for Argentina are institutions, the efficiency of the Now altogether to globalization and market, the financial aspect, the competitiveness we set ourselves some technology, the sophistication of the questions where it examines the impact market and innovation since they are of these variables in a country like internal factors of great importance that Argentina and the way in which apply define, so globalized and competitive in this scenario: may be abroad, because once these What consequences have the factors are exacerbated, any developing globalization in the economy of country would have great dynamism Argentina and that way influence and advantage to enter the world market these factors in the competitiveness of These pillars are very important in the country? Argentina since they are the largest projection that explains the Argentine Throughout this report we have problem in the global framework, the observed that the consequences of positive of having recognized these

16 issues, is that the Government can focus running the risks presented by the on investing in them and improve them globalized world. for this way to have growth in all the sectors concerned, for this reason we Recommendations: can conclude that when restructuring -At political level it would be necessary each of these variables , the overall for Argentina to be opened more to the framework of Argentina will be more global context, thus promoting greater favorable and the country will have participation in bilateral agencies which greater growth in terms of can benefit the country through competitiveness in the world market, cooperation to facilitate certain taking into account that it has enough administrative factors that have affected potential to succeed. the development of Argentina as a The opening to a globalized world resume for example, integration with would offer a greater competitiveness the International Monetary Fund. to Argentina? -Is necessary political restructuring on Completely, though this would have commodity investor, in such form in positive and negative connotations of which to analyze the variables that need that as open could be Argentina toward attention, such as low spots observed in a globalized world and the efficiency of the pillars of the index of its protectionist policies. To open up competitiveness, this form would be more to the globalized panorama spent for the growth and improvement Argentina would leave behind many of these variables, as well as the need to internal restrictions in the market, as for increase investments in the sectors of this should be as we have mentioned the economy especially where more before investing more by the competitive advantage might have, such Government toward the national as the agricultural and industrial sectors. enterprises and structural variables of -Argentina requires reducing and has trade in Argentina, for this reason it more control of its high inflation and would also have great importance the political change, since they are cause strengthening of domestic industries to and consequence of their problems to promote competitiveness with industries have their national industries that would come to the country to development in global trade. compete , for this reason the Government shall encourage mostly -Prioritize investments to local to their commercial sectors that same foreign investment industries, since foreign investment by other countries, every time they arrive in the country, economic openness and global must be local industries are totally directly dependent on the strength of disadvantaged and his family shopping their protectionism for thus do not basket, is affected since most of disadvantage to his country, since revenues end up benefiting these otherwise it runs the risk of several foreign companies. potential threats that would make it more dependent on imports and would -The Government with the support of drop its gross domestic product and the the population should generate a balance would be lost from the family collective about their true roots as shopping basket. In conclusion, the Latin’s memory thanks to globalization global opening should be gradually its identity has been highly influenced strengthened its internal aspects for not by many countries, and there are no indigenous collective memories.

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-Argentina needs to strengthen its Bibliography protectionist policies for this way to introduce the global economy with greater efficiency and less likely to suffer from threats of capitalism. CEI, E. d. (Noviembre de 2004). CEI. -Generate stronger commercial identity Obtenido de around the world to promote better http://www.cei.gov.ar/userfiles/8 national reputation to the world %20SERIE%20DE%20ESTUDI OS.pdf -Focus on institutional viability to strengthen this aspect, which takes CIA. (s.f.). The world factbook. several years is handicap and is of great Obtenido de importance for development. https://www.cia.gov/library/publ ications/the-world-factbook/ -fostering innovation in the country to thus take advantage of this factor that is Datosmacro.com. (2014). Obtenido de of great importance worldwide and http://www.datosmacro.com/esta defines the advantage in terms of do/indice-competitividad- industrial or commercial processes. global/argentina -strengthen environmental policies for Lacquaniti, L. (s.f.). Monografias. thus acquiring sustainability and Obtenido de promote to efficiently exploit the http://www.monografias.com/tra renewable natural resources to take bajos16/argentina- advantage of these unusual globalizacion/argentina- commodities, thus you could generate globalizacion.shtml an added value for Argentina. report, T. g. (2015). The global -Make as many free trade agreements competitiveness report. and promote trade with neighboring Obtenido de The global countries taking advantage of their competitiveness report: competitive advantage, allowing flow of http://www3.weforum.org/docs/ trade and exchange the book for benefit WEF_GlobalCompetitivenessRe and benefit from other Latin American port_2014-15.pdf countries. Sticco, D. (03 de 09 de 2014). Infobae. -Encourage exports by removing Obtenido de restrictions and barriers to allow http://www.infobae.com/2014/0 industries to make trade and discourage 9/03/1592362-los-5-factores- imports to avoid deficits. que-explican-la-baja- competitividad-argentina -Take advantage of their national infrastructures to invest mostly in svarzman, G. (s.f.). Obtenido de tourism and maximize this advantage. http://www.cei.gob.ar/userfiles/o pamarue.pdf -Ensure support and investment to small and medium-sized enterprises for its Tragarelli, D. (s.f.). Obtenido de foray into the economy, looking at the http://rcci.net/globalizacion/200 same time encourage the consumption 8/fg727.htm of goods and domestic services.

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Area: Bolivia. • Total: 1,098,581 sq km;

• Land: 1,083,301 sq km; Water: Professor: Julio C. Botero R. 15,280 sq km;

• Country comparison to the world: 28.

Population: 10,631,486 (July 2014 est.). Country comparison to the world: 82

Government: Government type: republic; note - the new constitution defines Bolivia as a "Social Unitarian

State".

Background

Bolivia has a huge market to exporting gas and natural resources, but because of the laws and the political decisions is ranked in the least developed countries in the Latin American region.

Bolivia has structural problems, who are part of the development countries like bad institutions, low infrastructure, inefficient markets and low technological capacity and the government isn't give to this ones the real importance (eldeber.com.bo) Economy:

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• GDP (2014): $70.38 billion • Imports: $9.513 billion (2014 (2014 est.); Country comparison est.); Country comparisons to to the world: 94 the world: 106.

• GDP – Real Growth Rate: 5.8% • Exchange rates: bolivianos (2014 est.); Country comparison (BOB) per US dollar - 6.958 to the world: 39. (2014 est.)

• GDP – Per capita: $6,200 (2014 est.); Country comparison to the world: 158. Introduction. • Labor force: 4.881 million

(2014 est.); Country comparison to the world: 84 Bolivia is a Plurinational state, the present currency is the Boliviano who • Unemployment rate: 7.3% (2014 was established in 1988, since that the est.); Country comparison to the Central Bank of Bolivia is the only world: 81. financial system responsible for the coin • Population below poverty line: broadcast founded in 1928 (N.A., 45%. Wikipedia.org, N.D.). • Taxes and Other revenues: The Bolivian economy is focused mainly 48.7% of GDP (2014 est.); in extraction and export of raw materials, Country comparison to the the GDP is one of the lowest in the world: 17. region, and the minimum wage is over

• Inflation rate: 5.4% (2014 est.). the 91,5 USD per month (N.A., • Current account balance: eaboliva.com, N.D.). $1.133 billion (2014 est.); The composition of the economy in the Country comparison to the primary sector are mining and natural world: 47. gas extraction, in the secondary sector • Exports: $12.34 billion (2014 are beer production, dairy, oil, est.); Country comparison to the automotive industry, and in the tertiary world: 89. sector is composed by Telecommunications companies and also banks, although Bolivia has one of

21 the lowest GDP in Latin America, has This paper has the intention to show the one of the lowest unemployment rate of possible main causes of the deficiency in the region. In terms of production some the competitiveness from the aspect that really bother is the production interpretation of the Global of coca leafs (3rd producer in the world) Competiveness Index (GCI) (2014- although is used commonly with medical 2015) by The World Economic Forum. and religious purposes, also is used to Also a look of the Globalization in terms produce cocaine for US and European of economic, social and political markets (N.A., eaboliva.com, N.D.). globalization to provide an estimate of the state of the country guided by The Because Bolivia’s economy is composed World FactBook by the Central mostly by informality and large Intelligence Agency and the KOF Index companies are almost nonexistent, this of Globalization; and finally a has allowed the development of different comparison between the competitiveness types of microcredit business which are and the globalization and which common supported by bigger microcredit entities, factors affects both. this has made Bolivia the 2nd place globally with greater development in microfinance. (N.A., eaboliva.com, N.D.) (Evia & Pacheco, 2010)

Indeed, Bolivian exports consist of some products mostly raw materials, which is why Bolivia is susceptible commonly by external shocks like instabilities in the commodities market. (Antelo , Jemio , & Renquena, (N.D.))

According to the KOF analysis in 2014 Bolivia has 102 in terms of Economic globalization, 139 of Social globalization, 63 in Political globalization and with a ranking of 53,14 is the 100 in Globalization index. ((N.A.), (N.D.))

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GLOBALIZATION IN BOLIVIA restrictions on the handling of some political regulations. This crisis of The process of globalization is a legitimacy of the party system led to phenomenon that develops and steady crisis State to shape structural change in economic, political, social and cultural political institutions, under the growth for this case in Bolivia started leadership of popular games left made up from the twenty-first century in which of networks of social movements Bolivia began its international insertion. implemented transnational mobilization Its central feature is diversifying its against globalization. production structure and the global market economy making a more The aim is to contribute to the discussion dominant (Fernandez, Zegada, & of socio-political conflict looking for a Chavez, 2014)(N.A, N.D). reorganization of the international capitalist system from trends and Globalization policy: phenomena known under the term The process of economic globalization globalization, through mechanisms that has been affected by the crisis of allow this process of globalization and legitimacy of the system that has taken Bolivia suits it, from: the country, besides taking a long history • Retrieve the strategic of inequality and interethnic and inter management capacity of the fragmentation. Bolivia is in a socio- State political conflict, in which the political system of the military phase of • Redefine macroeconomic revolutionary nationalism has been in policies consistent with a constant dissent that aims primarily to strategy of growth fueled by achieve democratization of the political foreign markets and business system. This has caused a more complex innovation. and plural society Bolivarian affecting • Develop and coordinate policies their socio-economic sectors from the and programs of reconversion political system. and promotion of manufacturing An important fact was these political exports crises since 2000 when a crisis of • Strengthen private associations representation was presented, leaving so that they can provide support effects on neoliberal reforms and services to businesses.

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(Grebe, (N.D.)) • Constitutionalisation in the forms of organization; Community, state, private, Economic globalization: social, cooperative, where social and Economic globalization of Bolivia has community economy complement been subject to a strengthening of the individual interests to the collective. role of the state regarding the expansion • The new Constitution (NCPE) of political and economic alliances, establishes the "return of the state" to the achieving overcome the economic and strategic sectors of the economy, where labor conflict that Bolivia was. the surplus is generated. Bolivia has tried to be an exemplary • Society is demanding greater state country in terms of the application of presence in the control of natural neoliberal measures from stabilization resources and the redistribution of policies and the implementation of the wealth, reversing the capitalization of so-called reforms aimed at economic "strategic" sectors. growth in order to adapt to globalization while protecting the domestic economy • The rise in international oil prices is from the country. evidence that transnational sector of the economy was receiving returns on their The globalization process has been investment at much higher benefits than difficult for Bolivia as it is in a very perceived Bolivian society, even when it diversified economy in a slow growth benefited from improved many services and a low level of human development. and cheaper costs thereof. This influenced the process of globalization for Bolivia, for some • The regions demand greater access to factors like; the returns from the exploitation of natural resources located in the • It has a very diversified economy. departmental territory. (Bonifaz & • The economic and social gap with its Lünstedt, 2011) neighboring countries have been Bolivia's economy is based mainly in increased. industry, mining, commercial agriculture • State influence in the generation and and banking. These resources have not distribution of wealth, since adopted a been fully utilized to its full potential, so new role on strategic sectors. the process of globalization has been • A change in the world economy. difficult to Bolivia as they have not been

24 able to enter and compete in a global effects that influence the cultural conflict market, because even products do not in which the country finds itself. meet the standards be competitive and This cultural conflict and much affection position in the market, thus Bolivia the process of globalization, some should take over the resources they own, important aspects are: powering the economy and providing added value to be more competitive and • The reconstruction of a State in which possibly attaining adapt to this process of ethnic difference as a central focus of globalization. state institutions is recognized.

This process seeks to consolidate • Demand is channeled through the policies that serve as control construction of a multinational state, mechanisms so that globalization is a which recognizes indigenous autonomy way in which profits are made and no in local and forms of power-sharing at product markets for the level of the central State. industrialization of the countries that • The State redistributes surplus via drive these economic systems are downloads that primarily benefit the invading preclude one fair competition poorest and most excluded sectors. and liberalism and limited state • The plurinational state with autonomies intervention is demanded by is a structurally heterogeneous state in globalization. the territorial, political-institutional, economic and identity.

Social globalization: • The state has certain components

Bolivia is a country with great social consociational or power-sharing diversity, is composed of groups and between the indigenous and non- personalities from different ideological indigenous at the central level. and programmatic orientation: farmers • the possibility of creating autonomous who own small plots, indigenous indigenous spaces based on the principle peoples' organizations, small and of self-determination, with legislative medium entrepreneurs, academics, etc. powers and self-government, in addition

This diversity explains the contradictory to control of non-renewable natural ideological differences in political resources, respecting their customs were parties, that is one of the most important constitutionalized.

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• The shooting emigration abroad because of the beginning of the century crisis and political instability.

• Given an improvement in social indicators does not translate into economic gains, social movements demand the state a greater role in the distribution of wealth. (Bonifaz & Lünstedt, 2011)

Overall Bolivia is making improvements to the diversity of cultures that the country has to have more participation and thus to include them in a process of adaptation to a social globalization, where there is more participation of all social groups.

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COMPETITIVENESS IN BOLIVIA sophistication factors” (Los Tiempos, 2014) “Competitiveness is defined as the set of institutions, policies and factors that determine the level of productivity of a The Image 01 show the performance country”. (World Economic Forum, overview according to the GCI (2014- 2014) 2015), and show the 12 pillars which Bolivia in terms of competitiveness is a “quantify the impact of a number of key underdeveloped country, which is reflect factors which contribute to create the in the inability to create a sustained conditions for competitiveness, with economic growth, and as the Andean particular focus on the macroeconomic Competitiveness Project said “Despite environment, the quality of the country’s the structural Image 01. Bolivia’s Performance Overview reforms implemented since 1985, the level of per capita income does not exceed 2000 reached the late 70s.” (A. de Guzman, 2001).

According to the GCI study Source: Global Competitiveness Index (2014-2015) Bolivia is the 105 country with a general institutions, and the state of the country’s score of 3.8 in the index below technology and supporting Argentina, this country continued infrastructure” (Governance Assesment lowering of classification, while Portal, (N.D.)). maintaining a relative stability. These pillars contains subindex like

“Indicators that reflect the country's public institutions, private institutions, situation highlights three groups are the transport infrastructure, electricity and existence of basic requirements, telephony infrastructure, government efficiency enhancers and innovation and budget, GDP, inflation, government

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debt, health, quantity education, quality higher education and 5 3,7 of education, competition, quality of training demand conditions, flexibility, efficient use of talent, efficiency, technological 6 goods market efficiency 3,6 adoption and other ones which contribute to assess the competitiveness 7 labor market efficiency 3,6 in each country. 11 Business sophistication 3,6 In all the countries the pillars are organized depending the ranking given 1 institutions 3,5 to the pillar, in Bolivia these are organized: Macroeconomic 10 Market size 3,4 environment, Health and primary

education, Higher education and financial market 8 3,3 training, Goods market efficiency, development Business sophistication, Institutions, Market size, Financial market 12 innovation 3,1 development, innovation, infrastructure and technological readiness. The Table 2 infrastructure 3 01 shows the positions and rankings of the pillars of the GCI for Bolivia. 9 technological readiness 2,8

Table 01. Classification pillars GCI Source: Global Competitiveness Index (2014-2015) Bolivia (2014-2015)

To try to interpret the GCI, in this paper Pilla Scor Name will be chosen the two highest r e (Macroeconomic environment and

macroeconomic Health and primary education) and the 3 5,5 environment lowest pillars (Infrastructure and Technological readiness) as a strategy to

health and primary try to give an overview about the 4 4,9 education possible main causes of the deficiency in the competitiveness in Bolivia.

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Image 02. Compared Pillars highest points over 2012, when the debt was pillars. 33.36% of GDP” (Datosmacro, 2013). In the pillar Health and primary environment “The Ministry of Health and Sports (MSD) serves less than half the total population through the public subsector, which includes the Universal Maternal and Infant Insurance and Coverage Extension Program for Rural Areas” (Ledo & Soria , 2011).

Source: http://knoema.es/

The Image 02 shows the two highest pillars in the GCI which are Macroeconomic environment and Heath and primary environment. In the pillar of Macroeconomic environment Bolivia The lowest pillars are Infrastructure and has an average GDP of 4,1% achieving a Technological readiness. The pillar of fiscal surplus and also in the current infrastructure “At least 80% of account because of the nationalization educational units are in poor condition of policy of natural resources, infrastructure, parents lament the lack of telecommunications and energy, this resources for their maintenance” policies allowed a growth in the public (FMBolivia, 2012). In the pillar of investment because of the growth in the Technological readiness, Bolivia in 2015 public collection (N.A., eaboliva.com, according to the World Economic Forum N.D.); the public debt “in 2013 it reached is in the 90 ranking, because according to 32.56% of GDP in Bolivia, a fall of 0.80 the ranking “In the first are the poor

29 quality of the overall system (since 133) and the lack of preparation in math and science (138); limiting the capacity to make good use of technology. The second is the lack of effective legislative bodies (140), affecting the regulatory environment” (Peru21, 2015).

Bolivia has some disadvantages like “intellectual property, kickbacks, high tax rates and regulations on FDI, low availability of local suppliers and a low capacity to absorb technology.” (Corz, 2012).

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ANALYSIS • State influence in the generation and distribution of wealth, since adopted a Questions new role on strategic sectors. 1. What are the factors that have • A change in the world economy. influenced the process of globalization? • Constitutionalisation in the forms of organization; Community, state, private, Globalization policy: social, cooperative, where social and • Retrieve the strategic community economy complement management capacity of the individual interests to the collective. State • The new Constitution (NCPE) • Redefine macroeconomic establishes the "return of the state" to the policies consistent with a strategic sectors of the economy, where strategy of growth fueled by the surplus is generated. foreign markets and business • Society is demanding greater state innovation. presence in the control of natural • Develop and coordinate policies resources and the redistribution of and programs of reconversion wealth, reversing the capitalization of and promotion of manufacturing "strategic" sectors. exports • The rise in international oil prices is • Strengthen private associations evidence that transnational sector of the so that they can provide support economy was receiving returns on their services to businesses. investment at much higher benefits than (Grebe, (N.D.)) perceived Bolivian society, even when it benefited from improved many services Economic globalization: and cheaper costs thereof. • It has a very diversified economy. • The regions demand greater access to • The economic and social gap with its the returns from the exploitation of neighboring countries have been natural resources located in the increased. departmental territory. (Bonifaz & Lünstedt, 2011)

Social globalization:

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• The reconstruction of a State in which economic gains, social movements ethnic difference as a central focus of demand the state a greater role in the state institutions is recognized. distribution of wealth. (Bonifaz & Lünstedt, 2011) • Demand is channeled through the construction of a multinational state, In general the process of globalization which recognizes indigenous autonomy has been affected more by the political in local and forms of power-sharing at situation, as the political crisis in Bolivia the central State. have done this slow and difficult process, so its adaptation has been lower than in • The State redistributes surplus via other countries. The cultural conflict has downloads that primarily benefit the made Bolivia a country with different poorest and most excluded sectors. ideological views contradictory in that • The plurinational state with autonomies which each have different objectives, is a structurally heterogeneous state in some in favor of globalization to make the territorial, political-institutional, Bolivia a country more developed, but economic and identity. others against so they do not have serious • The state has certain components consequences for the national economy. consociational or power-sharing between the indigenous and non- 2. What is the sector most benefit indigenous at the central level. and least influenced in terms of • the possibility of creating autonomous globalization? indigenous spaces based on the principle Overall political crises have subsided, of self-determination, with legislative these cultural conflicts that arise in the powers and self- government, in addition country have been reduced because all to control of non-renewable natural the social diversity that has Bolivia has resources, respecting their customs were been taken into account so that they have constitutionalized. political participation so that better deals • The shooting emigration abroad are presented and political alliances aim because of the beginning of the century to bring benefits to the country. crisis and political instability. On the other hand they have not paid • Given an improvement in social enough attention it deserves economic indicators does not translate into sector of the country, Bolivia has a great

32 diversity of products and natural Institutional Factor: resources, but because of the political crisis in the country have neglected this Quality and reliability of the legal, social sector that is so important and can and political institutions in terms of: The greatly influence the growth, competence of the judiciary and the rule development and globalization of the of law, the role of government as an country. institution, the level of corruption, police protection, the existence of organized 3. What are the factors that have crime and size the informal economy. influenced the process of (Guzmán, Bolivia: Indicadores de competitiveness? Competitividad , 2011) These main factors that influenced the process of competitiveness Government Factor: according to the Global The state's role in competitiveness and Competitiveness Index are the the way in which intervenes in the Macroeconomic environment and economy through; the composition of Health and Primary education, which public expenditure, spending on also were analyzed in the infrastructure, tax system. (Guzmán, development of the present paper. Bolivia: Indicadores de Competitividad ,

Factors that influenced the 2011) competitive process are: 4. What are the aspects that

Infrastructure Factor: influence the country to have these indicators of • System land and air transport. competitiveness? (A. de Guzman, 2001) The events which have helped Bolivia in • Telecommunications, terms of competitiveness are such internet and email. (A. de corruption, political decisions, low Guzman, 2001) technification, lack of infrastructure

• Port facilities and Other aspects that have influence on the productivity of investments. competitiveness indicator are: (A. de Guzman, 2001)

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• Institutional: corruption, costs of this is affecting much of the country, in crime, violence and confidence in the addition to intervene in a way that police service. (N.A., market barriers are reduced, since it does Competitividad de Bolivia retrocede not allow us to interact the world y enfrenta 12 trabas, 2012) competitive today, Bolivia could thus be truly competitive in the future, even at • Low quality of education and health this time it is not necessary to strengthen systems. (N.A., Competitividad de these weaknesses to get competitive. Bolivia retrocede y enfrenta 12

trabas, 2012)

• Problems to do business because red tape and trade barriers. (N.A., Competitividad de Bolivia retrocede y enfrenta 12 trabas, 2012)

5. What is the projection that the country is in the future, in terms of globalization and competitiveness? In terms of globalization Bolivia still needs to improve and adapt much as it is in a state of somewhat slow development and therefore have found it very difficult to enter this global phenomenon, it may strengthen its weaknesses, making better use of natural resources, achieve development in all sectors of the country. But for the moment it is not feasible because it takes many factors that Bolivia is a globalized country.

Regarding competitiveness is important for government intervention to reduce violence and corruption indicators, as

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potentiate their products in new

RECOMMENDATIONS markets and in this way to be competitive. • National public policies should incorporate external factors that may • Is necessary to invest in better affect the country and make better infrastructure. use of them (Fernandez, Zegada, & Chavez, 2014). CONCLUSIÓN • Promote the articulation and In general terms Bolivia is looking for assertion of local identity, joining the improvements respect for diversity of past with the present and projecting cultures that the country has to have into the national and global space, in more participation and thus to include order to build a common political them in a process of adaptation to enter community (Fernandez, Zegada, & the phenomenon of globalization, where Chavez, 2014). there is more participation of all social • Assemble, interbreed, complement, groups. In addition to this decrease and the social forces that have been in the manage the political crisis is the great political movement in the country factor that has prevented Bolivia suits (Fernandez, Zegada, & Chavez, against globalization, although it has 2014). contributed in several ways to control

• Bolivia should better political this cultural conflict and partly relations within the country, thus contributed to an improvement of forming alliances may remain relations within the country. Bolivia still benefits to the country. needs to improve against its economic, political and social development in order • Take into account the social to compete with neighbouring countries diversity of the country is, and or other to become a globalized country. give them more participation, thus diminish the contradictory ideology that in the country there. In terms of competitiveness Bolivia has • Strengthen the sectors of the a huge gap in terms of infrastructure, economy, making better use of technology, innovation, and all this and natural resources, in order to more components is reflected in one of

35 the lowest GDP in the region, that is http://www.datosmacro.com/deu mainly by a chain of political decisions da/bolivia and economic deficit induced by the Evia, J. L., & Pacheco, N. (9 de 11 de corruption. 2010). http://www.kas.de/. Obtenido de http://www.kas.de/wf/doc/2301- References: 1442-1-30.pdf

FMBolivia. (26 de 01 de 2012). (N.A.). ((N.D.)). http://www.fmbolivia.com.bo/. http://globalization.kof.ethz.ch/. Obtenido de Obtenido de http://www.fmbolivia.com.bo/no http://globalization.kof.ethz.ch/ ticia74193-al-menos-80-de-los- media/filer_public/2014/04/15/r colegios-tienen-mala- ankings_2014.pdf infraestructura.html

A. de Guzman, M. (01 de 2001). Governance Assesment Portal. ((N.D.)). www.cid.harvard.edu. Obtenido http://www.gaportal.org/. de Obtenido de http://www.cid.harvard.edu/arch http://www.gaportal.org/global- ive/andes/documents/workingpa indicators/global- pers/indicators/indicators_bolivi competitiveness-index a.pdf Ledo, C., & Soria , R. (2011). Antelo , E., Jemio , L. C., & Renquena, http://bvs.insp.mx/. Obtenido de J. B. ((N.D.)). http://bvs.insp.mx/rsp/articulos/a http://www.udape.gob.bo/. rticulo_e4.php?id=002613 Obtenido de Los Tiempos. (05 de 09 de 2014). http://www.udape.gob.bo/portal http://www.lostiempos.com/. es_html/AnalisisEconomico/anal Obtenido de isis/vol13/art06.pdf http://www.lostiempos.com/diari Corz, C. (05 de 09 de 2012). la- o/actualidad/economia/2014090 razon.com. Obtenido de 5/bolivia-baja-7-posiciones-en- http://www.la- ranking- razon.com/index.php?_url=/econ de_272661_598829.html omia/Bolivia-puesto-Indice- N.A. (N.D.). eaboliva.com. Obtenido de Global- http://www.eabolivia.com/econo Competitividad_0_1682231825. mia/6208-economia- html boliviana.html Datosmacro. (2013). N.A. (N.D.). Wikipedia.org. Obtenido http://www.datosmacro.com/. de Obtenido de

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http://es.wikipedia.org/wiki/Boli viano_(moneda)

Peru21. (16 de 04 de 2015). http://peru21.pe/. Obtenido de http://peru21.pe/economia/peru- se-encuentra-puesto-90-indice- preparacion-tecnologica- 2216769 World Economic Forum. (2014).

http://www.weforum.org/. Obtenido de http://www.weforum.org/reports /global-competitiveness-report- 2014-20

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Brazil exploitation of natural resources, one of the first in the area to begin an economic

recovery.

• Country name conventional long form: Federative Republic of Brazil.

• Population: 202.656.788.

• Capital: Brasilia.

• Legal system: Civil law.

• Gross domestic product: 3.073 trillion US dollar. Students of International Business and Economy on fifth semester on • GDP real growth rate: 0,3% “Fundación Universitaria Politécnico • Unemployment: 5,5% Grancolombiano”. • Labor force: 110.9 million. Brazil is a country located in the Eastern of South America, its area total is • Poverty: 21,4% 8.515.770 square kilometers, this area is • Taxes for the GDP: 38,4% composed by 8.358.140 square kilometers of land and 157.630 square • Current account balance: - kilometers of water, its territorial $80.92 billion US dollar. expansion locates Brazil in the ranked 5th • Imports: 241.9 billion US dollar. on the country comparison on the world. In the history, Brazil gained its • Exports: 242.7 billion US dollar. independence in 1822 and it was • Public debt: 59,3% of GDP. dominated by the coffee exporters, then the countries was submitted by a populist • Inflation: 6,3% and military government and finally with • Exchange rates: 2.36 reals the civil power the industrial and (BRA) per US dollar. agricultural sector growth through the

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On July of 2014, Brazil already had 15.200 US dollar occupying with these 202.656.788 Brazilians this population the 101th place and beating countries like locates the country on the 6th place, with Colombia, Peru and Costa Rica. The the major urban area in Sao Paulo 5,5% of its EAP was unemployment on although its capital is Brasilia and its 2014 and Brazil comparison on the world administrative division are compose by was the 57th and in comparison on Latin 26 states apart from the capital, The Americas was the 2nd being overtaken federative Republic of Brazil is governed only by Ecuador (5%) as is expressed on with a civil law, the last civil law code the graphic 1 (The world bank. was enacted in 2002. Unemployment total).

According to The Central Intelligence Agency (CIA) Brazil has a develop and extensive agricultural, mining, manufacturing and services sector, this is the competitive and differential factor about the rest of Latin America, also, they are characterized by their stability in macroeconomics aspects and this item attracting foreign direct investment. After the economic world crisis in 2008 Brazil was one of the first on recovery its economic situation, currently the Brazilians’ GDP is 8th around the world but the 1st in the region with 3.073 trillion US dollar, ironically its GDP real growth rate in 2014 was 0,3% occupying the 198th position on the world comparison and the 18th place in America.

The big Brazilian population contributes with a labor force compose by 110.9 million of people to economically active population and the GDP per capita is

39

One of the mains problems in Brazil is management to achieve a balance the poverty, the last studies in 2009 between public debt and gross domestic reflected that 21, 4% of population is product” (CEPAL, 2008). poverty. According to The World Bank the poverty gap is 3,3% and this percent GRAPHIC 2 survive with $2 US dollar a day. The fiscal policy in Brazil contributed to the PUBLIC DEBT ON BRAZIL GDP with 38.4% being the 46th country on the world that more taxes and other revenues, although its imports on 2014 was 241.9 billion US dollar and its exports in the same year was 242.7

billion US dollar, but Brazil had a current The macroeconomic data show an account balance with a deficit equivalent inflation of 6.3% in 2014 on the to -$80.92 billion US dollar. customer prices, but the monthly growth The Brazilians public debt reflect a was 0.7%, mainly on medicine, general vision of the public finances, in apartment, food and non-alcoholic 2014 the public debt reach the 59,3% of beverages (1.2, 1.0 and 1.0 respectively). GDP, and that positioning to Brazil on On 2014, one US dollar represents 2.36 the 56th place on the ranking, “since 2004 reals (BRA), this badge was devalued on

Brazil adopted a public debt Source: Datosmacro.com

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1.37% and it is the most devalue badge. share of gross domestic product” (The Currently, invest on the exchange market World Bank) to avoid the increase in the US dollar Brazil’s trade balance was structurally price. positive, but has declined in recent years GLOBALIZATION due to a drop in the prices of raw materials, an increase in energy imports Economic Globalization and a decline in the competitiveness of Brazil is the world's seventh largest Brazilian products. In 2014, for the first economy. After a period of strong time since 2000, the country registered a growth, the Brazilian economy started trade deficit of USD 3.93 billion. Exports showing signs of a slowdown due to the fell by 7% compared to 2013, while stagnation of prices of raw commodities imports declined by 4.4% brazil in the in exports, a drop in domestic demand KOF index of globalization occupies the caused by high levels of household debt position 113 with 51.59 points, the total and a decline in investments. Affected by export of goods and services (% of GDP) a decline in household consumption and 12.6% and total Imports of goods and in industrial activity and investment, the services (% of GDP) 15.0 % by 2013. Brazilian economy entered a recession in (CIA) the first half of 2014 and only emerged In terms of Foreign Direct Investment, from it in the third quarter. Over the stocks (US $ million) 64 045 in 2013. whole year, growth was estimated at The Portfolio Investment in 2014 was 0.3%. A slight recovery is expected in (US $ million) 443 110, income 2015. payments to foreigners were (USD Although foreign trade only represents million) 25.37114311 one fourth of its GDP, Brazil is amongst Restrictions in Brazil according to the the world's 22 largest exporters and has Global Competitiveness Report ranks an enormous economic potential. The the 115 position regarding trade barriers country's main trade partners are China, and tariffs is in position 118. the United States, the countries of Mercosur and the EU. Political Globalization

“Trade is the sum of exports and imports of goods and services measured as a

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Political globalization is a process of Participation in the missions of U.N. integration of national policies and Security Council in 2014 was 1697. global political institution. Brazil has 62 international treaties.

Political globalization is divided into Social Globalization Embassies in Country, Membership in Brazil, the giant of Latin America, has International Organizations, been rocked by a series of economic, Participation in U.N. Security Council social and political problems. To this day Missions and International Treaties. has not really improved as expected, Brazil has 69 embassies in their country poverty is a factor that every day and a member of the following becomes more visible. Moreover international organizations: education is also a problem affecting Brazilian since for the government is “AfDB (nonregional member), BIS, much more important to invest in BRICS, CAN (associate), CD, CELAC, education infrastructure. Then we can CPLP, FAO, FATF, G-15, G-20, G-24, see the role of globalization in Brazil G-5, G-77, IADB, IAEA, IBRD, ICAO, through data and analysis of factors that ICC (national committees), ICCt, ICRM, influence the development of this IDA, IFAD, IFC, IFRCS, IHO, ILO, country. In the same way, the economic, IMF, IMO, IMSO, Interpol, IOC, IOM, social and political globalization IPU, ISO, ITSO, ITU, ITUC (NGOs), discloses the strengths and weaknesses LAES, LAIA, LAS (observer), are there in this country. Mercosur, MIGA, MINURSO,

MINUSTAH, MONUSCO, NAM Social Globalization [38%] (observer), NSG, OAS, OECD (Enhanced Engagement, OPANAL, * Data on Personal Contact (33%) OPCW, Paris Club (associate), PCA, SICA (observer), UN, UNASUR, Telephone Traffic (25%) UNCTAD, UNESCO, UNFICYP, Transfers (percent of GDP) (3%) UNHCR, UNIDO, UNIFIL, Union Latina, UNISFA, UNITAR, UNMIL, International Tourism (26%) UNMISS, UNOCI, UNRWA, UNWTO,

UPU, WCO, WFTU (NGOs), WHO, Foreign Population (percent of total population) (21%) WIPO, WMO, WTO”

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International letters (per capita) (25%)

* Data on Information Flows (35%)

Internet Users (per 1000 people) (36%)

Television (per 1000 people) (38%)

Trade in Newspapers (percent of GDP) (26%)

* Data on Cultural Proximity (32%)

Number of McDonald's Restaurants (per capita) (44%)

Number of Ikea (per capita) (44%)

Trade in books (percent of GDP) (11%)

Of 207 countries, Brazil is in 115th with a percentage of 43.61 in social globalization.

Globalization has led to a gap between rich and poor that has generated inequality, a clear example of what happens in Brazil, where we talk about the difference between classes to talk of globalization, it is true that Brazil has adopted globalization but this belongs only the upper class part; disinterest and coldness are the protagonists of modern society that are directed toward poverty.

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On the other hand, education and poverty are a vicious circle in which the lack of preparation was really alarming figures thrown by the literacy rate confirms that most Brazilians eligible to vote, only distinguish words and short sentences.

Brazil with over the years in this case take period 2005-2013 has maintained a level not so favorable for the country, in places such as Tax revenue (% of GDP) Brazil has had a range that has not been as significant changes to the economy. Moreover, we can see that in Brazil social globalization has not had major The global competitiveness index 2014- indices that endanger the country even if 2015 ranked to Brazil on the 57th they are expected different results. according to studies about each pillar (

institutions, infrastructure, macroeconomic environment, health and primary education, higher education and

COMPETITIVENESS training, goods market efficiency, labor market efficiency, financial market “The competitiveness is the ability of a development, technological readiness, country to create, produce and distribute market size, business sophistication and goods and services on the international innovation) Brazil has a score of 4.34 in market, maintaining growing earnings of general. In general the region has an its resources” (Harvard Business School estimated growth rate for 2,5% on 2014 Rivkin, Porter & Kanterr). where the most competitiveness rd The global competitiveness index was economy is Chile on the 33 for their published by the World Economic stable profile. In comparison with the Forum since 1979, and it measured the global competitiveness index 2013-2014 ability of each country to provide high decline and the main reason is the levels of prosperity. insufficient progress.

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On the first pillar, Brazil ranked 94th and according to the evaluated items the worst was “Business cost of terrorism” and the best was “Burden of government regulation”. In order to infrastructure, it’s ranked 76th protruding quality of port infrastructure, “Brazil has 37 important ports, we would mention Puerto de Paranagua, Puerto de Rio Grande, Puerto de Santos” (Roman), and quality of roads, currently Brazil has 1.580.964 kilometers of roadways and it positioning to Brazil on the fourth place on the country comparison on the world, The macroeconomic environment in but only the 13,46% was paved, to Brazil are marked by a good level increase this competitiveness index the inflationary, on 2014 was 6,13%, the Interamerican Development Bank (IDB) second one on comparison on the BRICS created the Brazilian Infrastructure group, the government budget balance Investment Found (BIIF) on 2004: “The was a deficit of 2% of the GDP on 2012, investments was directed to the gross national saving on 2013 was infrastructure’s project of private sector 3.000 billion US dollar, the general and public companies of energy, government debt ascend to transport, networks and water and 482.469.814.000 US dollar, this items sanitation” (Iinteramerican are reflected on the competitiveness Development Bank IDB) . this found index where Brazil is positioning on the arise as an answer to the little funding in 85th place. long term to infrastructural projects, also The state is support by a high taxation the program has created 1.439 jobs, in and it improves the economy and the the last year the Rousseff government social balance but it decrease the global has oriented to the development and competitiveness because it’s really 7.000 concessions was granted to build different to its competitors like Chile, new highways. Mexico and China. Currently, the local currency is highly revalued on

45 comparison with the dollar by the highest cases per 100.000 people, the mortality demand, the increase in the foreign direct rate was 5,6 per 100.000 people and investment in the new development Brazilian business are the 63th country center of Latin America and the high most affected by HIV rates. interest rate to controlling the The higher education and training had inflation.The public debt has improved improved during 2000 and 2008, in 2008 by the increase in the GDP in the last the 81% of expect students was studying, year and the revalued of the reals and on comparison with the region Brazil has although the country improve constantly better indicator, because the average is in items like employment, prices of 72.8%., but this only was the matriculate exports commodities and foreign direct rate but the conclusion rate was 55%, and investment, Brazil has a public deficit so this rate remains better on comparison it indicate that if someone of this items with the region. In Brazil the poverty change the public deficit would increase. finish the primary and secondary Taking part in social aspect, we would education less than the rest of talk about the fourth pillar, health and population, so the level education primary education, in this index the main depends of the socioeconomic stratum. problem is the quality and enrollment of Evaluating subjects like math and lecture primary education, although “The the students present better indicators in Brazil’s matriculate rate in primary lecture, because the 47% of Brazilian education is within the average of the students don’t reach the basic level region (95,3%)” (UNESCO). The health according to Latin American Laboratory index in Brazil are good present good for Assessments of Educational Quality indicators about malaria, in the last year (LALAEQ). With respect to internet, the averages of cases was 530.000 and Brazil has 75.982 million of internet they are concentrate in the Amazon users, and the internet access in school Region because the changes in the was in 2014 the 98th highest level of extractive economic activities, internal internet in schools, taking into account migration and transient rural settlements this information, Brazil occupying the but the business aren’t affect by this 41th place in comparison on the world. disease, so Brazil is the 5th country less The life expectancy in 2013 was 74 affected by the Malaria on the world. years, but the women life expectancy in During 2011, Brazil presented 20.2 HIV the same year was 77,58 years and a man

46 live in average 70,36 years and metallurgical products, machinery and occupying the 78th place in the ranking, equipment, irons and steel and cars, and its infant mortality is 20.5 deaths per finally, the third economics’ sector, the 1.000 births, in proportions 2,3% of services, where excel tourism, business women and 1,6% of men under one year services, international travels, transport death each year. and financial services, the tourism would be an important item by the Brazil’s Taking part in the topic of economy, we characteristics but it’s attack for the have to talk about markets, goods, insecurity, infrastructures and low levels services and commodities where Brazil of capacitation in tourism, in 2011, the is characterized by its emerging market principal source markets are Argentina and its economic openness, the foreign (1.593.775 tourists), United States trade is open with partners like China, (594.947 tourists), Uruguay (261.204 United States, Argentina and tourists) and Germany (241.739 Netherlands and its principal exports are tourists). The labor market in Brazil is iron ore and crude oil, in the imports the extensive by its population, its labor principal business partners are similar force is 110.9 million of people, the 6th and only change the order, the principal biggest on the world, this comparison is is United States with petroleum oils and led by China and India and Brazil is the medicines, the second one is China with biggest on the region (Latin America) parts for audio and video and parts for but United States appears in the 4th laptops and finally, the third is Argentina position as the first biggest labor force in with cars. The GDP is composed America. In 2012, the average real principally by agriculture, industry and income of workers reached a historical services, in 2014 these sectors rate, overcoming the rate of 1800 reals contributed to the GDP 5,8%, 23.8% and per month and in the next year this record 70,4% respectively, in the first figure was overcame with 1.862,40 reals economics’ sector, Brazil has an per month. The labor market is divided advantage because is characterized by its by the formal and informal jobs; the biodiversity but the agricultural sector informality represents 30% of the labor don’t contribute a the main products are market and incomes for 578.400 reals coffee, cereals, soy, meat and sugar, in per year, in the Global Competitiveness the second economics’ sector, the Index qualified this pillar in the 109th industry, Brazil has progressed in place because the efficiency is affected

47 by high tax burden, corruption and an In the aspect of networks, Brazil has excessive regulation. 248.324 million of mobile cellular, is the 6th country with more mobiles in The financial market development is comparison on the world, 75.982 million beneficiary by prospects like economic of Brazilians use internet and the stability, diversify and dynamic government want to expand this rates economic, big and solid financial and and they designed networks policy capital markets. The financial market where different goals has being achieved has governed by laws, resolutions of as the Brazilian networks model where National Monetary Council and releases they demand universal service provision of Central Bank of Brazil, this institute and quality assurance of fixed telephony, also control banking and non-banking the public policy (decree 4733/2003) has institutions. Moreover institutions like as objectives: ensure the individual National Monetary Council stablish access to each citizen to at least one criteria to monetary policy, credit policy network, guarantee access to each and exchange rates policy, other function citizen to internet, meet the needs on is regular access conditions, networks in rural population, fair and performance and financial institutions’ reasonable rates of access to networks supervision. The general framework for and organize networks’ services financial market isn’t only stablished by emphasis on social inclusion; terrestrial laws, to make it looser as financial digital television model ( decree innovation, include also growing 4901/2003 and 5820/2006) which want convergence with international to introduce radio and television digital standards. transmission and Broadband National The banking development is one of the Program (decree 7175), it arise to better on the region, the most important implement the communication network commercial bank is “Banco do Brasil” to public federal administration, support and the most important state bank is public policy to connection to broadband “Bradesco”, and the foreign banks don’t internet, provide infrastructure and lead the market as happen in other support’s networks to countries in the region and that only telecommunication services. represents 4% on the market, the banking The Brazilian market is emerging, its system is strongly capitalized. domestic market is the 6th biggest on the

48 world, and this size was the reason how Brazil are affected by factors like tax Brazil overcame economic crisis on regulations, restrictive labor regulations, 2008, the domestic market represent inadequate supply of infrastructure, tax three quarters of gross domestic product, rates, inefficiency government this increase purchasing power of bureaucracy and corruption. Brazil are Brazilians and this move the offer and strong in topics like cluster, local demand therefore the economic change supplier quantify but don’t quality and so Brazil is a good place to produce and extent of marketing, and its business are market goods and services: “Brazil today the 47th more sophisticate on the world. is the second economic and political Finally, the last pillar is the innovation power in the American continent, also where Brazil receives the 44th place. the second democracy and the second population in America after United States” (Catedra Nebrija-Grupo Santander ). Brazil is the first receiver of foreign direct investment in Latin America, in 2008 received the half of investments intended to the region; Brazil already has excellent multinational companies, it’s the 4th exporter of commercial airplanes, the fifth global steel producer, the sixth automaker and the 7th chemical industry on the world. Brazil is the 12th receiver economy of foreign direct investment, the investments are received in sectors like mining of metal ores, metallurgy, financial services and manufacture of Globalization is the growing integration food products, also has institutions to between countries; dare trade, support and commercial policy are investment and cultural and important items to the technological exchanges. internationalization process, and the On trade Brazil has experienced biggest investors are United States, tremendous growth which has allowed Netherlands and Spain. The business in

49 him to become the first economy in Latin growing economy, a lot of raw materials, America and the sixth largest economy skilled labor and a strategic position in in 2011 with a GDP of 2,473 billion the region. Among the factors that dollars, in recent years Brazil's trade negatively affect foreign direct balance has a surplus but this indicator investment this bureaucracy and has declined. Brazilian law.

Exports of goods and services for 2011 In 2011 the flow of foreign direct represented 11.9% of GDP for a total of investment was 66,660 million this 292.474 million dollars; its main trading investment comes mainly from the partners are China and the United States United States 20.2%, Belgium 11.1%, 18.0% 12.1% of total exports. Spain 10.7% and the UK 7.3%.

These exports are mainly divided into The main sectors for investment in Brazil iron ores accounted for 11.5%, 10.3% are the Financial Services 14.0%, agricultural products and oil and chemical industry 12.0%, 12.0% petroleum products by 7.3%. The main beverage industry and oil and gas with services exported 53.37% were business 6.0%. services, travel and transportation The investment portfolio in Brazil was $ 16.67% 13.60%. 35 billion, mainly to the United States As for imports of goods and services 201 243 000 dollars and the UK 76.392 account for 12.6% of GDP for a total of million dollars. 309.94 million dollars, these imports Taxes on international trade include come mainly from China and the United import duties, export duties, Brazil States 16.3% 15.4%, the main products accounted for $ 27 million in 2011 and imported They are oil and petroleum with respect to revenue was 2.69% products 18.2% and automobiles 3.4%. The main imported services other The number of tourists arriving in Brazil business services were 35.03%, 27.48% is 55 million in 2011 this number is and transportation travel 17.54%. ascent because the organization of the World Cup Brazil 2015. Brazil is the main destination of foreign direct investment in Latin America and The total number of foreign residents in fifth worldwide because it has a large Brazil according to the Brazilian population and potential markets, a Institute of Geography and Statistics

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(IBGE) is 431 319 people of which In the midst of these features 53.6% are men. internationalization appears as a necessity for Brazil. Cellular subscriptions in 2000 was 23,188,171 and for 2013 this number However, this is a difficult, complex and Haciende to 271 099 799. costly process, which may even harm Brazil if not previously performed a The percentage of Internet use in 2000 strategic analysis before making such a was 2.87% and for 2013 is 51.60%. decision. Number of restaurants McDonald's is According to V. Donoso (1997) explains 812 this indicator is part of the social "as a phenomenon, globalization has its globalization. basic thrust in technical progress and, RELATIONSHIP BETWEEN particularly, in the latter's capacity to GLOBALIZATION AND reduce the cost of moving goods, COMPETITIVENESS services, money, people and information. This phenomenon of The international economic environment "reducing the economic distance" has in recent years has increasingly enabled exploit opportunities in markets identified by its dynamism and for goods, services and factors globalization. Trends such as the diminishing, if not eliminating, the growing interdependence among importance of trade barriers. “(P. 108) countries, the rise of emerging economies and the amazing Moreover, research and development are technological advances around the elements that influence in favor of world, shape an increasingly competitive globalization. Therefore, technological and changing global environment. change is an important part in the competitiveness of entire sectors of a As a result of these trends, globalization country, as an important part requires and competitiveness of a country have innovation. Indeed, Brazil is not self- increased even more. Therefore, it is sufficient from a technological necessary for Brazil to have an standpoint. international vision of economic activity and consider economic strategies within furthermore, the increase in trade around an open economy model. the world, has prompted Brazil to participate in a greater

51 internationalization; Also the existence • To carry forward the of multinational competitors and the globalization of Brazil requires a very globalization of competition creates continuous development of a a strong need to increase stronger public opinion. It is also competitiveness encourages businesses important that efforts to prepare to operate in larger markets, cooperating Brazil to discuss new and competing in a game that is opportunities facing the world as perceived mutually beneficial. they are of great benefit to the country are made. Decisions at In contrast, economic globalization is the time for action has to be clear forcing companies to compete in global and concise, may thus reach a markets and hence the interest in consensus and decide on what international competitiveness. should be done, how it should be According Forsner, Ballance (1990) "if done and who should do it. the economy is globalizing, companies have the need to operate in because • A vibrant civil society, foreign markets are supporting the action empowered by freedom of of third country competitors. In this way association and expression that confronted with the necessity to expand reflects and voices the full their markets or exporting, establishing diversity of views and interests. agreements or manufacturing products The existence of organizations abroad” representing the public interests, the poor and other disadvantaged Finally, the economic strength of a groups are also essential in order country depends on their own abilities, to ensure a participatory and advantages and level to compete. In an socially just governance. open world economy as the current, competitiveness is therefore a key • An essential requirement for variable to ensure business success. improved global governance is that all organizations more WHAT IS THE accountable to the public at large RECOMMENDATION THAT A for the policies they pursue. The COUNTRY IS GLOBALIZED AND Governor of Brazil should COMPETITIVE? contribute to this process by regularly reviewing decisions

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taken by their countries' internationalization process if the representatives to these company isn’t competitive at the organizations. national level. In the same way, internationalization makes the country HOW GLOBALIZATION AFFECTS more competitive to be able to produce ECONOMIC COMPETITIVENESS? larger quantities. Also allow you to The theme of globalization has taken on benefit from economies of scale because special importance in the global they are factors that complement each economic discussion, the point other. considered a model of the reality of the RECOMMENDATIONS AND market that integrates the dimensions in CONCLUSION the way you think, act and grow. Globalization is a process that has been Competitiveness by economic taking more and more strength, globalization affected because not all developed countries are those that have economically active population will be made progress in every sense, but also globally competitive, and not the entire developing countries have benefited planet's population remains excluded from these advances that have been from the benefits of modernization taking place in the world, progress. Today it is already talking about a Therefore, Brazil to impose a dynamic common market in a borderless world to new markets, have to design specific be seized, but also concern the projects aimed to other dimensions, standardization of certain specific identification of the role of the state must aspects of each country, then we have to focus on the formation of a competitive ask ourselves how can we speak of a human resources to respond to the homogeneous culture Globalization ?, It demands of a dynamic economy as a has its advantages, but also force for economic growth and wealth disadvantages for poor countries. generation for Brazil. Economic globalization has affected not DOES THE GLOBALIZATION OF only the relationship between the COMPETITIVENESS DEPEND? competitive strategies of low cost or Globalization hardly occurs without differentiation, but has also been competition, fails to start the introduced as a new element to consider

53 in studies of strategic direction, resulting http://www.bcra.gov.ar/pdfs/eve in a jump from strategic programs ntos/NIIF_SILVIA_MARQUES .pdf towards designs a fully strategic international and global level. Canals, J. (1991). Competitividad internacional y estrategia de la Brazil as an emerging country has a great empresa. Barcelona: Ariel S.A. potential to be among the top 22 Catedra Nebrija-Grupo Santander . exporters in the world thanks to its vast (n.d.). Retrieved May 26, 2015, from https://www.camara- availability of natural resources (raw brasilespana.com/assets/files/inf materials). ormes_sectoriales/Brasil- Universidad-Nebrija.pdf Increase production and export of CEPAL. (2008). GESTIÓN DE LA manufactured goods and finished DEUDA PÚBLICA: LA products and raw materials exploiting EXPERIENCIA DE BRASIL. the low cost of labor. REVISTA DE LA CEPAL, http://www.cepal.org/publicacio Reducing administrative barriers or nes/xml/0/32730/94eferreirasant bureaucracy to reduce costs to os.pdf. businesses and encouraging foreign CIA. (s.f.). Central Intelligence Agency direct investment. CIA. Recuperado el 26 de May de 2015, de Controlling the exchange rate of the real https://www.cia.gov/library/publ ications/the-world-factbook/ against the dollar to not reduce the competitiveness of some economic DATOSMACRO.COM. (n.d.). Retrieved May 26, 2015, from sectors. Cut red tape for start-ups to http://www.datosmacro.com/de encourage investment. mografia/esperanza-vida/brasil

Departamento de infecciones de transmisión sexual, sida y hepatitis virales. (n.d.). ITS- References SIDA. Retrieved May 26, 2015, from http://www.aids.gov.br/es/pagin Ballance, F. &. (1990). Competing in a a/2011/50458 global economy. London: Unwin Hyman. Donoso, V. (n.d.). El comercio exterior en la aconomia global (Vol. 74). Brito, S. M. (n.d.). Banco Central Do Economist. Brasil. Retrieved May 26, 2015, from

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Goirigolzarri, J. I. (n.d.). Revista SICE. omica/dnper/documentos/Brasil Retrieved May 26, 2015, from _May2011.pdf http://www.revistasice.com/Cac hePDF/ICE_810_231- Oficina Economica y Comercial de 240__4CABC90BE7DAD99D2 España en Brasilia. (2013). 54EA7055EDEAAB7.pdf Informe economico y comercial de Brasil. Brasilia. Goirigolzarri, J. I. (n.d.). Revista SICE . Retrieved May 26, 2015, from Organizacion Panamericana de la Salud http://www.revistasice.com/Cac . (2013, April 11). Salud en las hePDF/ICE_810_231- Americas. Retrieved May 25, 240__4CABC90BE7DAD99D2 2015, from 54EA7055EDEAAB7.pdf http://www.paho.org/saludenlasa mericas/index.php?id=25&optio Harvard Business School Rivkin, Porter n=com_content & Kanterr. (n.d.). Harvard Business School. Retrieved from Roman. (n.d.). Procomer. Retrieved http://www.hbs.edu/faculty/Page May 22, 2015, from s/item.aspx?num=48030 http://www.procomer.com/conte nido/descargables/logistica- Iinteramerican Development Bank IDB. exportacion/america- (n.d.). Iinteramerican sur/logistica_exportacion_brasil Development Bank IDB. %20agosto_2013.pdf Retrieved May 26, 2015, from http://www.iadb.org/es/structure Santander, Catedra Nebrija-Grupo. d-and-corporate-finance/fondo- (n.d.). Retrieved May 26, 2015, de-inversion-en-infraestructura- from https://www.camara- de-brasil-biif,8004.html brasilespana.com/assets/files/inf ormes_sectoriales/Brasil- Jan Rivkin, M. P. (n.d.). Harvard Universidad-Nebrija.pdf Business School . Retrieved from The World Bank. (n.d.). KOF Index of http://www.hbs.edu/faculty/Page Globalization. Retrieved May s/item.aspx?num=48030 26, 2015, from http://globalization.kof.ethz.ch/ Kindeblerger. (1969). American Business Abroad: Six lectures on THE WORLD BANK. (s.f.). Direct Investment. Yale Unemployment total (% of total University. labor force). Obtenido de http://data.worldbank.org/indicat Mendez, G. C. (n.d.). Ministerio de or/SL.UEM.TOTL.ZS/countries/ economia y finanzas publicas de 1W-BR-XJ?display=graph la Republica de Argentina. Retrieved May 26, 2015, from UNESCO. (n.d.). Retrieved May 26, http://www.mecon.gov.ar/pecon 2015, from https://www.google.com.co/url?

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CHILE country's commitment to democratic and representative government. Chile has increasingly assumed regional and international leadership roles befitting its status as a stable, democratic nation. In January 2014, Chile assumed a two-year nonpermanent seat on the UN Security Council.

Geography Location: Southern South America, bordering the South Pacific Ocean, between Argentina and Peru Source: CIA The World Fact book,

South America: Chile Area: total: 756,102 sq km, land: 743,812 sq km, water: 12,290 sq km, Introduction: Chile declared its note: includes Easter Island (Isla de independence in 1810; decisive victory Pascua) and Isla Sala y Gomez, country over the Spanish was not achieved until comparison to the world: 38 the longest 1818. In the War of the Pacific (1879- north-south trending country in the 83), Chile defeated Peru and Bolivia and world, extending across 38 degrees of won its present northern regions. It was latitude; strategic location relative to sea not until the 1880s that the Mapuche lanes between the Atlantic and Pacific were brought under central government Oceans (Strait of Magellan, Beagle control. After a series of elected Channel, Drake Passage); Atacama governments, the three-year-old Marxist Desert - the driest desert in the world - government of Salvador ALLENDE was spreads across the northern part of the overthrown in 1973 by a military coup country; the crater lake of Ojos del led by General Augusto PINOCHET, Salado is the world's highest lake (at who ruled until a freely elected president 6,390 m) was inaugurated in 1990. Sound economic policies, maintained Population: 17,363,894 (July 2014 est.) consistently since the 1980s, contributed country comparisons to the world: 65 to steady growth, reduced poverty rates Country name: by over half, and helped secure the

57

Conventional long form: Republic of Chile. Economy: Local short form: Chile Chile has a market-oriented economy Capital city Santiago; note - Valparaiso characterized by a high level of foreign is the seat of the national legislature trade and a reputation for strong financial institutions and sound policy that have Legal system: civil law system given it the strongest sovereign bond influenced by several West European rating in South America. From 2003 civil legal systems; judicial review of through 2013, real growth averaged legislative acts by the Constitutional almost 5% per year, despite the slight Tribunal contraction in 2009 that resulted from the International organization global financial crisis. Growth slowed to participation: 4.2% in 2014. Chile deepened its longstanding commitment to trade APEC, BIS, CAN (associate), CD, liberalization with the signing of a free CELAC, FAO, G-15, G-77, IADB, trade agreement with the US, which took IAEA, IBRD, ICAO, ICC (national effect on 1 January 2004. Chile has 22 committees), ICCt, ICRM, IDA, IFAD, trade agreements covering 60 countries IFC, IFRCS, IHO, ILO, IMF, IMO, including agreements with the European IMSO, Interpol, IOC, IOM, IPU, ISO, Union, Mercosur, China, India, South ITSO, ITU, ITUC (NGOs), LAES, Korea, and Mexico. LAIA, Mercosur (associate), MIGA, MINUSTAH, NAM, OAS, OECD GDP: $410.3 billion USD(2014) country (Enhanced Engagement, OPANAL, comparison to the world: 44 in terms of OPCW, Pacific Alliance, PCA, SICA GDP (observer), UN, UN Security Council GDP - real growth rate: 2% (2014) (temporary), UNASUR, UNCTAD, country comparison to the world: 151 in UNESCO, UNFICYP, UNHCR, terms of GDP Real UNIDO, Union Latina, UNMOGIP, UNTSO, UNWTO, UPU, WCO, WFTU GDP - per capita: $23,200 USD (2014) (NGOs), WHO, WIPO, WMO, WTO GDP - composition, by sector of origin:

Agriculture: 3.5%

58

Industry: 35.5% Imports - partners: US 20.3%, China 19.7%, Brazil 6.5%, Argentina 5%, Services: 61.1% (2014) Germany 4% (2013) Labor force: 8.514 million (2014) Exchange rates: Unemployment rate: 6.5% (2014) Chilean pesos (CLP) per US dollar - 568 Population below poverty line: 15.1% (2014) (2009)

Taxes and other revenues: 19.2% of

GDP (2014)

Public debt: 16.5% of GDP (2014)

Inflation rate: 4.3% (2014) Chile: Analysis of the country

Current account balance: Chile is today the South American country that perhaps holds a lesser *Exports: $76.98 billion (2014) country degree participation in regional comparison to the world: 48 integration organizations. In this sense, it Exports - commodities: copper, fruit, is not part as a full member of any fish products, paper and pulp, chemicals, organizations in the subcontinent. Thus, wine the Republic of Chile has only participated fully in the Organization of Exports - partners: China 24.9%, US American States of which he is a 12.8%, Japan 9.9%, Brazil 5.8%, South founding member. However, this sort of Korea 5.5% (2013) reticence towards regional integration *Imports: $70.67 billion (2014) country bodies, which reached its zenith with the comparison to the world: 43 withdrawal from the Andean Community in 1976, has begun to Imports - commodities: petroleum and change. Today integration is viewed petroleum products, chemicals, electrical favorably and foreign policy of and telecommunications equipment, democratic governments after 1990 was industrial machinery, vehicles, natural to foster collaboration with neighboring gas

59 countries and participation in regional has fostered a sustained liberalization forums and institutions. policy which has resulted in the conclusion of numerous free trade

agreements with several countries. In Thus, a major milestone in this process this context, Chile has served since the was the ratification in October 1990 of beginning of the ALADI, and even since the Inter-American Convention on the days of its predecessor ALALC. Human Rights, which represented a real However, the policy of free trade point of involution from the previous promoted from the 1980s has had major period, where the country had become successes outside the subcontinent. Thus authentic island on international today Chile has free trade agreements cooperation, and the time was an concluded with the United States, Japan important progress in the development of or the European Union. a culture of respect for human rights, which enabled display for the first time the enormous contribution that can mean Therefore, there was a sort of distrust an international organization in the toward American integration processes institutional development of the country. such as the Andean Community and MERCOSUR during the 1990s. Indeed,

for Chile was the first of its founding Well, as Chile pointed out he has members, relationship stops abruptly in participated in the Organization of 1976 with the denunciation of the treaty. American States since its earliest origins, This situation has begun to change in whose first record dates back to the First recent times. Chile now has the status of International American Conference, held associate member in respect of both in Washington DC, the day October 2, institutions, even to ratify certain 1889 to April 19 1890. In the same way instruments obliging towards these that was one of the countries that in institutions. For example, Chile in its 1948, adopted the Charter of the capacity as an associate member of Organization of American States, the MERCOSUR has signed the Protocol of American Treaty on Peaceful Settlement Ushuaia on Democratic Commitment and the American Declaration of the 1998 or some commercial agreements, Rights and Duties of Man. On the other which have undoubtedly boosted hand, in economic matters, the country

60 relations between Chile and MERCOSUR.

In terms of GDP we are going to analyze the next table taken from the ECLAC (Economic Commission for Latin America and the Caribbean) (2015):

Source: ECLAC: Economic Commission for Latin America and the

Caribbean (2015).

As we can see on the table the most representative sector for Chile is mining that since 2011 has have a decreasing of

8.55% in 2012 and 9.67% in 2013; the main reason for this decreasing could be specially in the lower production of

cobber and the change in terms of production that Chile is having, it means that as we can appreciate in the table

specially in manufacturing, it has Table 1: increased since 2010 to 2013 a 23,58%, increasing that can be explained mainly Annual Gross Domestic Product (GDP) because Chile in spite of the fact that by activity at current prices mining keeps being the main economic (Millions of dollars)

61 activity, the manufacturer of products Graphic 1 derivative of mining is taking an important role in the Chilean economy and shows how the country is industrializing its production and integrating vertically the value chain and it means a possible reason why the labor hand and capital is moving into manufacture processes; other factors as agriculture, services, financial and energy are also important in the economy of the country and have had a growth and evidence an important projection about the Chilean market internally and As we can see in the graphic Chile since specially how the internal structure of the 80’s until the 2000’s had a Chile is improving in terms of progressive growth given by the ending infrastructure, social and economic of the socialist government that was growth. dominating in the 70’s, indeed the Analisys in terms of globalization: change in the economic model , on the next years gave an economic openness The first item to analyze is the economic due that Chile adopted a neo-liberalist globalization, in the next graphic we will model and guided by the Pinochet’s show some data to explain how has policies there was a reduction on the globalized economically: public spends, privatization of the state enterprises, improvement in the central bank autonomy and the control of the interest ratios by the central bank and finally the crisis that countries in the north(USA and Europe) and Asia give to LATAM and specially to Chile the opportunity to expand its market and improve the external sector; now the graphic shows after the 2000 a higher

62 growth ratio given by the performance of the external sector in Chile that is given Graphic 2 specially by the economic integration processes signing treats and becoming member of blocs like MERCOSUR, UNASUR or The Pacific Alliance and the improvement of the mining sector in the country that was high demanded specially in the USA market, also the economic globalization was given by the increasing of imports of transformed goods and raw material from the neighbor countries and USA, finally after 2009 there is a decreasing in the economic globalization that is given as How socially globalized Chile is we said before because of the change in dependent on many factors, but among the production model, it means that Chile them is that Chile had a military regime doesn’t export mining in the same level which receives the name by which the that years before due that the labor hand period of Chilean history between the and capital were transferred to the September 11, 1973 and 11 March 1990, manufacturing sector based con copper during which a military dictatorship led or minerals; the final factor to analyze of by General Augusto Pinochet. This the decreasing is the restrictive monetary period began with the coup that policies implemented by the central bank overthrew the government of President characterized by the high interest ratio Salvador Allende. and the revaluation of the national During this period systematic violations currency giving a result of the detriment of human rights, with at least 28 259 of the trade terms becoming them victims of political imprisonment and negatives and indeed making that the torture, executed 2298 and 1209 commercial balance stays negative. disappeared detainees were committed, Now is important to analyze also the this meant the domain without social globalization of Chile shows in the counterweight to the business sector, the next graphic: sustained increase in income inequality

63 were committed along with an increase Also socially Chile has achieved a in precarious and unstable sectors equality grade that allows him to employees. Culturally, it resulted in the become more competitive making so-called "cultural blackout", many of its population increase real characterized by repression and self- incomes and purchasing power, repression of certain cultural events indeed the Chilean economy has considered contrary to the official line. become one of the most important

In early 2010 a 20-year cycle of four factors to describe the social governments of the Concentration was globalization due to the protectionist completed, the political coalition that has policies aimed first to fortify the made growth with equity a central local industry and second to establish element of his program, and managed to a life standard for population in Chile give continuity to an important set of that allow it to have a high quality of social policies used precisely for this life in comparison with its neighbors purpose. as we can see in the next table which describes how Chile has overcome Social policy played a major role in the poverty of people and decrease the politics of growth with equity, which poverty ratios in 5 years. Poverty opened in 1990 with the return to and homeless ratio 1996-2006 democracy in the government of President Patricio Aylwin. He stared to year Poor homeless GDP improve conditions for workers resulting peop participatio on reforms in the labor market and the le n poor benefits to be channeled to the poorest people according to expenditure social governance.

199 38,4 12,8 4,09 6

200 23,1 2,8 1,36 0

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200 18,7 4,7 0,95 overlooked the important 3 contribution of this factor to increase social spending. With 200 13,7 3,2 0,49 the transfer to the private sector 6 investments in infrastructure, the state could release substantial resources in the traditional way would have to finance This decline in poverty is the result of investments necessary for the increase in the income received by growth. these households reflects a rise in their salaries and better job opportunities. To 2. A second factor that allowed to a lesser degree, also they contributed open more space for social cash subsidies granted by the State. spending was lower defense spending. Peace conditions Five factors contributed to this shift of resources: possible to maintain this spending without growth, thereby reducing 1. Investment in infrastructure was their relative importance. done with private funds, which Defense expenditure of the freed the state to finance essential general government increased investment in projects for the from 2.2% of GDP in the late 80s, development of the country. to 1.2% in 2005-2009 Investment in energy 3. The third factor contributing to infrastructure (electricity) and expand social spending was also telecommunications was in a direct result of fiscal policy. private hands as a result of The first budget surplus allowed privatization of the 80 Investment reducing public debt and in the in water and sanitation works, super cycle of high copper prices road, port and airport the years 2006-08, accumulate infrastructure, was conducted by assets. private investors as a result of the

new concession system created in 4. A fourth factor that raised funds the 90s and / or new for social programs was the privatizations. Often it mobilization of private resources

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that joined the public effort. This Those factors allowed Chile to overcome "leverage" of private resources in social challenges and socially became various social programs are one the most stable countries although conducted primarily through the the education sector became a challenge financial system. For example, a for the country due to the bad policies of new micro-credit system in which the government and the attempt of the the state only pays the subsidy government to privatize it that has and the credit is granted by caused struggles among students and financial institutions was teachers and has initiated an educational introduced; in the case of crisis in the country. housing, it was used further the

mechanism of housing subsidies and less direct engagement by the State; credit systems were created Now is important to analyze also the for higher education. political globalization of Chile shows in 5. Finally, a fifth factor which the next graphic increased social investment was

the contribution of the beneficiaries' ability to pay. In Graphic 3 several programs the contribution of stakeholders is promoted, allowing the state to concentrate its efforts on the neediest and / or expand the favored population. Examples of these initiatives are participatory payments, where neighbors contribute to financing the cost of paving streets or passages, and shared funding in the case of primary and secondary education, supplementing the grant of State Pinochet's dictatorship used the with input from families. institution of the plebiscite to achieve

66 legitimacy of certain decisions, or simply sectors. On the one hand the population to generate an image of citizen support, felt that the antidictatorial force was or as a propaganda instrument. Pinochet respectable and capable of undermining never resorted to fraudulent elections- the stability of the current system and the even-to designate municipal or functioning of the economy. The check parliamentary authorities. Only used the dictator was evident. But at the same plebiscite, but blocked its use under time and to the extent that a significant democratic governments. part of that force was guided by a strategy of "rebellion" without excluding In 1989 the coalition, with the support of forms of violent struggle, the "protests" the sectors of supporter’s left "popular generated fear in areas of central and rebellion" triumphed at the polls and other advocacy groups democratization elected President Patricio Aylwin. growth of the strength of the Communist Presidency that lasted exceptionally Party and the Patriotic Front. constitutionally four years and was followed by six years led by Eduardo Frei and then, in 2000, for the presidency Result of it as we can see on the graphic of Ricardo Lagos. after the dictatorship, politically Chile All this political evolution of Chile became globalized specially because begins with the emerging force called started to adopt international standards to "social issue" is about the emergence of guarantee the fulfillment of a respectable a mining and industrial proletariat democracy, also is important to stand out organized the first solidarity, union and the importance of the integration political institutions aspiring to represent processes where in spite of the fact that the interests of poor and working layers, Chile is the less participative country in the political history of Chile shows, in the region those attempts to integrate the general, a relatively orderly political economy into a supra national regulation parties box whose names tend to allowed Chile adopt policies that correspond quite clearly identifiable guarantee an equal participation first of ideological options. the population and second by politician that consequently turn the country into In the first half of the eighties the country one of the less corrupt in LATAM, suffered a serious economic crisis that hit therefore by the hand of the democratic with particular force to the working parties the influence of dictatorships and

67 its ideology were decreasing among giving as a result the implementation of peoples and the form how the country a democratic society. was directed. Therefore as we could analyze socially, economically and politically Chile has taken a main role in the international

participation first because of its location that has given to the country a competitive advantage becoming the

main one where income of goods from the pacific countries arrive, second because the country is attractive to invest

due to the reduction of poverty that has meant an improving in the social conditions in the country that means

more educated and effective people in the labor market; third the change from a dictatorship to a democracy gave

credibility to the country facing the international organizations and specially in terms of human rights and finally the

changes given in the GDP spend wherein Conclusion: most of it started to be invested in the

In terms of globalization Chile is ranked productive sector and the creation of in the 39th place which make it the most clusters that made the country easier to globalized country in Latin America in travel and move goods and services and spite of the fact that is the less competitive to trade specially in participative country in terms of regional maritime areas. integration and agreements with other countries; this globalization process of Ending, the globalization of Chile was Chile was given thanks to the military given in the last 30 years and the most dictatorships since the 70´s that reformed important benefits of the country have the political, economic and social system been the creation of commercial relation

68 especially with the NAFTA and China , the institutionalization of Chile as a credible government and recognized by the international community and internally in the improvement on the quality of life of citizens that is a result of the state policies aimed to become the country as one of the leaders in the regional context, finally Chile nowadays is a globalized country that in some years will trend to change to be the one of the less integrated countries to become a main participant in the global PILLARS participation with a potential to become in the best country to love, work and trade in LATAM even over Brazil. INSTITUTIONS

Global competitiveness report 2014- Despite the reform effort of past decades, 2015 the economic and social performance of Latin American countries during the Graphic 4: competitiveness pillars 1990s was quite disappointing. The (2014-2015) exception was Chile, which grew at a rate near 7% for most of the decade and reduced its poverty rate quite

significantly. This paper tries to explain this striking difference. Following the most recent literature that highlights the role played by institutions and policies on growth, we argue that Chile’s better performance was due to the country undertaking reforms that were much deeper and broader in scope than those in other Latin American countries. In the

69 process, Chile ended up with stronger institutions allows it to control them macro fundamentals and, most more efficiently and achieving a high important, better institutions, all of ratio of transparency in comparison with which allowed it to face in a better way other countries. the adverse shocks of the 1990s. This is based on the most recent literature on economic growth that suggests that the The role of institutions is clearly ultimate cause of a country’s growth lies illustrated in the figure, which shows a on the quality of its institutions. Better scatter for 151 countries between per institutions –property rights protection, capita GDP (as of 2002) and the quality governance, lack of corruption and of the countries’ institutions: bureaucracy, rule of law, and the like– Graphic 5 lead to the design of better policies, and enhance the support, credibility and effectiveness of implemented policies, therefore, allowing countries to attain faster economic growth. Thus, the argument follows, Chile has been able to grow faster than other Latin American countries since the mid- 1980s, although facing the same external environment and shocks, mainly thanks to its better As we can see on the graphic Chile is the institutions. best country in terms of the quality of

institutions and GDP ; the importance of the country is that is the most developed In sum, macro stability, financial system in LATAM in terms of institution and is development and the timing of the over even Argentina and –Brazil which structural reforms are important are considered the next two most elements that made Chile set a stable important institutions in the region, also group of institutions specially to in terms of GDP the impact of the generate welfare, equality and a institution in Chile is highly important considerable reduction of the corruption specially as we said before the country inside the country; also the high have one of the largest investments in investment of the country in its

70 government direction and indeed Thus the next graphic shows in terms of because of that reason Chile has a better these indicator de improvement on the performance in the form how its quality of infrastructure in Chile since institutions work thorough the country 1971 and compare it with the world specially with the central bank that is averages: considered the most respectable institution in the country. Graphic 6

INFRASTRUCTURE

The composition of government expenditure in Chile is tilted in favor of growth. In the case of capital expenditure, a negative relationship with income per capita, and Chile is about where its level of income would predict; the fact that Chile has an ambitious program of road privatization, As we can see in the graphic 6 Chile in implemented in the second half of the terms of stock (value) in the 70´s decade 1990s, suggests that total investment in had an important growth specially given infrastructure is much higher than public by the improvement of sea ports which investment reveal. demand the country create new railroads The stock and quality of infrastructure and more efficient forms of are indeed important determinants of the transportation that is traduces in a large rate of economic growth. The main investment on internal infrastructure variables that must be considered are specially in energy and airports that were indicators of telecommunications, introduced a few years ago in that energy, and roads; consequently an country; later we can see that Chile had a increasing on the investment in that constant growth until the 90’s result of factors make that inequality and poverty the social and economic changes that the decreasing in a long term of time. country had on that period of time explained in the previous chapters that

71 made chile one of the most important integration processes that the country is economies in LATAM even comparing having nowadays. the value of its infrastructure as equal in the world. MACROECONOMIC ENVIRONMENT Thus Chile has seen notable improvements in its infrastructure over The macroeconomic environment in time in summary, the evidence indicates Chile has been favorable in the last years. that the decade of the 1990s was marked The economy grew at a good pace thanks by an extraordinary increase in to strong investment and domestic infrastructure in Chile in terms on quality demand. In the past few years, GDP is and also in value. This growth involved expected to grow slightly above 5%. As not only public investment, but also we can see in the in the graphic 4 the substantial private sector involvement, macroeconomic environment is the most which fostered a surge in foreign direct important competitiveness item for investment. The surge in investment, in Chile, on the other hand as we argued the turn, not only affected Chile’s long-term isolation of the country on integration growth potential, but also gave a short- processes make him to become more term boost to domestic activity. From an strategic and selective with its trade international perspective, this effort partners, so if we analyze USA and helped Chile catch up with the world China are the most important average after a long period of weakness commercial associates of Chile in the last in infrastructure. International years, indeed Chile has taken advantage comparison also reveals, however, that a in comparison with other countries gap remains between Chile and the more specially in ports and the maritime advanced developing countries, such as transportation of its products on the the East Asian economies, in terms of pacific sea despite of the fact that its both the stock and the quality of integration processes are just a few, infrastructure. For this reason, the pick- regionally the most important integration up of investment was a strength in the process in this moment is the pacific 90s, but still the stock can be improved alliance that is an evidence of we argued now specially in terms of movement of before that Chile choose just the most people, services and goods due to the strategic partners to trade and till to be in the attempt to create a supranational

72 process to move freely goods, people and Chile despite its emerging status, ranks capital with the countries member of the alongside the most developed economies alliance. in the world. It has one of the world’s Nevertheless, the economic outlook for most business-friendly environments the next years continues to be favorable, and has attracted a number of well- with growth rates expected to once again known multinational and foreign reach 5% and inflation well within the investors with its open and competitive Central Bank’s target range (3%). The economy. The reason for this superior monetary policy rate should remain at performance is due to the success of its current levels (5%). reforms and the strength of its institutions, which have allowed Chile to In an environment of strong economic build a robust macroeconomic activity, the financial system has seen a framework. significant expansion in lending in 2014, concentrated mainly in consumer Chile's macroeconomic policy rests on finance and mortgage loans. According three pillars: to the Superintendence of Banks and Financial Institutions, lending is growing (i) A monetary policy geared year-on-year at 14.3% (at constant towards achieving inflation exchange rates), with strong activity in targets; the consumer portfolio (up 17.7%) and accelerating growth in corporate loans (ii) Exchange flexibility; and (up 15.6%). The earnings posted by the (iii) Prudent tax policy design, based local banks show a 1.1% contraction on the structural surplus rule. compared with the previous year (2013) due in part to the negative impact of the increase in expenses (up 10.3%) and Thanks to these policies and to the loan-loss provisions (up 14.2%). The transparency of its institutions, an open levels of return on equity have therefore trade regime and sound banking systems, been adjusted downward: from 17.4% as Chile has been able to maintain its of November 2013 to 15.1% as of stability and a reasonable economic November 2014. growth rate despite the difficult external

73 situation created by the international pollutant particles small enough to enter financial crisis. and cause damage to the lungs –is 46.2 micrograms per cubic meter in large

urban areas, considerably higher than the OECD average of 20.1 micrograms per cubic meter. Chile could perform better HEALTH AND PRIMARY in terms of water quality, as 73% of EDUCATION-HIGGER people say they are satisfied with the EDUCATION AND TRAINING quality of their water, lower than the OECD average of 81%.

Chile has made tremendous progress over the last decade in terms of improving the quality of life of its citizens. Since the 1990s, the country has Higher life expectancy is generally seen a track record of robust growth and associated with higher health care poverty reduction. Chile performs well spending per person, although many in only a few measures of well-being other factors such as living standards, relative to most other countries in the lifestyles, education and environmental Better Life Index. Chile ranks close to factors have an impact on life the average in subjective well-being, and expectancy. ranks below the average in civic The Bono Auge programme (launched in engagement, health status, jobs and 2010) reduces long waiting lists in public earnings, social connections, work-life hospitals and ensures fast treatment for balance, housing, income and wealth, publicly insured patients in case of high personal security, education and skills, risk diseases. The programme and environmental quality. establishes a system of universal access In terms of health, life expectancy at and explicit guarantees for health care birth in Chile is almost 79 years, one year services by law. It means that people can lower than the OECD average of 80 obtain health care in the private sector years. Life expectancy for women is 81 via a voucher (bono) if public care is not years, compared with 76 for men. The available. The programme sets a level of atmospheric PM10 – tiny air maximum time limit to get medical

74 attention to patients with one of 80 high- programs and services is guaranteed in mortality pathological conditions. terms of both health and financial policy Patients who do not get prompt treatment decisions. in a public facility will be assigned to a different, public or private, provider through a Bono Auge voucher within Those changes had the process in after two days. the military regime where the governors set a strategy based in education on the Health sector reform was redirected idea to create a society with a basis on starting in 1990 and in 1994 was social and economic welfare and included in the government’s proposal equality doing intensive investment in on modernization of the State. Since that the education and health sector in time, the Health Sector agenda covers collaboration with the private sector; three stages: one of the most important changes was i) Recovery of the public health in the teaching profession wherein the system (1990-1994) idea was to promote it and improve the standards to became a teacher, indeed ii) Modernization of the public the educational process would be health system (1994-2000) enhanced and the knowledge of the iii) Reform of social security in students would be higher allowing them health (2000 and beyond). to face the professional market in more competitive form, therefore the students took a main role in the Chilean education taking the next four pillars as In the course of Health Sector, hospitals the basis to develop it(OCDE 2014): have reduced the average length of stay, increased the number of discharges per bed, increased the use of surgical wings, and know costs per day for i) Access to education hospitalization and outpatient care. ii) Teaching practices Development and Employer-Employee Committees have been created to iii) Legal framework for educational strengthen social participation. The institutions medium- and long-term sustainability of

75

iv) Establish a superior quality of compete in equal conditions, finally is institutes since the primary important to stand out the taxes in Chile education that has a VAT of 19% which for the consumer is one of the most expensive

on the region and most of its tariffs GOODS MARKETS EFFICIENCY specially with favored nation which has a kind of treaty is around the 6% ad

valorem that could be considered a low

Chile has developed as we argued before ratio in term of tariffs. a high level of infrastructure that allows the country transport easily good throughout the country, indeed Chile has TECHNOLOGICAL READINES one of the most competitive markets specially because of the importance that (INTERNATIONAL TRADE its maritime ports have for trading in ORGANIZATION 2010) The World LATAM; also the support of the Economic Forum’s Global government to entrepreneurship and the Competitiveness Report for 2009 ranked programs of it to stimulate job creation, Chile 42nd out of 134 economies in capacitation, scholarships given by terms of technological readiness, placing enterprises and advices to natural and it 2nd among ranked Latin America and juridical people to create, establish and Caribbean nations. Its closest expand business in the country and later competitors were Barbados at 41st and in foreign markets. Brazil at 46th.

Therefore the country has developed In the Technology Readiness Index good conditions to trade internally and 2013, published by the World Economic externally and due to the antimonopoly Forum, Chile ranked 34th among 144 laws of the country the share of the countries, with 4.59 points, position that market is distributed equitably, other leads Latin America. Chile stands out in important factor is the adoption by the the top twenty countries in indicators country of the harmonized system for such as mobile phone coverage, tariff classification wherein control bad government online and virtual business practices like dumping is easier participation. This index measures the for the government doing that enterprises degree of preparedness of countries to

76 benefit from the development of ICT INNOVATION based on its regulatory and economic climate, their readiness, their levels of use and the socio-economic impact. Is the lowest pillar for Chile specially because its economy is characterized for producing raw material although MARKET SIZE AND BUSINNES according to the economy ministry the SOPHISTICATION country is moving from an economy based on efficiency into a economy

based o innovation, unfortunately Chile Business sophistication concerns two has a low ration of investment on elements that are intricately linked: the innovation and only 0,35% of the GDP is quality of a country’s overall business spent on that fact in comparison with the networks and the quality of individual OCDE that has an average of 2,4% of the firms’ operations and strategies. GDP, indeed the government is working Chile has one of the smallest markets of by the hand of the innovation the region (around 17 million of people), department to develop the next point to in spite of that fact the production be in the vanguard ECONOMY processes in the country specially in MINISTRY 2015 : terms of supply is one of the highest of (i) selectivity the region due to the integration of the clusters that the country has had in the (ii) institutional Strengthening last decade, also is a friendly country to (iii) Boost innovative SMEs do business due to the stability of the (iv) Ecosystem and culture of national economy which make the entrepreneurship and innovation country more attractive for foreign (v) Innovation for inclusive growth investment, finally in terms of the value (vi) Comprehensive vision and chains is one of the most integrated, that strengthening human capital , reason makes doing business easier and science and technology more attractive because the production and logistic processes to trade a good So, those factors are the basis that the have a short and cheap time until the country will develop to lead the final consumer. innovation in the region although is important to stand out that Chile is one

77 of the most innovative countries in Facing the unemployment that is one of LATAM just behind Mexico and Brazil. the most important challenges for the government, that’s because 58% of FINACIAL MARKET employment in Chile is temporal, so the DEVELOPMENT: most important challenge would be to create and promote stable jobs for population in la long term duration, In terms of the financial market Chile has indeed for the next years the a high performance in comparison with government´s objective is to reduce the its neighbors, although is considered a unemployment ratio from 6,6%, small market in comparison with Mexico unfortunately the country is facing a and Brazil , the country has a high ratio economic slowdown that could increase of availability in term of financial the ratio, as a conclusion Chile must services and an easy access to them; the improve the quality of jobs in the country legal framework is highly regulated by in a long term to reduce first the the government and the central bank unemployment ratio and secondly to making Chile a safe place to move reduce the temporal jobs and move them money and capital, in terms of into a stable jobs. development Chile has growth considerably due to the privatization of banks that in the 80´s most of them were property of the state, nowadays the Chilean financial sector growth is based in to encourage savings, deregulation of mutual funds and corporative governance in the stock markets, however the size of the financial market in Chile is smaller in comparison with advanced economies like Japan , Singapore or China .

LABOR MARKET EFICIENCY

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education, better health and an increasing of jobs opportunities for people in the country, second the strength of the country in financial terms that make Chile a confinable country to do businesses and consequently shows a Conclusion: stable economy with a high potential for In term of competitiveness Chile has foreign investment, third the integration many challenges specially in terms of of technological processes each day the innovation due to the low ratio of country is increasing the adoption of new investment on that sector; although the processes making trade and living easier macroeconomic environment and the and doing that time of any operation turn education are the two most important lower than a few years ago, finally as a pillars where Chile is basing its growth, fourth point is the regulation of the state indeed the economy of the country is the that is effective in the country giving to second one most competitive in LATAM it the opportunity and the necessary after Puerto Rico and is 33th in a global funds to invest in social infrastructure level and in the future will be higher that like health, education , railroads and position due that those pillars are the stimulation of new employment. basis of development for any country, so Concluding the market size of Chile in the other pillars have an equal of spite of the fact that is small is one of the importance due that are the cause of most dynamic in the south region due to Chile stay leading in terms of the integration of the value chain in its macroeconomics and education, to stand process of production which gives to the out is important to conclude that the country a high ration in the business pillar of infrastructure has turned into a sophistication and consequently make it main factor for the country to develop a friendly and comfortable place to do itself in terms of competitiveness business. because that improvement in infrastructure will make first that the goods will be transported easily and cheaper, also the movement of people will create an interconnected country opening the doors to the access to new

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opportunity marker for the country, also corruption and bureaucracy wasn’t objectives of the country) that would Competitiveness and globalization: gave to the country a form to develop as As we could see on this draft Chile competitive and international one. became globalized by the hand of Nowadays Chile must improve competitiveness, first in spite that the substantially its innovation processes innovation pillar is the lowest the basis because if the country keeps with the of fortify it since the 70s gave to the same policies probably in a short term its country the opportunity to show itself to level of competitiveness will be lesser the world thus to the improvement of and will occupy a lower place in the infrastructure, political and economic rankings, evidence of it is the slowdown model and finally the production process of the economy which keeps growing but that required an important form to in a lower ratio, it means that Chile innovate an become competitive; second should change the mentality of primary the most educated people opened to the production intro an intermediate and country the access to education from final goods production and establish a other part of the world and the protection value added to their product in terms of of the government to avoid the brain differentiation and quality. drain allowing to the country apply Finally each day the country is becoming international standards of production, more and more globalized, evidence of it trade, taxes and rights, finally the is the initiative of the Pacific Alliance connection of competitiveness and where the main objective is to achieve a globalization and the success of the level of integration like the European country´s performance was given by the Union so in a long term we will conclude estate intervention which with the that Chile will become the most population struggles allowed the country globalized country in LATAM thanks to achieve a consensus in terms of politic improvement of its performance in the and economic development, also that international market and internally Chile started its globalization process thanks to the growing quality of the with protective policies choosing condition for population and enterprises. carefully its commercial partners ( ex. Chile went away from MERCOSUR because weren’t a good growing Recommendations

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1) Chile must to invest more money new knowledge and new ideas to on innovation processes specially become the country more because it is causing a slowdown competitive in the national economy and is 6) Infrastructure must be improved making the country less in maritime ports to import and competitive in the markets. export more goods in bigger ships 2) Is important to change the and quantities, it with the production model from objective to become Chile the exploiting raw material to create center of the commerce in new industries on this chase LATAM. products derivative of copper. 3) To achieve the second point is important for the country to take Finally from this summary about the advantage of the integration situation in Chile is important to processes like the pacific alliance make ourselves the next three to expand the value chain and questions consequently to integrate its • Would Chile adopt an production process with other Industrialization throughout countries that as a result would export substitution like Japan, give a more specialized industry Korea or Singapore to for the country. achieve a high performance in 4) There is a necessity to create terms of globalization and more stable employments, so the competitiveness? government have to stimulate and • If the country achieve a high give benefits to the enterprise that level of innovation will it to earn people in a long term and transform all its industries those ones that improve the into a final product industry? working conditions to keep • If is true the last answer reducing poverty. would Chile become more 5) In terms of education the country important economically than needs to send more people to Brazil o Mexico? other countries to learn engineering or sciences that References: allows the country to produce

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• Navia, Patricia (1st September • Corbo, V. Hernández, L. Parro, 2009). Los cambios en la F (10th April 2005) Institutions, sociedad chilena entre 1990 y Economic policies and growth: 2009, University of New York. lessons from the Chilean Taken from experience. Central Bank of http://www.cesco.cl/assets/docs/ Chile. Santiago de Chile. Taken estudios-y- from presentaciones/Presentacion_Pat http://dialnet.unirioja.es/servlet/a ricio_Navia.pdf rticulo?codigo=1160664 see full text • Paredes, Felipe (17th May 2012). Procesos de integracion en • Gregorio, Rebeco. J (6th America Latina, Universitat December 2004) Economic Pompeo Fabrat, Barcelona. growth in Chile: evidence, Taken from sources and prospects. Central http://www.upf.edu/integracione Bank of Chile. Santiago de Chile. namerica/PAISESMAPA/chile/ Taken from http://dialnet.unirioja.es/servlet/a • Arellano M, Jose Pablo (20th June rticulo?codigo=1064745 see full 2012). Veinte Años de Políticas text Sociales. Chile 1990-2009, Santiago de Chile, Dimacofi. • Banco Bilbao Vizcaya Taken From www.cieplan.org or Argentaria BBVA (24th October http://dspace.utalca.cl/bitstream/ 2012) Chile in 2012. Bilbao, 1950/9676/1/Arellano%20jose% Spain. Taken from 20pablo.pdf http://shareholdersandinvestors.b bva.com/TLBB/micros/bbva201 • Arrate, Jose ( 5th september 2/en/Businessareas/Chile.html 2004). La Evolution Politica de Chile (1988-2003), University of • Ministry of Finance, government California, Berkeley. Santiago, of Chile (24th January 2010) Why Chile. Taken from Chile?. Santiago de Chile. Taken http://www.archivochile.com/Ide from as_Autores/arratej/1/1arratej001 http://www.hacienda.cl/english/i 6.pdf

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nvestor-relations-office/why- políticos, 1983-1990. Santiago de chile.html Chile. Pontificia Universidad Católica de Chile, 2011 • World Trade Organization, Trade Policy Review Body (2nd • Redondo, Jesús M., september 2009). TRADE Policy Descouvières, Carlos, Rojas, review report by Chile. Santiago Karina (2004) Equidad y calidad de Chile. Taken from de la educación en Chile: https://www.wto.org/english/trat reflexiones e investigaciones de op_e/tpr_e/g220_e.doc eficiencia de la educación obligatoria (1990-2001). Chile. • Better Life Index – OECD (14th Universidad de Chile, Facultad November 2014) Learn about Ciencias Sociales, Vicerrectoría Chile. Chile. Taken from Investigación http://www.oecdbetterlifeindex.o rg/countries/chile/ • Rolwing, K. (6th December 2013) Higher Education in Chile. World • Better Life Index – OECD (29th Education Services and World August 2014) Health in Chile. Education News & Reviews. Chile. Taken from California, USA. Taken from http://www.oecdbetterlifeindex.o http://wenr.wes.org/2013/12/intr rg/topics/health/ oduction-to-the-higher- • Cox, Cristian (13th December education-system-of-chile/ 2004) Innovation and reform to • Chan, Louis. (22th January 2015) improve the quality of primary Chile: Market Profile. Hong education: Chile. Education for Kong Trade Development All Global Monitoring Report Council. China. Taken from 2005. Chile. Taken from http://emerging-markets- http://datatopics.worldbank.org/h research.hktdc.com/business- np/files/edstats/CHLgmrpap04.p news/article/Latin- df America/Chile-Market- • Rubio Apiolaza, Pablo, G. (2011) Profile/mp/en/1/1X000000/1X00 La Derecha en el régimen militar 3I6C.htm chileno: el caso de los partidos

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• Cifuentes, R. Desormeaux, J. • U.S. & FOREIGN González C. (21th february 2005) COMMERCIAL SERVICE Capital markets in Chile: from AND U.S. DEPARTMENT OF financial repression to financial STATE (25th March 2010) Doing deepening. USA. Taken from Business in Chile: 2013 Country http://www.bis.org/publ/bppdf/bi Commercial Guide for U.S. spap11g.pdf Companies. USA. Taken from http://photos.state.gov/libraries/c • UK Trade & Investment (2nd May hile/103796/fsc_business/countr 2014) Doing business in Chile: y_commercial_guide_2013.pdf Chile trade and export guide. London. UK. Taken from • Comité de Inversiones https://www.gov.uk/government/ Extranjeras (16th August 2013) publications/exporting-to- 10 Razones para invertir en Chile. chile/exporting-to-chile#growth- Santiago, Chile. Taken from potential http://www.ciechile.gob.cl/es/por que-chile-9/ • Collins, J. Lear J. (1995). Chile´s free market miracle: a second look. Subterranean Company. USA. Institute for Food and Development

• Richards P. (2013) Race and the Chilean Miracle: Neoliberalism, Democracy, and Indigenous

Rights. University of Pittsburg.

USA

• CONRAD, VON IGEL (13th June 2013) Innovation: The Case of Chile. Americas Quarterly. USA. Taken from http://www.americasquarterly.or g/content/innovation-case-chile

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COLOMBIA Country comparison to the world: 111 Labor force: 23.67 million (2014 Est.) Unemployment rate: 9.2% (2014 Est.) Country comparison to the world: 105 Population below poverty line: 32.7% (2012 Est.) Taxes and other revenues: 28.5% of GDP (2014 Est.)

Country comparison to the world: 99 GEOGRAPHY: Public debt: 41.9% of GDP (2014 Total: 1,138,910 sq km est.) Land: 1,038,700 sq km Inflation rate (consumer prices): Water: 100,210 sq km 2.9% (2014 est.) Country comparison to the world: 26 Current account balance: $16.08 POPULATION: 46,245,297(July billion (2014 est.) 2014) Country comparison to the Country comparison to the world: 30 world: 181 Conventional long form: Republic of Exchange rates: Colombian pesos Colombia (COP) per US dollar 1,992 (2014 Legal system: Civil law system est.) influenced by the Spanish and French civil codes. ABSTRACT GDP (purchasing power parity): Colombia is an important economic $642.7 billion (2014 est.) country that emerged from the Country comparison to the world: 32 collapse of Gran Colombia in 1830. GDP real growth rate: 5% (2014 This country has been est.) characterized by along conflict in Country comparison to the world: 54 the nearly five-decade. This GDP per capita (PPP): conflict is between government $13,500(2014) forces and anti goverment

85 insurgent groups, principally In 2013 and 2014 also the level of FARC (the revolutionary armed foreign inversion mostly in forces of Colombia). For this hydrocarbons sector. For this reason, the drug trade was funded reason Colombia depends heavily during the 1990’s. This problem on energy and mining exports, continues today but in the large making it vulnerable to a drop in a areas of the countryside are under commodity prices. Colombia is the guerrilla are contested by security world's fourth largest coal exporter forces both are in specific cases. and Latin America's fourth largest In 2012, the Colombian oil producer. The problem to export government started the peace only commodities are that negotiations with the FARC Colombia doesn’t have an adequate including a definitive bilateral infrastructure, this produce ceasefire to achieve introduce inequality poverty, narco demobilized FARC’s people into trafficking and uncertain situation society and politics. Moreover, the unemployment rate It’s clear that Colombian’s people of 9.2% in 2014 is still one of Latin has fear because Colombia is America's highest. The SANTOS characterized by their democratic Administration's foreign policy has institutions are funded in pillars as focused on bolstering Colombia's peace, transparent elections and the commercial ties and boosting protection of civil liberties. This is investment at home. Colombia has one of the causes by which signed or is negotiating Free Trade Colombia has an efficiency Agreements (FTA) with more than economic policies and aggressive a dozen countries; the US- promotion of free trade agreements. Colombia FTA went into force on This helps to the real GDP which May 2012. Colombia is also a has growth more than 4% per year founding member of the Pacific for the past 4 years. All the three Alliance - a regional grouping major ratings agencies have formed in 2012 by Chile, upgraded Colombian’s government Colombia, Mexico, and Peru to debt to investment grade. promote regional trade and INTRODUCTION economic integration. In 2013, Colombia began its ascension

86 process to the OECD. In 2014, Some important changes have taken Colombia passed a tax reform bill place in the past few years. By the late to offset the lost revenue from the nineties, the country had experienced an global drop in oil prices. The escalation of violence, an erosion of SANTOS administration is also institutions and isolationism. The using tax reform to help finance security conditions prompted Colombia implementation of a peace deal, in to be placed in some ‘Failed States’ the event FARC and the rankings published in 2005. Today, government reach an agreement in however, Colombia is seen by some as a 2015. Colombian officials estimate rising star because of the improvement in a peace deal may bolster economic security conditions in recent years. This growth by almost 2%. result, coupled with the country’s political and economic stability, has GLOBALIZATION IN COLOMBIA made the economy attractive for foreign The Colombian economy is among the investment, despite its low level of five largest in Latin America (Table 1). globalization. At the same time, the In the early 1990s, as happened in Colombian government has accelerated several Latin American countries, the several trade negotiations, an area in Colombian government undertook a which the country had remained almost number of economic reforms aimed at stagnant through the last part of the strengthening the country’s ties with the 1990s. world economy. Two decades after that shift in the economic model, however, Colombia lags behind other Latin American countries in its internationalization process in several dimensions (Table 2). The impact of globalization on Colombia has been uneven. It has been particularly high in areas like security and energy, and low in areas such as economic development, politics and social issues.

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adoption of the so-called ‘Import Substitution Industrialization’ (ISI) model, which was common in several countries in Latin America during the 1960s and 1970s. Under ISI, the development of domestic industry was based on strong state intervention in the economy through the subsidy of new industries, price controls, high import tariffs and quotas, administered interest rates and directed credit, among others

Although Colombia may be at a turning mechanisms.2 The high cost of imports point in its internationalization process, under ISI made production based on big challenges remain in order for the foreign raw materials more expensive, country to be able to take advantage of thus generating an anti-export bias in the the opportunities that globalization economy. This policy virtually closed offers. In the following sections, we the economy, even for foreign present the historical reasons for the low investment, and favored the degree of openness to the international development of a lobbying culture market. The impact that the internal among business people, that in some conflict, both with guerrilla and drug- cases, still plays a major role in the trafficking groups, had on preventing the formulation of trade policy. Thus, in the country from a shift towards greater seventies, Colombia came to be called globalization, is also analyzed. The the Tibet of Latin America. The policy of paper concludes by highlighting the economic liberalization implemented in main challenges that the Colombian the late eighties and early nineties, and economy faces in order for it to become the evolution of regional integration in a real rising star in the regional context. the early nineties, both due to the affinity of the Colombian technocrats with the HISTORICAL BACKGROUND so-called ‘Washington Consensus’ In the second half of the 20th century, the ideas, laid the foundation for changing restrictions imposed by geographical the ISI development model. Between conditions were exacerbated by the 1991 and 1994, Colombia reduced tariff and nontariff barriers and deepened trade

88 integration with Andean countries, reform momentum. At that time, leading to the formation of a customs Colombia experienced its worst union, known as the ‘Andean economic crisis in 30 years: in 1999 its Community,’ which included GDP fell by 4.2%. Along with the Venezuela, Colombia, Ecuador, Perú economic crisis, strong pressure and Bolivia. Furthermore, in 1994 the emerged from the private sector against Colombian government signed an the liberalization policy, especially in the Economic Complementation Agreement area of trade policy, due to the increasing with Chile within the Latin American competition of imports to domestic Integration Association (LAIA) production. The resulting return to framework, a 1995 free trade agreement protectionist trade policies included the with Mexico, and the treaty that created attempt to increase the tariffs of certain the World Trade Organization (WTO) in productive sectors, such as textiles, that same year. These were the formal apparel and shoes, and also the means used by Colombia to search for a application of non-tariff barriers in those better insertion into the international sectors such as ports-of-entry restrictions economy. Meanwhile, Colombia had on imports, and the widespread use of strengthened its links with the rest of the trade defense instruments, such as anti- world in other areas. The integration in dumping duties and safeguards. Much of security had its origin in the non-formal the anti-dumping investigations have integration process initiated in the 1980s occurred in the industrial sector (textiles, through drug-trafficking. Likewise, the garments, chemicals and petrochemicals, guerrilla movement had historically and metalworking sectors), and generated links with other leftist especially against China. In contrast, movements in Latin America, especially safeguards investigations have been Cuba. The reformist trends of the concentrated mainly in the Andean nineties, especially in economic policy, Community countries and on was reversed at the end of the decade as agricultural products. a result of the institutional crisis Subsequently, the first administration of stemming from allegations of President Alvaro Uribe (2002-2006) involvement of drug money in the implemented the Democratic Security presidential campaign of 1994. The Policy, which focused on improving impact on the economy of the 1998 public safety and restoring confidence in Asian financial crisis also stopped the Colombia. The government found an ally

89 in the United States and framed its integration) as integration strategy, foreign policy in accordance with the mainly led by Venezuela and Brazil. In proposed war on terrorism of the 2004, Venezuela led the creation of The administration of President George W. Bolivarian Alliance for the Peoples of Bush. The dynamics of armed conflict Our America-Peoples’ Trade Treaty continued to determine Colombia’s (ALBA-TCP), and in 2008, The international agenda. As a result, the role Constitutive Treaty of the Union of of the Colombian president and the South American Nations (UNASUR) Ministry of Defense became was signed. increasingly important in the design and This context of regional polarization was implementation of the country’s foreign further complicated by political policy. instability in some countries in the Colombia’s economic integration region, and by the distrust generated by agenda therefore became subordinated to the expansion of Colombian drug its security agenda. While Mexico, Chile traffickers and guerrillas beyond the and the Central American countries were country’s borders. The effect of the able to ratify free trade agreements with fumigation of illicit crops along the United States prior to 2006, Colombia’s borders, and episodes such Colombia signed a similar agreement as the bombing of a Revolutionary that year, and then had to wait six more Armed Forces of Colombia (FARC) years to put it into effect. guerrilla camp in Ecuador in 2008, In addition, Colombia’s foreign policy further increased regional distrust of the approach during 2002-2008 faced a very Colombian government. (Zuluaga, 2012) complex regional context. Political polarization in the region led some countries to reject the role of the free- market and outward-oriented growth strategy fostered by the so-called Washington Consensus, as well as the Bush-era, foreign-policy unilateralism. This trend resulted in a rethinking of Open Regionalism (that is, the combination of a general reduction of tariffs and a deepening of the regional

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experienced by Colombia in the last 30

The model of import substitution years. Since opening, the weight of industrialization occurred in Colombia foreign trade in GDP has increased and the rest of Latin America from the considerably, not only for the expansion 60s, as a result the management of the of exports, but also by the growth of exchange rate with the progressive imports. Besides coffee as export devaluation was altered, trade product until 1993, featured a varied integration began with the Andean basket of goods and services exported countries and spent a growth inward to from those found in manufacturing, outward growth based on the mining products (coal, oil, ferronickel diversification and expansion of exports and emeralds), agroindustrial goods ". In the mid-70s they began to introduce (flowers, sugar and banana) and various sweeping reforms of liberalization and illicit substances such as marijuana, http://globalization.kof.ethz.ch/query/ 1 deregulation of economic management. cocaine and heroin especially Europe, Finally, since the early 80s, United States, Venezuela and Ecuador. decentralization made its appearance In its component of liberalization, strongly from that date. Thus, economic foreign trade is more open and less openness, liberalization and regulated today; economic management decentralization became the axis of the is done without resorting to complicated deep socioeconomic transformation system of incentives and punishments

91 sector of the past, attempts to provide The Colombian economy of the nineties general terms of exchange, monetary and the protectionist economic development financial stability for the most model, interventionist regulator, the competitive activities stand out without welfare state is changed from the nineties public support. It tries nevertheless hold by the liberalization model of free trade, an active social policy based on the privatization and capitalist who started in location of vulnerable groups and the 1990 with a vigorous program granting of demand subsidies. modernization of the economy, with an Decentralization meant greater political exchange status to maintain and autonomy of municipalities and consolidate levels of change that will governors who are currently elected by give competitiveness to Colombian the vote for their leaders. Additionally, in products abroad, in addition to the case of municipalities, social mobilizing resources for private spending and investment is executed by investment and industrial restructuring, them, it is financed through a fund as well as development of science and transfer redistributed assigned to social technology, linked to other policies in criteria. Amid these general key sectors such as agriculture, transformations, the Colombian urbanization, industrialization, economy has managed to sustain an telecommunications and information annual growth rate of 4% low compared technology, health and education to to the world but acceptable concert in the achieve modernization. To comply with rest of Latin America. The per capita the above was chosen in 1991 a income achieved an annual average of Constituent Assembly to reform the 2%, contrary to what happened in most constitution, but the country was not of the neighboring countries, the prepared for these changes so fast, being economy grew considerably, going from affected by the new open economic 10% to about 30% of GDP; However model the agricultural sector, small and Colombia is the only country in the medium enterprises and the social sector region that struggles amid a deep in employment, housing and subsidies in political crisis marked by dispersion and general. From that model Colombia radicalization of the opposing forces and recorded in the period accelerated rate of expressed in 30 000 violent deaths per outsourcing since activities such as year. agriculture, mining and manufacturing fell to its participation in the generation

92 of value added, while public services guerrilla groups that were born at that residential, trade, transport, finance and time, in order to prevent the spread of personal and social services increased. Indeed, the first group of sectors went from 47.5% in 1990 to 34.5% in 1996, while the second one increased from 49.7% to 59.7% By grouping the data in tables It shows that in Colombian imports by sector (thousands of US $) trade liberalization of the economy grew rapidly even at a faster pace in imports than exports; so the total imports in 1996 was 13,681 million dollars; in 1997 15.334; in 1998 to 14 677; in 1999 to 10 communist wave. "It is also for this time 659; in 2000 from 11,757 in 2001 to that drug trafficking has become the 12,821 in 2002 and 11,637. (Cubides, main problem of bilateral relations with 2010) the United States." This particular issue For the 70 "s relations between allowed the takeoff of the Colombian / Colombia and the United States they US relations, and from this point the US took a special character, because it interest in supporting Colombia's speaks of the struggle against new internal problems and that in one way or

http://globalization.kof.ethz.ch/query/ 2

93 another affected the internal situation in Colombian foreign policy. Also I will that country is in sight. continue with the intention of promoting In years 80's internal problems a Latin American and Caribbean Colombian conflict intensified arming integration, adding linking non- and drug trafficking; which affected the traditional foreign policy issues such as Colombian elite that at this point no one trade, economic, environmental issues knows for sure how to guide national and and respect for human rights issues. international policies to address the However, the diversification of situation. With the advent of the years international relations was also a major 90s and the economic opening a new topic during this period, whereas trend of foreign policy known as Respice Colombia's main market is the United Mercatum15 ran, this trend shifted topics States, held this status although at as political and security issues slightly reduced rates; according to the previously prevailed on the agenda of political perspective of the moment Colombian foreign policy, passed to the diplomatic relations with countries in background. Africa and Asia widened, adding a In 1994 Colombia was in a crisis due to strengthening of diplomatic relations the scandals awarded to the government with the European Union on trade issues. of the day, this was reflected in a lack of No doubt one can say that during confidence in Colombia by governments previous governments 1998 the worldwide, reaching even for the first management of foreign policy had a time to deny a visa for a Colombian different guideline depending on the president. No doubt this serious internal situation and the needs when situation the country was led to reflect on establishing and defining international the world and how Colombia should look policies; each of the governments then inward to thereby achieve better left a legacy of principles that constitute insertion in the international system. At the evolution and actions of Colombia to first glance what happened during the the world. Samper government is involved in In the first decade of the century XXI purely negative aspects that hindered the Colombian foreign policy was actions of Colombia internationally. But characterized by the deepening of the should I take into account the Samper traditional alignment of Colombia with government's foreign policy remained on United the margin of the traditional principles of

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States, from the priority given to the suggest a return to Colombia to military dimension and the issue of prominence in the Latin American security in international relations. This concert. From the first months of his feature is adopted according to the government, Santos was interested in interaction of internal and external restoring relations with Ecuador and conditions Venezuela, which were damaged in the The closer relations with the Colombian last four years of the Uribe government US administration States caused discomfort of neighboring Velez. They had said Santos in his countries will increase, especially after inaugural speech: "[...] One of my the terrorist attacks of September 11, fundamental purposes as President will 2001 in be to rebuild relations with Venezuela New York. From that event, the and Ecuador, restore confidence and Colombian government decided to join privilege diplomacy and prudence" the crusade that George W. Bush, It is worth remembering that during the president of the United States declared second term of two neighboring against terrorism, also giving that governments Uribe broke off diplomatic character to illegal armed groups in relations with Colombia: The Colombia. government of Ecuador in March 2008 Thus formal internationalization of the after Operation Phoenix that struck the Colombian armed conflict deepened, member of the FARC "Raul Reyes" on a with the addition of Plan Colombia, FARC camp located in the territory of initiated by the government of Andres the neighboring country; while the Pastrana Arango, the Democratic government of Venezuela took the same Security Policy of the government of decision in July 2010 in response to Alvaro Uribe Colombia's decision to report to the But after two years of government of Permanent Council of the OAS the Juan Manuel Santos, there are signs of presence of FARC camps in Venezuela. change in Colombian foreign policy at These disagreements led to, at the end of the beginning of the second decade of the the Uribe government, the country will century: since August 2010, when Santos be in one of the moments of greatest assumed the presidency, have received isolation as it pertains to their regional some leeway in the management of environment. international relations, which seem to

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A fact that contributed to strengthen the American Nations, Unasur, as they approach to South America Santos was perceived as a threat to the security of the the decision of August 10, 2010 of the region. (Herrera, 2010) Colombian Constitutional Court, which declared nonexistent this agreement with the US allowing the use of seven Colombian military bases by that country. The agreement was invalid for failing to pass before Congress. Therefore, the fall of the agreement and the fact that the government did not try to revive Santos facilitated the recovery of the Latin American regional confidence in Colombia, without affecting relations with the United States. The question of military bases had generated much controversy in different scenarios for dialogue with the

http://globalization.kof.ethz.ch/query/ 3 South American countries and The Colombia Migration Profile specifically in the Union of South illustrates the current status of migration

96 in this country. Colombia is a return of highly qualified personnel. The multicultural country with a projected probability of return increases as the population for 2010 of 45,508,208 training level and type of employment inhabitants, of which 49.37 per cent are enters the second tier: a labour force or male and 50.63 per cent are female. In range of people engaged in different Colombia, migration flows from the tasks that do not require advanced dynamic of a society that transforms training. itself according to context, economic Historically, mobility has been a fluctuations and the variable conditions characteristic of the people of Colombia. that characterize Latin American It took place in three waves the decades countries. Colombia is considered one of of the sixties and seventies (the first the countries with the most migration in wave principally to the United States), the region. Data on emigration comes the eighties (the second wave to from the 2005 Census. The census takers Venezuela) and the nineties (third wave identified the number of persons in each to Spain). (MIGRATION, 2010). census household who had gone to live Colombian emigration to the United abroad permanently, inquiring about States took place in the sixties and destination and period of emigration. seventies and reappeared in the nineties, The 2009 report prepared by the National in particular for economic reasons – the Department of Statistics (DANE) states possibility of finding work and that the total number of Colombians augmenting income - and, to a certain living abroad is 3,378,345. extent, for political reasons, such as the According to the various information threat of illegal armed groups. Typical of sources, the causes of Colombian this migration was the level of education migration abroad are mainly economic, of the migrants, good knowledge of the followed by family-related causes, and, English language, a larger proportion of less frequently, by security women than men and a considerable considerations. This profile evidences a presence of middle and upper class loss of human capital and shows how a migrants. significant number of educationally In the case of emigration to Spain, it qualified Colombians have emigrated increased considerably as of 1998, which from the country. Moreover, as seen in was largely the result of Colombia’s the Medina and Posso study (2009), economic crisis in the years 1998-1999, there are minimal opportunities for especially in certain regions, such as the

97 coffee growing country and because of market that takes advantage of Spain’s attraction as a place in which to opportunities. join the collective immigrant workforce, ECONOMIC as well as the advantage of the language Colombian and Latin American trade for Colombians. At present, the integration starts from the 60s, trade population of Colombians is the fourth union begins with the Andean countries, most numerous in Spain after Moroccan, starting with an internal progress and Ecuadorean and Romanian immigrants. expand based on diversification and The majority of Colombian migrants in export of products and services. Spain are women, who have a medium In the 70s I had an approximate rate of educational level and belong to the 28% in which there were significant middle and lower middle classes. changes, major reforms of liberation and (CANCILLERIA, 2012) deregulation of economic management ANALYSIS OF GLOBALIZATION were introduced equally Colombia has IN COLOMBIA also failed to find a path of growth, Globalization in Colombia has had transformation and modernization of several much economic political and production to achieve stand against the social events to be in the current position. other countries. Over time Colombia had an overall At the beginning of the 80 Colombia growth from 1995 with an index of 40- grew strongly giving an economic 60 and was previously at a rate of 20-40. opening, liberalization and In spite of the internal problems of decentralization became the two most Colombia globalization, companies in important pillars for socio-economic fast-growing markets are intervening transformation of Colombia. GDP and innovating and continue its global increased by exports and imports, the expansion is not stopped. average growth rate in the period of 70- Government efforts have been reflected 80 was 5.99% Colombia achievement over time with commercial impulses identify leaders and most dynamic implemented free trade agreements, is sectors and thus potentially eligible for looking to motivate the strengthening of successful integration into the culture and knowledge and acquisition of international market. new and better technologies to continue From the 90s there was a vigorous to grow and position Colombia as a program of modernization in the economy, indicating from industrial

98 restructuring, technological advances, signed up at that time and took place six linked to other policies in key sectors years later. such as agriculture, urbanization, In 2008 a distrust generated in the industrialization, computer Colombian government since it had telecommunications, health and strong confrontations with the education to achieve Colombia government of Ecuador and Venezuela modernize and be more competent by bombing in international land to the compared to other countries. FARC. Faced with all these rapid changes was In the government of president holy silt chosen to implement the Constituent fences with those two governments Assembly in 1991 ordering the achieving sovereignty borders. In the construction of reform but since financial crisis of 2008 began to receive Colombia was not ready was affected the increasing foreign direct investment various economic sectors. especially in the oil and mining period. In this decade the Washington consensus This investment was more a result of as regards political reforms and was Colombia's new poltical stability and drafted in 1990 to deepen trade abundance of raw materials than levels integration with the Andean countries of integration with world markets. was formed, reduced tariff and nontariff POLITICAL barriers to potentiate the beginning. It In the 70's Colombia was developing will also be devoted to economic treaties bilateral relations with the USA with a as agreements completeness chili, specific objective was to fight against ALADI, among others. The impact of the armed groups that were born at that time, Colombian economy in 1991 due to the in order to avoid the spread of Asian economic crisis experienced its communism. Another important issue worst crisis since its GDP fell by 4.2%. was the drug that became over time in From former President Alvaro Uribe their primary problem. Velez was commissioned to restore In the 80's became an obstacle the confidence in Colombia, implementing internal armed conflict and drug security policies. He allied with the trafficking, which affected national and United States with President George. W. international policies. Bush. From the 90's had the index of political In 2006, while Latin American countries globalization an estimated 58% to 78%, ratified the FTA with USA. Colombia is due to the inclusion of Colombia in the

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Association of Caribbean States in which the international agenda, strengthening a free trade zone is between countries the links Colombians abroad. region, coordination of policies on third In 2010 there were political changes that parties and promoting functional began with the new administration in the cooperation in various areas. possession of the current president Juan In 1996 there was a political crisis since Manuel Santos. The main evidence of former President Samper was involved change in perception of the world on in a drug scandal, many government foreign policy was the fact that the delegates were in favor of his country obtained a multilateral resignation, and thus worsened the crisis international triumph. of legitimacy of the government. Direct Since 2011 Colombia went into effect relations with President Samper the free trade agreement with USA and completely excluded. so had a you trade, political and social In 1997 the Colombian-US relations openness. began to slowly return to normal. The SOCIAL American state recognized that In the 70's, 80's and mid 90 had no Colombia had accomplished effectively significant changes in social and decisively in the war against drugs. globalization, from the year 1995 had a In 1998 the government of Andres cultural and demographic growth thanks Pastrana opened a new era in to the inclusion of Colombia in a international relations. This period could globalized world. be considered that it was a government Colombian migration is divided by in which he was given via the FARC decades, beginning of the Colombian because I create a demilitarized zone migration starting from the 60's to the with 45km to the guerrillas and over time USA to meet the happy American dream, were strengthened. Colombians were especially economic Had the same rate until 2005, in 2006 factors. Colombia implemented the planning and In the 90s the Colombian migration in execution of Colombian foreign policy, Spain was significant, Colombian meanwhile the strategic plan of the immigrants were the third population Ministry of Foreign Affairs group of extracted non-EU residents in consolidation of bilateral strategies is the Spain. diversification of relations and issues on Spain experiencing the Spanish economy came at a good time and

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Colombia going through a crisis of technology, market size, business and armed conflict and economic crisis, the innovation. Colombians were emigrated in search of Colombia has climbed three places in employment opportunities for the world ranking of competitiveness, thus sustenance of the family, family leaving for 66th with a score of 4.2 (the reunification were also found in search same as last year). Although you can of better life and finally the provision of clearly see how higher education. COMPETITIVENESS

http://reports.weforum.org/global- competitiveness-report-2014- 2015/economies/#economy=COL various pillars of competitiveness have been affected by this change of position. The GCI (Global Competitiveness Index) is based on 12 pillars that provide a way to visualize the landscape of international competitiveness for countries; in this case Colombia. The pillars are: institutions, infrastructure, macroeconomy, health and primary education, higher education, efficiency of goods market efficiency of the work market, financial market development,

101 http://reports.weforum.org/global- multimodal transport, which implies low competitiveness-report-2014- competitiveness against time. The 2015/economies/#economy=COL subscript overall quality of Infrastructure In the case of institutions we can show has a position of 108 on 144 overall the change in different subindexes as reveals as Colombia does not invest in it, organized crime that has a position of and finally Quality of railroad 139 on 144 indicating that lost focus by infrastructure with 102 on 144 position the authorities because vandalism has shows how this country allows the increased its percentage share, bussiness deterioration of this ancient but primary cost terrorism this subindex has a transport. position of 138 on 144, has increased so glaring that brought peace processes in Havana make these costs increase, bussiness costs of crime and violence http://reports.weforum.org/global- this subindex has a position of 134 on competitiveness-report-2014- 144 noting that at this point the 2015/economies/#economy=COL government has other interests less In the case of goods market efficiency, security of its people and diversion of the total subscript tax rates% profits from public funds this sub-index with a a position of 139 to 144 shows the position of 128 on 144 confirms that the highest percentage is used to pay taxes budgets to achieve a competitive country without noticing a minimum return, the are lost in the process. subscript effect of taxation on incentives to invest in a position of 127 on 144, shows the oblivion into which it was to attract new foreign investors.

http://reports.weforum.org/global- competitiveness-report-2014- 2015/economies/#economy=COL For infrastructure, the subscript Quality http://reports.weforum.org/global- of roads infrastructure with a position competitiveness-report-2014- 126 on reference 144 makes us how the 2015/economies/#economy=COL country does not invest in their

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In the case of labor market efficiency, http://reports.weforum.org/global- with good eyes we can see the subscript competitiveness-report-2014- cooperation in labor-employeer relations 2015/economies/#economy=COL to a position of 47 to 144 indicates that it In the case of technological readiness, has greatly improved the ability of we see all sub-indices generally show a Colombians have a job with decent positive change, making Colombia more conditions enabling it to maintain competitive with regard to ICT and its excellent relations; In addition, the implementation in all the labor and social flexibility of wage determination field subscript a position 53 on 144 confirms that the conditions and job offers in Colombia has improved positively

http://reports.weforum.org/global- competitiveness-report-2014-

2015/economies/#economy=COL http://reports.weforum.org/global- The development of a productive competitiveness-report-2014- environment That encourages innovation 2015/economies/#economy=COL and produce continued Increases in In the case of financial market productivity is required. Key to this is the development, we can see a unique development of competitive but subscript that is long forgotten by the nevertheless those changes have Colombian government as it is benefited the exchange of information, affordability of financial services allowing the integration of Colombian affordability of financial services since companies into this market. With the the financial institutions have high fees creation of the stock exchanges of and study very rigorous causes all Bogotá, Medellín and Occidente, Colombians can not access financial Colombian companies began to integrate services. benefiting national’s economy. However, this regional difference generated information problems which allowed opportunities of arbitrage.

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and bilateral agreements that countries seeking greater prosperity to celebrate them. For this reason, it is a competitive country is more than necessary in today's

world of complex systems generating http://reports.weforum.org/global- competitiveness variables to harness competitiveness-report-2014- their strengths to the maximum to 2015/economies/#economy=COL achieve excellent international The sustained Increase Competitiveness competitiveness. and welfare of a nation only requires Colombia’s competitiveness is reduced continuous improvements in again this year once sustainability is productivity, and this is only possible taken into account. However, Colombia through innovation. Therefore, the with the passing of time continues strategy following a process of long-term without generating significant advances successful growth should be betting on in competitiveness or simply almost science and applied for the production of imperceptibles changes are generated in sophisticated goods and knowledge- the latest international rankings have intensive services and technology which seen a rise of three places in the course benefits fully to Colombia in general of a year, from 2013 to 2014 job had only aspects. 69 to 66 maintained the same score

indicating that the process of ANALYSIS improvement in different pillars running Thanks to science called economy this ranking has remained stagnant. countries have gradually adapted to the Many of these problems are reflected in changes and challenges offered by that Colombia specialized in the primary today's world to compete internationally sector such as the mining and energy and to get products and services that are sector, and has neglected other sectors. excellent can position themselves in For this reason we have seen a slowdown foreign markets achieving a competitive in the industry, because it has not been advantage. But to achieve this important encouraged. Moreover, despite the rapid differential, countries must develop economic growth the growth of high oil strategies, policies change social and revenues in recent years, creates the need economic level. These changes can be to diversify its economy, we must seen reflected in different multilaterals improve the quality of the education

104 system still does not meet the production STRATEGIES needs of the increasingly more To make Colombia more competitive sophisticated business environment and should focus on their strengths more its capacity for innovation opportunities and not limitations. For The inability to move forward in example, competitiveness should lead to a ➢ In terms of agriculture, Colombia profound reflection on the efforts that could boost agriculture through have been implemented. While much is agribusiness in the medium term, being done on this front, continue with where farm implements models the dynamics bring is possibly the safest more technology to improve the way to move forward and not to keep process and time. Likewise, the watching how the country is surpassed government should ensure by other countries reference recipe. continued support to Colombian The need to shake the country in this peasants to provide confidence field becomes more prevalent to the and safety extent that seems to be coming to an end ➢ Infrastructure: To improve the "tailwind" representing the upward cycle sector's international of commodity prices resulting from the competitiveness improved growth in demand from countries like dramatically, since internal China and India to emerging countries transport costs are reduced, such as Colombia which they are of the highest in The terms of trade of the country in the the world because our industries last decade possibly diminished the remain inside. importance of the competitiveness ➢ Road Infrastructure: Increase agenda, he became something of which the number of kilometers of dual the country does not necessarily depend carriageway, improve road to achieve the levels of growth in recent quality is It has now, and create years. However, signs that this may be new routes to have options in changing international context should set moments of landslides and other off the alarms on the country's potential problems. Here you can have growth in the coming years. If true these public investment special signals, the competitiveness agenda of emphasis on improving road the country will become more urgent Bogota - Buenaventura and than ever.

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Bogota Cartagena, alternate economic growth. You could say routes if necessary. that this entity is the country's ➢ Port infrastructure: It should future, so it will have to be expand the docks to take the armored politicking, corruption Panama Canal expansion project and patronage. It should also be and to receive larger vessels. It is generated a link between a very expensive investment, but companies and Colciencias, not will give the opportunity for wanting to say that decisions are Colombia to have direct sea see affected by the business routes. This plan should be sector. implemented mainly in the port ➢ Institutions: The state must be of Buenaventura and committed to create a favorable Barranquilla. environment for the agribusiness ➢ Railway Infrastructure: It is flourish and shall transmit it to all important because it is another the Colombian people. but more alternative transportation that importantly, we must create the reduces costs internal transport enabling environment for doing and improving international business in peace, without competitiveness. especially in the intervention. mining sector. ➢ Corruption: Definitely this is ➢ Research: One of the most not only a commitment of the important factors is research to current government, but must be develop, without research would a common factor in all of be required to be an employee of Colombian society. Therefore it the other countries that we they should be set a national goal to impose their processes and end corruption by making inventions. The research should procedures more transparent and be focused on develop new creating a culture of corruption processes and new products in the NOT through the media. But agro-industrial sector. most of all must be a national ➢ Strengthening Colciencias: feeling, love for the country any Should be the main epicenter of citizen allows. research, so your budget you QUESTIONS should increase proportional to

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• What came first to Colombia country seeking overall growth and globalization and competitively. competitiveness? He devoted himself to improving In Colombia came first globalization globalization but regardless of the pillars competitiveness, we wanted to expose to of competitiveness makes them more grow like other countries but the pillars opportunities for growth and competitive that made competent to take the global advantage over other countries and more growth were vacuuming. commercial, political and social growth Colombia began its process of in globalization. globalization from the economic sphere; Colombia has been improving its pillars he continued the political arena and of competitiveness over time and so the finally the social. Colombia to begin to Colombian globalization grows to face a i miss global commercial market occupy top positions clashing with the technology to progress equal or better countries worldwide. quality than other countries, likewise In 2006 they created a National also took innovation to make a difference Competitiveness System (CNS), to form in the market and the Colombian and consistently integrate the efforts of infrastructure was inadequate for the institutions and others related to the economic progress. formulation, implementation and In the political arena there were many monitoring of policies that affect the setbacks by Colombian institutions as country's competitiveness actors. they had to face corruption, drug We entered into a globalized world and trafficking and armed conflict. In which Colombia is preparing to be more they undertook not competitive to competent and face the consequences address these factors did not help with that this process occurs. the growth of globalization skills. • What pillars of competitiveness Finally the social sphere would believe make globalized Colombia? that is one of the most affected by lack of All pillars of competitiveness make the pillars of competitiveness, beginning globalized Colombia; these two terms with the Colombian education that has are maintained on hand for the growth of not been the most favorable to face the any country. Here are the most important pace of globalization compared to other pillars are appointed: countries, inequality Colombia is clear For example the domestic economy, to and infrastructure is inadequate for a the extent that there is more competition

107 in the domestic economy of a country is globalized world be more competent no more likely that domestic company over others. more productive and competitive to face In short all the pillars are central to the a globalized world. globalization of a country playing a role Internationalization: with the opening of of increasing competitiveness and international economic activities enough productive, efficient and increases the economic performance of effective economic globalization. • What are the negative Government: With minimize direct state consequences of globalization in intervention in business. Government Colombia? policies focus on creating a competitive Colombia is undergoing policies environment for businesses and developed since over time is being establishing commercial policies adapt overrun by multinationals and countries to changes in the international context. like the United States increase their Infrastructure: a developed infrastructure profits because of the poverty of the supports economic activity boat nation countries. availability of natural resources and Colombia's economy is unsound and the functional business systems, information effects of globalization have led to the technology, transportation, opening end literally with Colombian communication and education, and agricultural and industrial companies. efficient environmental protection. The fall of the welfare of Colombians Science: has a competitive advantage by thanks to plummeting productivity building efficient and innovative levels. Affecting wages to workers, the technologies progress of existing ideas. per capita consumption, provide health Research and development of services, education and inequality. technologies are crucial for the country Global capitalism stops the growth of with the growth of the three aspects of medium and small that eliminates globalization. competing companies in the domestic Education: Education is fundamental to market and is destroying the peripheral the growth of a country as a skilled capital. workforce, education, technical capacity For low-income populations it is harder of labor support economic and social to get into an employment as it has development with high-profile initiatives sufficient resources to prepare for and covering areas of expertise that covers a have sufficient qualifications and

108 educational and cultural training, since American countries have a high level of the worker today must be able to handle income through exports of goods and technology, having at least one foreign services with high quality and language and compete with people from innovation. other countries. Colombia after years of living in armed The implementation of policies in which conflict sprang from the area of peace, by deterioration of economic, social and controlling drug trafficking cultural to strengthen the efficiency, organizations, and negotiation process of productivity, and economic freedom and rehabilitation and armed groups. property rights of rights is reflected Foreign domestic investment generated companies. From the above shows that an economic movement that will be the most vulnerable are ignored and do reflected in more formal employment, not contribute to human development less poverty and better quality of life for such as the fight against poverty, Colombians. unemployment, discrimination, The ministry of environment and social inequality and exploitation. development establishes policies for the Abuse multinationals to exploit natural care of the Colombian biodiversity and resources of the Colombian state without conservation and wildlife, rescuing and measure, making scans of land that is restoring lands exploited by illegal affecting the flora and fauna of the mining. country, for the purpose of profiting and Based on Colombia made large ending Colombia's biodiversity. infrastructure investments for improving Globalization is affecting and losing loss the national infrastructure for Colombian culture. Speaking of us into productivity it. the Colombian jungle are indigenous Concerning globalization in the ranking populations who left their cultural of Latin America will be positioned traditions to fit in a globalized world among the top three worldwide and in losing languages and customs. the top 10 being one of the most • What is the projection of important economies worldwide. Colombia within five years And finally the competitiveness of against globalization and Colombia will be the best in Latin competitiveness? America and ranked among the top 10 For 2020 Colombia will be one of the worldwide. most competitive and globalized Latin CONCLUSIONS

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• Globalization makes big profits biodiversity. To achieve this in a country in economic social, objective, Colombia should political and. Although Colombia strengthen its domestic has evolved around the time he environmental policy. The has tended several clashes and restoration of the Ministry of has not acquired the expected Environment. benefits. International economic • To mention the development of crisis, drug trafficking and the globalization of Colombia internal conflict have greatly must clarify that this is a harmed the nation, its economy developing country that does not and the social aspect. have enough material support in • We are in a complex new era of education, technology, global capitalism, an era that infrastructure and scientific. They offers great opportunities for are however interested in turning economic dynamism, but also Colombia into a competitive represents a high risk of country have implemented dissatisfaction of the population strategies for growth. with less opportunity for social, • The country should take economic and political advantage of its main development. comparative advantage is the • Colombia has to move forward to sector agriculture, since take advantage of the Colombia is intensive land and its opportunities and be more geographical position is competitive and more strength to privileged. Should be the main face the world. Looking reforms economic sector of the country, of Colombian sovereignty. promoting the agribusiness and • Environmental issues must agricultural export become cornerstones of diversification. Competitiveness Colombian foreign policy. The International should be aimed at preservation of a sustainable making life easier for this sector. environment is a key strategic • The main factors to improve the goal of the global agenda. international competitiveness of Colombia has a huge potential in Colombia they are due to lagging this area due to its large infrastructure in all modes of

110 transport, because research is not innovating, quality of research is the worst because they are not focused on what the country needs and institutions to ensure optimum business environment that generates FDI.

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modifications; traditional law in ECUADOR indigenous communities • Economy: Ecuador’s economy depends of the natural resources mainly of the petroleum which account more than a half of the country’s account exportation. In 1999/ 2000 Ecuador suffered a crisis where the poverty dramatically increased; as consequence of that the government decided to adopt the dollarization, because of this

restructure the economy was

stabilized and thanks to the oil Source: CIA The World Fact book, prices a positive grow came the South America: Ecuador. next years; Under the administration of the current • Geography: president, Rafael Correa, has Area: generated the economic uncertainty Total: 283,561 sq km and a disincentive to foreign Land: 276,841 sq km investment, which is the lowest in Water: 6,720 sq km the region. Furthermore, the current Country comparison to the world: 74 administration is considering des- Population: dollarizing the economy to allow 15,654,411 (July 2014 est.) the government to use monetary Country comparison to the world: 68 policy tools to stabilize growth. • Government: GDP (purchasing power parity): Conventional long form: Republic of $182 billion (2014 est.) Ecuador $175 billion (2013 est.) Conventional short form: Ecuador $167.4 billion (2012 est.) Capital: Quito sistem: civil law based note: data are in 2014 US dollars on the Chilean civil code with country comparison to the world: 64 GDP (official exchange rate):

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$100.5 billion (2014 est.) country comparison to the world: 53 GDP - real growth rate: Exports: 4% (2014 est.) $27.33 billion (2014 est.) 4.5% (2013 est.) $25.69 billion (2013 est.) 5.1% (2012 est.) country comparison to the world: 69 country comparison to the world: 72 Imports: GDP - per capita (PPP): $26.4 billion (2014 est.) $11,400 (2014 est.) $26.33 billion (2013 est.) $11,100 (2013 est.) country comparison to the world: 71 $10,800 (2012 est.) note: data are in 2013 US dollars country comparison to the world: 123

Labor force: 7.214 million (2014 est.) Ecuador: Analysis of the country country comparison to the world: 65 Unemployment rate: Ecuador is a South American country 5% (2014 est.) which is located in the west coast of the 4.7% (2013 est.) country, borders with Colombia on the country comparison to the world: 50 North, Peru on the East and South and Population below poverty line: the pacific ocean on the west, it is the 25.6% (December 2013 est.) fourth smallest country of the region; Taxes and other revenues: Ecuador's capital city, is Quito, and it is 39.3% of GDP (2014 est.) located in the north central part of the country comparison to the world: 41 country. Public debt: 30% of GDP (2014 est.) Quito became a seat of Spanish 23.1% of GDP (2013 est.) colonial government in 1563 and country comparison to the world: 127 part of the Viceroyalty of New Inflation rate (consumer prices): Granada in 1717. After the 3.9% (2014 est.) Independence between 1819 and 2.7% (2013 est.) 1822, Ecuador formed part of the Current account balance: Gran Colombia, when Quito $613.4 million (2014 est.) withdrew in 1830, name changed in -$1.29 billion (2013 est.) to the "Republic of the Equator.",

113 then the Republic of the Equador take advantage of these opportunities for lost a lot of territories because of sustainable and equitable the conflicts with their neighbors. growth;moreover globalization can helps to increase the poverty rate and social The country has been marked by political inequality in the developing countries as instability, the last three of four well, it depends in how the government democratically elected presidents and the local population act to face the because of protests across the country problems in the world, and it also left their government mid-term, in 2006 depends of the responsibility of the the current President Rafael Vicente developed countries, that have been Correa Delgado was chosen, and was re- taken advantage of them; Its important to elected in February of 2013. understand that we have to work Under the administration of President together, developed and developing Correa, Ecuador's economy has been countries, to reduce the poverty rate marked by uncertainty also around the world. discouragement of private investment, According to the KOF index of for example in 2009 was intended to end globalization, Ecuador this located in the 13 bilateral investment agreements, position 92 of 207 countries around the including one with the United States, and world, globalization can be divided in in 2012 rejected a bilateral free trade by three main dimensions and the overall the European Union; Thanks to the index covers the economic, social and petroleum prices. political dimensions of globalization. Globalization The economic dimensionthat according Globalization is a phenomenon that is to the KOF index it ismeasure by the affecting every single country in the actual flows, where we find the sum of world, it is increasing connectivity and exports and imports of goods and global consciousness, learn how tolive in services and the foreign investment a globalized world is a constant measured as a share of gross domestic challenge for the world's population and product, and the restrictions in the adapt themselves to rules that sometimes international trade it means the taxes on are unfair is difficult, but it provides to international trade and the capital developing countries as Ecuador a lot of account restrictions; in the graphic opportunities to grow up, they have to number 1 we can see the behavior that

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Ecuador has had in terms of economic 20015, its overall score is far below globalization over the years, its peak is in worlds average, one of the most 2000; in January of these year the worrying aspects isthe foreign president in that time, Dr. Jamil Mahuad, investment is so restricted mainly the announced his decision to dollarize last 10 years, in some economic sectors, Ecuador's economy, in 1999 Ecuador the lack of financing options, make so was suffering a huge crisis, it involved difficult for the private sector to growth, macroeconomic instability, that’s why it is difficult to create stable underdeveloped financial markets, the companies that allow generationof lack of credibility in stabilization employs more and more citizens programs, the history of high inflation and institutional , among others, that’s why the government took the decision of adopt the dollar as national currency, it helped a lot to improve the globalization economy, with a currency with credibility the international trade is much better and easier; After the 2000 the dynamics remains relatively stable, without major changes in recent years.

At this point is also important to check how is the country in economic freedom, the rules and laws to operate in this country, according to the economic freedom index the restriction in Ecuador has been increasing a lot the last The second dimension is the social years for example the tariff rate is 4,3%; dimension that according to the KOF additional barriers to trade include index, it is measured by the data on export taxes and government promotion personal contact, where they check the of “import substitution”; on the other sum of international incoming and hand in the index of economic freedom outgoing fixed telephone traffic (in of 2015, Ecuador has a score of 49.2, minutes per person), the sum of arrivals making its economy the 156 freest in and departures of international tourists as

115 a share of population and the number of Moreover the tourist sector in Ecuador is foreign population living in the county; constantly growing, this is a country that data on information flows, where they is recognized worldwide for its beauty, it count the number of Internet users in the has 1,600 bird species, 150 beaches, country and data in cultural proximity recreational activities and extreme sports that is measured by the number of that with the hard work of the national McDonalds restaurants, number of Ikea government generated in 2012, an and the trade of books, on the graphic increase of 84% of sightseeing.The number 2 we can appreciate that in growth of this industry in the country is recent years has

remained steady, peaking in 2006, it has very important because it generates been increasing in a positive way the last employment for too many people, in years, for many reasons one of the most December of 2013, it had 21,069 important is that the government made establishments dedicated to food and and effort for make easier the Internet beverage, accommodation, access to all the citizens, according to intermediation, operation, transportation the Ministry of Telecommunications, in and other tourism, generating a total of 2012, 66 of every 100 people used the 113 114 jobs, only food and beverage Internet this figure is 11 times higher segment has 14,057 establishments than in 2006, which were only 6 of 100 69,872 people work, it shows the users, it shows that the country has a importance of the growth of this sector, great improvement in terms of data and the potential that it has. The third information flows. dimension is the political globalization

116 according to the KOF index, Ecuador is located in the position 58th of 207 in the ranking of political globalization, it is measured by the number of embassies in a country, the number of international inter-governmental organizations, the Participation in U.N. Security Council Missions and the International Treaties, on the graphic number 3 we can see the evolution of the political globalization along the years, as we can see in 2004 it has an important improvement on this topic that continue stable the following years; Currently Ecuador is part of the following international organizations: Globalization is an inevitable CAN, CD, CELAC, FAO, G-11, G- phenomenon, then adapt to the changes 77, IADB, IAEA, IBRD, ICAO, that it brings becomes a matter of vital ICC (national committees), ICCt, importance, particularly for ICRM, IDA, IFAD, IFC, IFRCS, governments, who with every decision IHO, ILO, IMF, IMO, Interpol, are affecting millions of citizens in their IOC, IOM, IPU, ISO, ITSO, ITU, countries.The government of Ecuador ITUC (NGOs), LAES, LAIA, decided to address the globalization from Mercosur (associate), MIGA, two perspectives: the bilateral trade and MINUSTAH, NAM, OAS, regional integration. A treaty was signed OPANAL, OPCW, OPEC, Pacific on May 23, 2008 in Brasilia where was Alliance (observer), PCA, SICA structured and formalized the (observer), UN, UNAMID, Organization of the Union of South UNASUR, UNCTAD, UNESCO, American Nations, USAN, which aims UNHCR, UNIDO, Union Latina, at regional integration, it favors the trade UNISFA, UNMIL, UNMISS, between member states, the creation of UNOCI, UNWTO, UPU, WCO, strong blocks with this purpose is a WFTU (NGOs), WHO, WIPO, global trend, for example the European WMO, WTO Union, ASEAN (Southeast Asia), NAFTA (North America), among 117 others;On the other hand it is used for big corporations and banks”; It is a very construction and consolidation of a radical position and a decision that was South American identity that allows us to widely criticized because Ecuador's be proud of our region, remember the exports to the EU may be at a importance of the glocal in each country, competitive disadvantage with countries so in this way don’t forget our own like Colombia and Peru, developing customs in the globalization process. countries that signed the agreement.

With the dollarization process which was Moreover the government of Ecuador is carried out in 2000,the trade balance has working hard to eliminate social been favored, besides that Ecuadorian inequality in access to information exports expanded into new markets, and technologies, and this way providing the number of countries has increased equal opportunities for all citizens, that is significantly to over the years, despite why since 2009 has been developing a this the weight of imports and US set of policies, called Digital Ecuador exports remains relatively high, Strategy 2.0, which aims to 75% of the accounting in 2010 for 35% of exports population in 2017 have Internet access; and 25% of Ecuadorian imports, that is digital strategy is based on four stages: why the importance of a treaty with the equipment, connectivity, training, United States is high, as neighboring applications and content, which are countries like Colombia and Peru have based on an institutional, legal and achieved the agreement, it could regulatory framework; in 2015 its represent a threat and leave the country priority the educational equipment, in in disadvantage on the US market. this way reach to the more than 20,000 public schools that exist in Ecuador, Despite the importance of bilateral training the new generation in treaties and that these are exposed as one information technologies, At the same of its strategies to face globalization; in time it aims to increase broadband 2012 the Ecuadorian government, connection in all SMEs. headed by President Rafael Correa rejected the free trade agreement with the As we saw in adapting to the changes in European Union, he is arguing that“his a world that is increasingly globalized government is betting on broad-based and that we all are more interconnected economic development that benefits the around the world, is the key to success, it majority of the population and not just is important for a country to be aware of

118 that and its government implement Economic Forum1; Switzerland 1.49 strategies that enable it to become points less than that currently occupies competitive in a globalized world; first place in this ranking2. This tendency Ecuador is not far behind as we saw they to rise in the rankings because she are developing and implementing infrastructure improvements, stability in strategies to deal with this, the position macroeconomic conditions in the of the current government is quite radical country and low inflation that has been left, which leads to take decisions such presenting and thanks to these conditions as the rejection of some bilateral set the country has access to financing agreements that can make the country through equity and loans, which gave lose competitiveness in the world him the opportunity to carry out market. investment projects in education several local companies through factors of

COMPETITIVNESS efficiency and innovation factors. But Ecuador in recent years despite not despite this leap is important for the occupy a very high position in the Ecuadorian economy, the country is still competitiveness ranking has climbed a going through a bad time in terms of significant number of positions legal certainty and besides this target significantly. noting that although orientation of foreign investment and between 2007 and 2010 dropped 10 international relations in terms of trade places to occupy in the last year ranked need improve a lot, in addition to weak number 105 among 148 countries of the institutions and lack of initiatives and world studied, in 2011 the decline projects that help the country to expand stopped staying in the same position and its market; in order to counter these and in this year in which began this important other problems that may be affected the and so far unstoppable rise starting with competitiveness of the Ecuadorian 4 seats for 2012 15 posts between 2012 country in the short term are announcing and 2013 and 15 more between 2013 and proposals that aim to optimize processes 2014 which ultimately left him at which lead to there being a reduction in number 71 with a competitiveness index paperwork, time and costs that normally of 4.18 according to the World It must be incurred to start a business and

1http://www.datosmacro.com/estado/indice- 2http://es.wikipedia.org/wiki/%C3%8Dndice competitividad-global/ecuador. _de_Competitividad_Global. 119 obtain a permit of operation which will has been an increase which has favored promote local industry and will increase indicators such as: The number of the level of competitiveness. Internet users, the number of Internet subscriptions broadband, the Internet

bandwidth and the number of mobile phone users even though the latter indicator was taken into account

recently. The pillars on which the country has made most progress are those related to efficiency (efficiency in TWELVE PILARS OF goods markets, labor markets efficiency) COMPETITIVNESS but instead other pillars have not been very fortunate such as higher education and training where there have been setbacks or advances and other tiny but no falls we have seen stagnant as in the case of market size.

The increase in these positions has also been given thanks to stable macroeconomic conditions and low inflation that their conditions have enabled the country to access funding through shares and a loan which has

helped make further investment in local As mentioned and analyzed above companies and projects. Ecuador has been one of the Latin- American countries climbing positions The institutions have also been a weak in the competitiveness ranking point in the country's competitiveness as especially since 2010 both general it presents low magnification not become ranking as in each of twelve pillars very significant addition to these except technology which in some years recoveries are followed by falls at times their progress has not been significant greater than the previous increase. and elsewhere has shown steady but if the telecommunications infrastructure

120

and speed functions performed to generate a suitable environment to help

the development of the country. In Ecuador today can be seen that even though this is one of the pillars that most

affect their competitiveness public institutions have improved in every way, excellent service, quick troubleshooting, 1. INSTITUTIONS transparency and efficiency. But there

INTITUTIONS are still several issues to improve as organized crime, the efficiency of the YEAR RANK SCORE legal framework and judicial 2013 92 3,6 independence.

2012 131 3,2 1. INFRAESTRUCTURE

2011 125 3,1 INFRAESTRUCTURE

2010 128 3,05 YEAR RANK SCORE

2009 125 3 2013 79 3,8

2008 129 2,9 2012 90 3,5

2007 125 2,93 2011 94 3,4

2006 116 2,92 2010 96 3,18 1. 2009 100 2,9

2008 108 2,5 The institutions are the center where people relate to the company and the 2007 97 2,64 government, to possess optimum 2006 94 2,65 productivity and competitiveness, which 1. contribute to development, public and private institutions should be based on efficiency, transparency, good treatment

121

An extensive and efficient infrastructure 2008 16 5,9 improves the economy, as they can move goods faster and lowers costs for export, 2007 27 5,58 besides the expansion of infrastructure 2006 21 5,18 shows a more equitable distribution of 1. wealth in the country. Ecuador has progressed and the main thing in the last government was the construction and Macroeconomic stability is important expansion of roads connecting the entire because it means a payment decreased to country, and today it is possible to travel external debt, low inflation among by a modern road network so their others, that makes a country a good positions and their score on the ranking investment destination and this generates increased significantly. Other growth in the economy. This pillar investments by the government have emphasizes equilibrium analysis or been on improving infrastructure in macroeconomic stability. In this respect schools and universities. But all in all the country stopped paying a very high aspects of the country's infrastructure has external debt, noting that it is one of the been increasing but not to the same countries where inflation rates are very extent all have benefited. low, compared to worldwide. And besides all Ecuador has been able to 1. MACROECONOMIC overcome global crises, without altering ENVIRONMENT its economic system and although it has MACROECONOMIC had variations in their positions on the ENVIRONMENT ranking has enjoyed one of the most stable macroeconomic indicators which YEAR RANK SCORE is attributed the great progress that had in 2013 44 5,2 that ranking.

2012 37 5,3 1. HEALTH AND PRIMARY EDUCATION 2011 40 5,2

2010 55 4,76 HEALTH AND PRIMARY EDUCATION 2009 44 5

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YEAR RANK SCORE 1. HIGHER EDUCATION AND TRAINING 2013 54 5,9 HIGHER EDUCATION AND 2012 67 5,7 TRAINING 2011 70 5,7 YEAR RANK SCORE 2010 75 5,61 2013 71 4,2 2009 89 5,1 2012 91 3,8 2008 92 5,1 2011 90 3,8 2007 90 5,12 2010 92 3,65 2006 41 6,59 2009 103 3,2 1. 2008 115 3

2007 111 2,92 This pillar is about the health of workers, because if workers are in good health 2006 97 3,09 will be more competitive country that 1. will have more productivity and efficiency. It also analyzes the quality of primary education, because this depends This pillar examines the quality of higher on which people can more easily adapt to education, for which the country needs advanced production processes, people with a quality higher education to techniques and innovations which means be more productive because they can rapid growth and increased adapt more easily to new production competitiveness. In health, in Ecuador processes as now required of workers the government spends a lot of funds in able to deal with new technologies it also the construction and renovation of health emphasizes increased training to care facilities, life expectancy has workers to improve their skills and thus increased and as for education have been make more productive and more building schools called millennium competitive industries. One of the which has increased the percentage of methods implemented to further this children in school. pillar has been building a university

123 focused on the development of the generate supply can begin to enter country, which has a research and international markets. The Ecuadorian development center and business center government has focused on the of the leading private companies in the manufacturing of finished products, to world, experts in innovation and meet the domestic market and to expand technology.They have also implemented globally, entering the world market with technical training centers in cities across an added value, a brand, a style that the country in order to train people with identifies it as a developed country. a high degree of technical knowledge. 1. LABOR MARKETS 1. GOODS MARKET EFFICIENCY EFFICIENCY LABOR MARKETS GOODS MARKET EFFICIENCY EFFICIENCY YEAR RANK SCORE YEAR RANK SCORE 2013 111 4 2013 106 4 2012 135 3,5 2012 129 3,7 2011 138 3,4 2011 131 3,6 2010 137 3,24 2010 132 3,36 2009 130 3,3 2009 127 3,3 2008 122 3,8 2008 129 3,3 2007 116 3,73 2007 123 3,35 2006 112 3,51

2006 112 3,51 1. 1.

In an efficient labor market, workers are This pillar measures the efficiency of guaranteed the allocation of a job with an markets for domestic products in the incentive to give their best, steady country, because to meet demand and to income is also seen and accepted by the

124 workers. it is also important to include The proper functioning of the financial jobs for young people, as this generates sector of the country is very important greater well-being in the population, to for economic activities, because it accomplish this have been implemented ensures that the investment income from new labor deals with the competences abroad have a more productive use. The and studies of each person and be able to government has sought promote the cover the entire labor market without country seeking foreign investment to saturate any sector. encourage private and public companies.

1. TECHNOLOGICAL READINESS

1. FINANCIAL MARKET TENOLOGICAL READINESS

DEVELOPMENT YEAR RANK SCORE

FINANCIAL MARKET 2013 82 3,5 DEVELOPMENT 2012 82 3,6 YEAR RANK SCORE 2011 103 3,1 2013 89 3,8 2010 107 2,97 2012 110 3,6 2009 102 2,9 2011 112 3,5 2008 104 2,7 2010 115 3,42 2007 100 2,57 2009 114 3,4 2006 88 2,79

2008 125 3,2 1.

2007 99 3,69

2006 82 3,63 In the globalized world we live q use of technology in production processes is 1. necessary, this pillar the speed with

which the country acquires technology to improve production processes, to be

125 more competitive globally is measured . increased and improved its relations with This topic Ecuador is a little late, because different countries it is. being a small country and little known 1. BUSINESS SOPHISTICATION worldwide, the introduction of new technologies the country is very low and BUSINESS SOPHISTICATION it takes quite, preventing rapid growth. YEAR RANK SCORE

2013 69 4 1. MARKET SIZE 2012 84 3,7

MARKET SIZE 2011 93 3,6

YEAR RANK SCORE 2010 107 3,34

2013 59 4 2009 105 3,4

2012 60 3,9 2008 99 3,5

2011 60 3,8 2007 93 3,57

2010 61 3,81 2006 82 3,63

2009 60 3,9 1. This pillar relates to the quality of 2010 61 3,7 business networks, quality of operations 2007 68 3,37 and business strategies of the country. 1. Quality business networking means that companies are part of foreign markets

The market size directly affects and can offer different products, the productivity, when a market is limited to quality of operations makes our country small national markets but globalization more competitive than others, and this industries began to reach international thanks to strategies such as marketing, markets, why Ecuador has been seeking distribution and advanced production to bring their products to foreign markets processes, and this contributes to the and through this has released and has economic growth. with this Ecuador seeks negotiations with various countries and not rely on a single country, in

126 addition to this the government has been transform the country into a major seeking greater Expansion in global exporter of innovation project has markets so also it seeks to establish good progressed slowly but safely. relations with many countries.

CONCLUSION 1. INNOVATION Ecuador has had the highest and the most important growth in the pillars of INNOVATION infrastructure, education quality and YEAR RANK SCORE innovation; in the infrastructure with the

2013 58 3,4 construction of roads (7.000km), bridges, eight line ways, eight 2012 96 3 hydropower, airports and the first 2011 110 2,8 subway’s line started to work in Quito. With the education increased access 2010 130 2,43 education through scholarships, closing 2009 129 2,3 schools with poor education quality and decreasing educational credits and 2008 129 2,4 finally whit the innovation it has invested 2007 118 2,56 millions in research projects … whit everything Ecuador has shown why it’s 2006 105 2,65 climbed so fast this ranking. But the 1. rating of institutions and new Innovation can be technology or technologies is still low because in the advances in knowledge and skill institutions case its work is considerate enhancement for now all the products weak, they don’t have independence in you find in the market have a high added their legal system and for this they have value, which can only be acquired lost their reliability and with the through technological innovations that technologies case these are necessaries make the products produced in the because the country needs is to gain an country is more competitive in a global efficient use of labor for this it needs to market. In recent Ecuador years it has increase and strengthen the adoption of been importing a lot of technology and new technologies (with this could attract all the means that contribute to foreign investment and remove many innovation and it is working hard to trade barriers) and also it have other

127 problems like security, corruption, taxes barriers that make different countries be rates, fiscal regulations and labor equal conditions in certain markets, that regulations and these are big challenges is why be productive and competitive is that affects the country’s competitive so important right now. potential. Ecuador has progressed positively in

QUESTIONS: this regard although he needs to improve a lot, in terms of infrastructure, • What is the relationship between for example, you have made great globalization and strides by high investment in highways, competitiveness in Ecuador? hydroelectric plants, airports, urban These factors are related to transport, among others; as well as in productivity, innovation and their education that continually tries to inflation in each country. improve its quality is for this reason that 2013 14 universities were closed, and A country is always seeking to has taken measures such as low interest be a competitor regarding in educational credits to more people distinctive aspects. It can have access to higher education, despite achieve this by taking into these efforts still need more people consideration politics, culture accessing to this education. and the economy of the most developed countries that Education is very important for surround it and the ones that improving the competitiveness of a could be compared to the country, educating its citizens, Ecuador respective country. can be a more productive and competitive country internationally. • How could Ecuador be more To be more competitive Ecuador should competitive in a globalized continue increasing its efforts to world? improve Innovation, investing in The world in which we live, research and technology are a good increasingly globalized, proposes alternative at this moment, which could significant challenges for countries generate higher value added products regarding to competitiveness, as for that are attractive to the international example in international trade due to market; Moreover the free trade globalization has been eliminating tariff agreements are good strategies when

128 there are wise agreements it can Nowadays be competitive is one of the generate many opportunities for growth most important tasks for Ecuador. The and many markets where it can be key aspects companies would have are: competitive; all goes together, and one • Development of new projects, thing is not distant from the other, that programs and products that increase means, for example, that the productivity. opportunity to be competitive thanks to • Training on the individual and the free trade agreements is linked to company that aims to improve and innovation produced in the country, update the company. enabling it to be competitiveness in this new market. • Encourage the importance of human capital within the organization. • What aspects of competitiveness have affected the globalization • Optimization of resources and of Ecuador? improved customer service.

La falta de innovación tecnológica es • What is the relationship between una de las más grandes faltas que ha globalization and tenido la competitividad dentro de competitiveness in Ecuador? Ecuador y esto lleva a que el país no These factors are related to productivity, pueda ser demasiado competitivo para innovation and inflation in each poder llegar a economías más country. industrializadas. A country is always seeking to be a The lack of technological innovation is competitor regarding distinctive aspects. one of the biggest mistakes that has had It can achieve this by taking into competitiveness in Ecuador and this consideration politics, culture and the leads to that the country can not be too economy of the most developed competitive to get more industrialized countries that surround it and the ones economies. that could be compared to the respective

• What are the business country. competencies that make Ecuador One important factor would be the globalized? growth in the level of education in the country that helps companies to have within them people who can become more competent and likewise help to

129 reach the international economies and will be the founders of new increasing globalization from the companies with probably global country. ambitions which will

automatically increase economic growth and lower unemployment RECOMMENDATIONS: rates. • The country has to implement • Avoid protectionism because this strategies that make it more can affect the part of the efficient in comparison to population that works and lives countries that could have of imported products such as, for competitive advantages over it example, the increase of 45% of as, for example, the advantage the customs cost for imported that Ecuador has over the products that was implemented Netherlands in the exportation of recently forcing people to choose roses when it comes to the best between leaving this job and quality at a global level. look for other options or stay. • Strategies such as: not only • When it comes to the reduction search for specialization in a of poverty public investments certain product that could have have to increase, national an Absolut advantage but resources have to be liberated, achieve to not get the dutch human rights have to be desease and search for renewable promoted and at the same time resources that open new fields of social participation of all people; global markets creating all in collaboration with social productivity in the country as, organizations, the private sector for example, in the service and external agents. sector. • Promote mechanisms to govern • Launch promotions and transparently and decentralize incentives for new fields of processes in order to reduce personal development corruption that at the moment stimulating entrepreneurship to affects the economic young people and future development of the country professionals. The entrepreneurs significantly 130

• Open the market more with the plan 2.0 which aims for the 2007 objective to generate higher that 65% the population has incomes and therefore increase access to the internet. the GDP through the export and REFERENCES: import of products. • http://www.elcomercio.com/actu • The country should open the alidad/arancel-alimentos- markets. importados-ecuador- CONCLUSIONS: balanzadepagos.html

• Ecuador is a developing country • http://www.aduana.gob.ec/index. that thanks to the good decisions action that the government to took such • https://www.google.com.co/url?s as dollarization, the country a=t&rct=j&q=&esrc=s&source= improve in some stages now it is web&cd=1&cad=rja&uact=8&v so much globalize than years ago ed=0CBsQFjAA&url=http%3A and its improving the %2F%2Fwww.monografias.com competitive climbed in the index %2Ftrabajos902%2Fecuador- ranking but the rating of sociedad- institutions and new technologies conocimiento%2Fecuador- is still low because in the sociedad- institutions case its work is conocimiento2.shtml&ei=5- considerate weak, they don’t JjVbnZMYK9ggSCvIOwCQ&u have independence in their legal sg=AFQjCNHmfPW9O05yUOv system and for this they have 5cORLeAX2uw5bTQ lost their reliability and with the technologies case these are • http://www.elcomercio.com/actu necessaries. alidad/holanda-compite-ecuador- productor-rosas.html • The Ecuador’s government made policies which are • http://www.unmillenniumproject specially think it for eliminate .org/reports/recommendationsS.h the gap of social inequality that tm gives the same opportunities for the citizens as: - Ecuador digital

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• http://es.wikipedia.org/wiki/%C3 • http://www3.weforum.org/docs/ %8Dndice_de_Competitividad_ CSI/2012-13/Ecuador.pdf Global • http://www3.weforum.org/docs/ • http://www.datosmacro.com/esta GCR2013-14/Ecuador.pdf do/indice-competitividad- • http://www3.weforum.org/docs/ global/ecuador GCR2011- • http://www.slideshare.net/Presid 12/CountryProfiles/Ecuador.pdf enciaEc/1-indice-de- • http://www3.weforum.org/docs/ competitividad WEF_GlobalCompetitivenessRe • http://www.revistalideres.ec/lide port_2010-11.pdf res/mejores-calificaciones- • http://www.weforum.org/pdf/GC competitividad.html R09/Report/Countries/Ecuador.p • df

• http://es.slideshare.net/JurgenSp • http://www.weforum.org/pdf/GC ark/los-12-pilares-de-la- R08/Ecuador.pdf competitividad-del-foro- • http://www.weforum.org/pdf/Gl econmico-mundial obal_Competitiveness_Reports/ • http://www.espae.espol.edu.ec/i Reports/gcr_2007/chapter1.pdf mages/documentos/publicacione • http://www.weforum.org/pdf/Gl s/articulos/perspectivas_competit obal_Competitiveness_Reports/ ividad.pdf Reports/gcr_2006/chapter_1_1.p • http://www.academia.edu/94032 df 98/ANALISIS_INDICADORES • http://www.dinero.com/edicion- _WEF impresa/editorial/articulo/ecuado • http://www.telegrafo.com.ec/noti r-gana-colombia- cias/informacion- competitividad/185344 general/item/ecuador-mejora-su- • http://www.larepublica.co/el- ubicacion-en-ranking-de- %E2%80%9Cmilagro%E2%80 competitividad.html %9D-ecuatoriano_120526

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The world factbook aouth America:Ecuador, 2015; https://www.cia.gov/library/publications /the-world-factbook/geos/ec.html

Kof Index of globalization; 2015; http://globalization.kof.ethz.ch/

Gobierno destina $90,3 millones para la estrategia Ecuador Digital 2.0; Mayo, 2012;http://www.explored.com.ec/notic ias-ecuador/gobierno-destina-90-3- millones-para-la-estrategia-ecuador- digital-2-0-547986.html

Turismo en el Ecuador se incrementa; 2010;http://www.suitesguayaquil.com/t urismo-en-el-ecuador-se- incrementa.html

Rafael Corrrea reitero el rechazo al TLC, 2010 diario El Universo, http://www.eluniverso.com/2010/06/22/ 1/1355/rafael-correa-reitero-rechazo- tlc.html

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Area: Paraguay Total: 406,752 sq km

land: 397,302 sq km

Water: 9,450 sq km

Country comparison to the world: 60

People and Society

Population: 6,703,860 (July 2014 est.)

Country comparison to the world: 105

Government

Paraguay achieved its independence Country Name: Republic of Paraguay from Spain in 1811. In the disastrous Government type: constitutional War of the Triple Alliance (1865-70) - republic between Paraguay and Argentina, Brazil, and Uruguay - Paraguay lost two-thirds Capital name: Asuncion of its adult males and much of its Legal system: civil law system with territory. The country stagnated influences from Argentine, Spanish, economically for the next half century. Roman, and French civil law models; Following the Chaco War of 1932-35 judicial review of legislative acts in with Bolivia, Paraguay gained a large Supreme Court of Justice part of the Chaco lowland region. The

35-year military dictatorship of Alfredo Economy STROESSNER ended in 1989, and, GDP (purchasing power parity): despite a marked increase in political $57.87 billion (2014 est.) infighting in recent years, Paraguay has held relatively free and regular Country comparison to the world: 104 presidential elections since the country's GDP (official exchange rate): return to democracy. (CIA, 2015) $31.3 billion (2014 est.)

Country comparison to the world: 69 Geography 134

Unemployment rate: Stroessner and twenty six years of colored continuity. With the victory of 7.3% (2014 est.) the Patriotic Alliance for the Change on Country comparison to the world: 80 April 20, 2008 in the presidential choices way is made to the alternation of the Population below poverty line: political power and there begins a third 34.7% (2010 est.) stage, The dictatorship of the General Alfredo Stroessner (1954-1989), Taxes and other revenues: hegemonic stage of the Party Colorado 16.7% of GDP (2014 est.) characterized principally, for the military authoritarianism, the repression, the Country comparison to the world: 184 violence, the institutional corruption, the Inflation rate (consumer prices): clientelism, the enrichment of some few ones, the brake to the freedom of 5.1% (2014 est.) expression, social dismantled sectors, a Exports: political culture practically, Non- existent and a legitimacy disguised with $14.61 billion (2014 est.) democratic processes false The Imports: democratization and continued colored

$12.37 billion (2014 est.) (1989-2008), stage later to the fall of the dictatorship of Stroessner, it can be Exchange rates: identified as a period of democratization guarani (PYG) per US dollar - of the country (positive aspect), accompanied of the coloured continued 4,451.7 (2014 est.) (CIA, 2015) (negative aspect), this party stopped

being hegemonic to turn in predominantly, because in spite of Politics possessing a new political regime, the

Precedents The political system current Paraguay continued for 19 more years, in Paraguayan is the reflection of sixty an hands of coloured leaders and of related years of power of the Party Colorado businessmen to this party. In this period divided in two stages, thirty five years of there were eliminated the violent and the dictatorship of the General repressive actions of the government but they continued the practices of

135 institutional corruption, clientelism, bad Economic distribution of wealth, between others. Landlocked Paraguay has a market The system of State - party gives place economy distinguished by a large slowly to a System of parties very little informal sector, featuring re-export of structured and for especially weak imported consumer goods to person. (Carmen Carolina Ubaldi neighboring countries, as well as the Aquino) activities of thousands of microenterprises and urban street vendors. A large percentage of the

population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis.

Because of the importance of the informal sector, accurate economic measures are difficult to obtain. On a per Social and cultural capita basis, real income has stagnated at Paraguay possesses a cultural undeniable 1980 levels. The economy grew rapidly wealth, fruit of the mixture of Guarani between 2003 and 2008 as growing and Spanish; there is much for which world demand for commodities recognizing to our country. We must combined with high prices and favorable value ours and not to be ashamed to be weather to support Paraguay's Paraguayans / Paraguayan, since we are commodity-based export expansion. a nation fighter, with claw, people who is Paraguay is the sixth largest soy not left to win for the circumstances and producer in the world. Drought hit in to see it in having survived two big wars, 2008, reducing agricultural exports and In Paraguay the poverty is raised and is slowing the economy even before the known fundamentally in the rural area. onset of the global recession. The The total poverty affects 32, 4 % of the economy fell 3.8% in 2009, as lower population, number of for yes raised that world demand and commodity prices is accentuated in the rural area, where it caused exports to contract. The affects 44, 8 % of the population. (Banco government reacted by introducing fiscal Central del Paraguay, 2015) and monetary stimulus packages. Growth resumed at a 13% level in 2010,

136 the highest in South America, but slowed agricultural production and the exterior in 2011-13 as the stimulus subsided and trade. (Wold Bank, 2014) severe drought and outbreaks of foot- and-mouth disease led to a drop in beef and other agricultural exports. The 3.1 Economic Globalization: economy took another leap in 2014, largely due to strong export growth. Political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to long-term growth. (CIA, 2015)

Paraguay is a country that possesses innumerable natural wealths. The production of clean energy is one of the Source: (The Global Economy, 2015) most relevant activities of the country, as well as the highly mechanized agriculture and the ranching, also The The growth of the Paraguayan economy Paraguayan economy is small and from the year 2002 owes to itself to an opened, highly dependently on the improvement of regulation and agricultural production and the exterior prudential taxation to a macroeconomic trade, especially of the soybean and the environment more stable, One of the bovine meat that they represented near reasons for which one has come 40 % of the exports in 2013. (banco improving it is that the banks have turned mundial) more solvent and profitable. The defaulting of the portfolio of credit one

has come diminishing 2%, (Banco 3. Globalization Central del Paraguay, 2015).

Paraguay is a slight country, but In the year 2007 the lending’s banks to regarding to aspect to globalization is a private entities I increase to comparison country that it’s present in almost all to of previous years but this not happen the sectors to economics; the economy is following year in the year 2008 for the small and open, highly dependent on the

137 financial crisis of the close conditions the lending’s decreased.

The Paraguayan economy has experienced a high volatility in the growth. After a fall of the Internal Brute Product (GDP) near to 1.2 % in 2012, explained principally by a strong drought and an outbreak of foot-and-mouth disease that affected severely the exports, the economy recovered vigorously with an expansion of 13.6 % of the GDP, being this the major rate of growth of Latin America in 2013.

In 2014 a study was done where show that Paraguay was the country with the economy more opened that was very good but in turn he was affected by everything what was happening in the external and mas if one treats of brazil that he is one of his principal partners. In 2011 Paraguay registered 49 per cent (Banco Central del Paraguay, 2015) of the population in situation of poverty. This number diminished in comparison 2010, where it was 54 %, Paraguay has 3.2 Social Globalization come improving notably the index of Source: (The Global Economy, 2015) poverty since in 2001 It’s present an indices of 61 %, In all that the percentage of poverty of 2011 I register 28 % I

diminish with regard to 2010 that was presenting an index of 30 %.

In spite of the fact that one has come the poverty improving even their concerns one of every four Paraguayans. 138

The level of school inscription, primary CAN (associate), CD, CELAC, FAO, G- level like it does not show the information of the World Bank they have come diminishing from the year 2005.

The level of school inscription, primary level like it does not show the information of the World Bank they have come diminishing from the year 2005.

The principal reasons of this phenomenon are: Problems of school performance, this is, a low performance, 11, G-77, IADB, IAEA, IBRD, ICAO, difficulties of conduct and those related ICC (national committees), ICCt, ICRM, to the age, Problems with the educational IDA, IFAD, IFC, IFRCS, ILO, IMF, offer or the lack of establishments, that is IMO, Interpol, IOC, IOM, IPU, ISO to say, absence of the degree, distance, (correspondent), ITSO, ITU, ITUC difficulties of access, absence of the (NGOs), LAES, LAIA, Mercosur, teachers etc… MIGA, MINURSO, MINUSTAH, MONUSCO, NAM (observer), OAS, In the year 2012 in Paraguay It’s increase OPANAL, OPCW, Pacific Alliance the hunger 8, 7 % the growth was from (observer), PCA, UN, UNASUR, 16, 8 to 25, 5 according to the UNCTAD, UNESCO, UNFICYP, information of the United Nations UNIDO, Union Latina, UNISFA, Organization for the agriculture and the UNMIL, UNMISS, UNOCI, UNWTO, supply. (Goup of World Bank, 2014) UPU, WCO, WHO, WIPO, WMO, WTO. (CIA, 2015)

3.3 Political Globalization: The fiscal politics across the years in Paraguay has come improving SOURCE: (The Global Economy, 2015) increasingly doing that was diminishing the poverty.

International organizations participation: 139

One of the events mas important to political level of last years in Paraguay was the crisis of 2012 due to the political judgment against the president at the time Fernando Lugo for the deputies' chamber of Paraguay, they accused the president of evil performance of functions, accusing it for the clashes happened between the peasants and the policemen.

In the year 2005 it had important achievements in the aspects of the technical cooperation offered in the topics of agricultural health, rural sustainable development and institutional modernization. (Banco Central del Paraguay, 2015)

140

According with the World Economic Forum’s annual Global Competitiveness Report they define competitiveness as

the set of institutions, policies, and factors that determine the level of productivity of a country. The level of

productivity, in turn, sets the level of prosperity that can be reached by an economy. The productivity level also

determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its

growth rates. In other words, a more competitive economy is one that is likely to grow faster over time. (World

Economic Forum) 4. Competitiveness In that way, Paraguay is located for the last available report (2014-2015) ranked 120 in the ranking of 144 countries. Pillars such as innovation and the infrastructure were those who had the lowest score, which means that the country presents weaknesses in these aspects, however pillars such as macroeconomic development and health and primary education brought high scores.

The global competitiveness index ranks the country in the second stage of the three in which the index classifies the

Fuente: (World Economic Forum)

141 different countries named stage 2: of development strategies and policies. Efficiency-driven. For example, owners of land, corporate shares, or intellectual property are With regard to Basic requirements unwilling to invest in the improvement (40.0%) the country was ranked in the and upkeep of their property if their 112 position with a score of 3.8. After rights as owners are not protected. having assessed the first four pillars. The role of institutions goes beyond the

legal framework. Government attitudes 4.1 First pillar: Institutions toward markets and freedoms and the efficiency of its operations are also very About Institutions the country was important: excessive bureaucracy and ranked in the 133 position with a score of red tape, overregulation, corruption, 2.9. dishonesty in dealing with public The institutional environment is contracts, lack of transparency and determined by the legal and trustworthiness, inability to provide administrative framework within which appropriate services for the business individuals, firms, and governments sector, and political dependence of the interact to generate wealth. The judicial system impose significant importance of a sound and fair economic costs to businesses and slow institutional environment has become all the process of economic development. the more apparent during the recent In addition, the proper management of economic and financial crisis and is public finances is critical for ensuring especially crucial for further solidifying trust in the national business the fragile recovery, given the increasing environment. Indicators capturing the role played by the state at the quality of government management of international level and for the economies public finances are therefore included of many countries. here to complement the measures of The quality of institutions has a strong macroeconomic stability captured in bearing on competitiveness and growth. pillar 3. It influences investment decisions and Although the economic literature has the organization of production and plays focused mainly on public institutions, a key role in the ways in which societies private institutions are also an important distribute the benefits and bear the costs

142 element in the process of creating routes, of which are paved 5.474 km, wealth. The global financial crisis, along 17% of the total and three times less than with numerous corporate scandals, has what is needed for the country to be highlighted the relevance of accounting minimally competitive, according to the and reporting standards and transparency parameters of the World Economic for preventing fraud and Forum. mismanagement, ensuring good In all the countries of the region, the governance, and maintaining investor percentage of paved routes is still over and consumer confidence. An economy 20 %, like the case of Argentina that is well served by businesses that are run comes to 32 %, Chile to 34 % and honestly, where managers abide by Uruguay to 43 %, to quote two examples. strong ethical practices in their dealings In Paraguay there exist, also, 20.000 with the government, other firms, and the linear meters of wooden bridges, which public at large. Private-sector replacement for concrete structures will transparency is indispensable to demand USD 250 million. Till now there business; it can be brought about through are counted by a credit of USD 50 the use of standards as well as auditing million of the Andean Corporation of and accounting practices that ensure Promotion, for 3.000 meters. (Ultima access to information in a timely manner. Hora, 2014) (World Economic Forum) Extensive and efficient infrastructure is

critical for ensuring the effective 4.2 Second pillar: Infrastructure functioning of the economy, as it is an important factor in determining the In Infrastructure the country was ranked location of economic activity and the in the 117 position with a score of 2.7. kinds of activities or sectors that can This is one of the pillars with lowest develop within a country. Well- score, in that way, will analyze the developed infrastructure reduces the situation of the country in this aspect effect of distance between regions, then. integrating the national market and connecting it at low cost to markets in

other countries and regions. In addition, According to official data, in the country the quality and extensiveness of there are 32.207 kilometers of roads and infrastructure networks significantly

143 impact economic growth and reduce With respect to Macroeconomic income inequalities and poverty in a environment Paraguay was ranked in the variety of ways. A well-developed 54 position with a score of 5.0 transport and communications This is one of the pillars with highest infrastructure network is a prerequisite score, in that way, will analyze the for the access of less-developed situation of the country in this aspect communities to core economic activities then. and services.

Effective modes of transport—including quality roads, railroads, ports, and air In the last decade, the country has transport—enable entrepreneurs to get achieved important advances in the their goods and services to market in a macroeconomic aspect, with solid results secure and timely manner and facilitate in the fiscal, monetary ambience and the movement of workers to the most with the beginning of important social suitable jobs. Economies also depend on reforms. Between the most beetling in electricity supplies that are free from the last years, they are the free access to interruptions and shortages so that the primary health care of the health and businesses and factories can work to the basic education monetary, as well unimpeded. Finally, a solid and as the expansion of the programs of extensive telecommunications network transference determined with impact on allows for a rapid and free flow of the most vulnerable populations. (Wold information, which increases overall Bank, 2014) economic efficiency by helping to ensure The stability of the macroeconomic that businesses can communicate and environment is important for business decisions are made by economic actors and, therefore, is significant for the taking into account all available relevant overall competitiveness of a country. information. (World Economic Forum) Although it is certainly true that macroeconomic stability alone cannot increase the productivity of a nation, it is 4.3 Third pillar: Macroeconomic also recognized that macroeconomic environment disarray harms the economy, as we have seen in recent years, conspicuously in the European context. The government

144 cannot provide services efficiently if it This is another one of the pillars with has to make high-interest payments on its highest score, in that way, will analyze past debts. Running fiscal deficits limits the situation of the country in this aspect the government’s future ability to react then. to business cycles. Firms cannot operate efficiently when inflation rates are out of hand. In sum, the economy cannot grow Paraguay has done a great effort to in a sustainable manner unless the macro guarantee these aspects and has done an environment is stable. Macroeconomic excellent job. This is clear in the results stability captured the attention of the of the index in these aspects. public most recently when some In a broad sense the health and primary advanced economies, notably the United education go hand in hand with de States and some European countries, development of a Macroeconomic needed to take urgent action to prevent environment of a state. It could explain macroeconomic instability when their why this two aspects present the highest public debt reached unsustainable levels scores. in the wake of the global financial crisis.

It is important to note that this pillar evaluates the stability of the A healthy workforce is vital to a macroeconomic environment, so it does country’s competitiveness and not directly take into account the way in productivity. Workers who are ill cannot which public accounts are managed by function to their potential and will be less the government. This qualitative productive. Poor health leads to dimension is captured in the institutions significant costs to business, as sick pillar described above. (World workers are often absent or operate at Economic Forum) lower levels of efficiency. Investment in the provision of health services is thus

critical for clear economic, as well as 4.4 Fourth pillar: Health and primary moral, considerations. education In addition to health, this pillar takes into In the Health and primary education account the quantity and quality of the Paraguay was ranked in the 111 position basic education received by the with a score of 4.8 population, which is increasingly

145 important in today’s economy. Basic Quality higher education and training is education increases the efficiency of crucial for economies that want to move each individual worker. Moreover, often up the value chain beyond simple workers who have received little formal production processes and products. In education can carry out only simple particular, today’s globalizing economy manual tasks and find it much more requires countries to nurture pools of difficult to adapt to more advanced well-educated workers who are able to production processes and techniques, perform complex tasks and adapt rapidly and therefore they contribute less to to their changing environment and the devising or executing innovations. In evolving needs of the production system. other words, lack of basic education can This pillar measures secondary and become a constraint on business tertiary enrollment rates as well as the development, with firms finding it quality of education as evaluated by difficult to move up the value chain by business leaders. The extent of staff producing more sophisticated or value- training is also taken into consideration intensive products. (World Economic because of the importance of vocational Forum) and continuous on-the-job training— which is neglected in many economies—

for ensuring a constant upgrading of In other way, about the Efficiency workers’ skills. (World Economic enhancers (50.0%) the country was Forum) ranked in the 112 position with the score of 3.5 after having assessed the second five pillars. 4.6 Sixth pillar: Goods market efficiency

Goods market efficiency was ranked in 4.5 Fifth pillar: Higher education and the 92 place with the score of 4.2 training

Higher education and training was rated in the 112 position with the score of 3.3 Countries with efficient goods markets are well positioned to produce the right

mix of products and services given their particular supply-and-demand

146 conditions, as well as to ensure that these forces companies to be more innovative goods can be most effectively traded in and customer-oriented and thus imposes the economy. Healthy market the discipline necessary for efficiency to competition, both domestic and foreign, be achieved in the market. (World is important in driving market efficiency, Economic Forum) and thus business productivity, by ensuring that the most efficient firms, producing goods demanded by the 4.7 Seventh pillar: Labor market market, are those that thrive. The best efficiency possible environment for the exchange With regard to Labor market efficiency of goods requires a minimum of the country was ranked in the 115 government intervention that impedes position with the score of 3.8 business activity. For example, competitiveness is hindered by distortionary or burdensome taxes and The efficiency and flexibility of the labor by restrictive and discriminatory rules on market are critical for ensuring that foreign direct investment (FDI)—which workers are allocated to their most limit foreign ownership—as well as on effective use in the economy and international trade. The recent economic provided with incentives to give their crisis has highlighted the high degree of best effort in their jobs. Labor markets interdependence of economies must therefore have the flexibility to worldwide and the degree to which shift workers from one economic activity growth depends on open markets. to another rapidly and at low cost, and to Protectionist measures are allow for wage fluctuations without counterproductive as they reduce much social disruption. The importance aggregate economic activity. of the latter has been dramatically Market efficiency also depends on highlighted by events in Arab countries, demand conditions such as customer where rigid labor markets were an orientation and buyer sophistication. For important cause of high youth cultural or historical reasons, customers unemployment. Youth unemployment may be more demanding in some continues to be high in a number of countries than in others. This can create European countries as well, where an important competitive advantage, as it

147 important barriers to entry into the labor expected rates of return rather than to the market remain in place. politically connected. A thorough and proper assessment of risk is therefore a Efficient labor markets must also ensure key ingredient of a sound financial clear strong incentives for employees market. and efforts to promote meritocracy at the workplace, and they must provide equity Business investment is also critical to in the business environment between productivity. Therefore economies women and men. Taken together these require sophisticated financial markets factors have a positive effect on worker that can make capital available for performance and the attractiveness of the private-sector investment from such country for talent, two aspects that are sources as loans from a sound banking growing more important as talent sector, well-regulated securities shortages loom on the horizon. (World exchanges, venture capital, and other Economic Forum) financial products. In order to fulfill all those functions, the banking sector needs

to be trustworthy and transparent, and— 4.8 Eighth pillar: Financial market as has been made so clear recently— development financial markets need appropriate regulation to protect investors and other As the pillar of financial market actors in the economy at large. (World development Paraguay was ranked in the Economic Forum) 93 position with the score of 3.7.

4.9 Ninth pillar: Technological The financial and economic crisis has readiness highlighted the central role of a sound and well-functioning financial sector for As many as the pillar of Technological economic activities. An efficient readiness was ranked in the 110 place financial sector allocates the resources with the score of 2.9. saved by a nation’s citizens, as well as those entering the economy from abroad, to their most productive uses. It channels In today’s globalized world, technology resources to those entrepreneurial or is increasingly essential for firms to investment projects with the highest compete and prosper. The technological

148 readiness pillar measures the agility with develop new technologies for innovation which an economy adopts existing that expand the frontiers of knowledge. technologies to enhance the productivity That is why we separate technological of its industries, with specific emphasis readiness from innovation, captured in on its capacity to fully leverage the 12th pillar, described below. (World information and communication Economic Forum) technologies (ICTs) in daily activities and production processes for increased efficiency and enabling innovation for 4.10 Tenth pillar: Market size competitiveness. ICTs have evolved into As much as the Market size of the the “general purpose technology” of our country was ranked in the place 92 with time, given their critical spillovers to a score of 3.3. other economic sectors and their role as industry-wide enabling infrastructure. Therefore ICT access and usage are key The size of the market affects enablers of countries’ overall productivity since large markets allow technological readiness. firms to exploit economies of scale. Whether the technology used has or has Traditionally, the markets available to not been developed within national firms have been constrained by national borders is irrelevant for its ability to borders. In the era of globalization, enhance productivity. The central point international markets have become a is that the firms operating in the country substitute for domestic markets, need to have access to advanced products especially for small countries. Vast and blueprints and the ability to absorb empirical evidence shows that trade and use them. Among the main sources openness is positively associated with of foreign technology, FDI often plays a growth. Even if some recent research key role, especially for countries at a less casts doubts on the robustness of this advanced stage of technological relationship, there is a general sense that development. It is important to note that, trade has a positive effect on growth, in this context, the level of technology especially for countries with small available to firms in a country needs to domestic markets. be distinguished from the country’s Thus exports can be thought of as a ability to conduct blue-sky research and substitute for domestic demand in

149 determining the size of the market for the are especially important for countries at firms of a country. an advanced stage of development when, to a large extent, the more basic sources By including both domestic and foreign of productivity improvements have been markets in our measure of market size, exhausted. The quality of a country’s we give credit to export-driven business networks and supporting economies and geographic areas (such as industries, as measured by the quantity the European Union) that are divided and quality of local suppliers and the into many countries but have a single extent of their interaction, is important common market. (World Economic for a variety of reasons. When Forum) companies and suppliers from a On the pillars of Innovation and particular sector are interconnected in sophistication that are worth (10.0%) the geographically proximate groups, country was located in the place 132 with called clusters, efficiency is heightened, a score of 2.9 greater opportunities for innovation in processes and products are created, and

barriers to entry for new firms are 4.11 Eleventh pillar: Business reduced. Individual firms’ advanced sophistication operations and strategies (branding, marketing, distribution, advanced In this pillar, Business sophistication the production processes, and the production country was located in the place 121 with of unique and sophisticated products) a score of 3.4. spill over into the economy and lead to sophisticated and modern business processes across the country’s business There is no doubt that sophisticated sectors. (World Economic Forum) business practices are conducive to higher efficiency in the production of goods and services. Business 4.12 Twelfth pillar: Innovation sophistication concerns two elements that are intricately linked: the quality of In terms of Innovation Paraguay was a country’s overall business networks ranked on place 134 with a score of 2.4 and the quality of individual firms’ This is another one of the pillars with operations and strategies. These factors lowest score, in that way, will analyze

150 the situation of the country in this aspect eventually run into diminishing returns. then. The same is true for the efficiency of the labor, financial, and goods markets. In

the long run, standards of living can be The function that there redeem the largely enhanced by technological persons and the teams in the process of innovation. Technological the innovation is fundamental. Included breakthroughs have been at the basis of the qualified labor, the intersection of the many of the productivity gains that our human, financial and technological economies have historically capital, the retention of the talent and the experienced. These range from the persons' mobilization with top industrial revolution in the 18th century formation. The PCT patents and the invention of the steam engine implementation, the Quality of scientific and the generation of electricity to the research institutions and the Company more recent digital revolution. The latter spending on R&D are some of the factors is not only transforming the way things where in innovation terms the country are being done, but also opening a wider has major weaknesses. range of new possibilities in terms of products and services. Innovation is

particularly important for economies as Innovation can emerge from new they approach the frontiers of technological and non-technological knowledge, and the possibility of knowledge. Non-technological generating more value by merely innovations are closely related to the integrating and adapting exogenous know-how, skills, and working technologies tends to disappear. conditions that are embedded in Although less-advanced countries can organizations and are therefore largely still improve their productivity by covered by the eleventh pillar of the GCI. adopting existing technologies or The final pillar of competitiveness making incremental improvements in focuses on technological innovation. other areas, for those that have reached Although substantial gains can be the innovation stage of development this obtained by improving institutions, is no longer sufficient for increasing building infrastructure, reducing productivity. Firms in these countries macroeconomic instability, or improving must design and develop cutting-edge human capital, all these factors

151 products and processes to maintain a What aspects of the competitiveness competitive edge and move toward even have affected the globalization of higher value-added activities. This Paraguay? progression requires an environment that The relation that exists between is conducive to innovative activity and globalization and competitiveness in the supported by both the public and the country is very small it is analyzed to the private sectors. In particular, it means development of the two aspects sufficient investment in research and separately, almost at all since the development (R&D), especially by the Paraguayans with regard to the private sector; the presence of high- globalization are well, it has his opened quality scientific research institutions markets and is considered to be one of that can generate the basic knowledge the economies mas opened of South needed to build the new technologies; America. extensive collaboration in research and technological developments between Exports are mostly of goods that they universities and industry; and the produce, have good international protection of intellectual property, in relations, are being employed at addition to high levels of competition situations that be badly, but in terms of and access to venture capital and competitiveness are not well at all, in one financing that are analyzed in other of the most important items to be highly pillars of the Index. In light of the recent competitive forehead other countries like sluggish recovery and rising fiscal innovation. Paraguay is very badly in pressures faced by advanced economies, this, it is one of its biggest weaknesses, it is important that public and private needs to invest in innovation if they want sectors resist pressures to cut back on the to be able to be at the height of other R&D spending that will be so critical for economies and must not be left behind. sustainable growth into the future. This can be done through the creation of (World Economic Forum) a governmental entity that encourages innovation in the economy and to encourage the research and development 5. Analysis throughout the country.

152

If Paraguay is open to international innovation and business sophistication trade and it economy depends largely to see again the results of the 2005 or one of this what happened with the aspects better. like innovation, infrastructure and Acording the World Economic Forum business sophistication in the country? the Business sophistication concerns two elements that are intricately linked: the quality of a country’s overall business The growth of Paraguay has been networks, and the quality of individual marked by macroeconomic firms’ operations and strategies, this strengthening of the country, aspects like includes the well-known clusters where to guarantee health and primary the country might be more efficient when education has become a priority for the their supply chains can be reduced, country. However most of the others reducing costs and production time. aspects like innovation, business sophistication have been neglected.

But, the reality is that the country is on Moreover the infrastructure in the the way to development and shows country is poor and in the need to enter interest to first develop basic aspects like to compete on the world market it is this. recommended to develop this aspect in large proportions, Extensive and But in a globalized world as the current efficient infrastructure is critical for is necessary find different ways to ensuring the effective functioning of the develop most of the aspects in medium- economy. terms without neglecting those who have achieved significant results.

The country highly dependent on the How Paraguay could to be a country agricultural production and the exterior more competitively taking advantage trade. In 2005 the country opened its the fact of being an open market? doors to international trade and the impact on their economy were very positive so, if the country now that it's In addition to develop it innovation, the way to obtain positive results have to sophistication of business, and do something to improve the aspects like infrastructure, Paraguay needs to be

153 strengthened in terms of technology, the who has already developed in function to country needs a very good technology to compete in the global market. develop and strengthen all the productive We also conclude that there is a sectors because if not, not will be relationship between competitiveness capably of competing with other and globalization, if we take the example countries that implement better it tools of Paraguay in terms of social with specific emphasis on its capacity to globalization grew in large proportions develop and fully leverage information since they guaranteed the health and and communication technologies. basic education, one of the pillars of the competitiveness index.

7. Conclusion We can see how, in spite of the fact that since its opening to the global market

have benefited from, have not developed Finally we can conclude with the important aspects in terms of investigation that Paraguay it is well in competitiveness that would help them to terms of globalization and opening of see better results in all aspects. markets where they export much of the products that they produce, the country has focused in guaranteeing a strong 8. REFERENCES macroeconomic development for the population However, the country has many shortcomings in terms of competitiveness, its infrastructure is Banco Central del Paraguay. (2015, poor its innovation also, they have no Mayo). Banco Central del major technological developments, in Paraguay. Retrieved from www.bcp.gov.py addition its economy mainly is characterized by agriculture and the banco mundial. (n.d.). banco mundial . Retrieved mayo 19, 2015, from informal sector, which means that they http://www.bancomundial.org/es do not produce goods that generate high /country/paraguay/overview added value. Carmen Carolina Ubaldi Aquino. (n.d.). Retrieved mayo 19, 2015, from What Paraguay need to do is to develop http://paraguay.sociales.uba.ar/fi all these aspects without neglecting those

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CIA. (2015, Mayo 13). www.cia.gov. Retrieved Mayo 20, 2015, from CENTRAL INTELLIGENCE AGENCY: https://www.cia.gov/library/publ ications/the-world- factbook/geos/pa.html

Goup of World Bank. (2014, Octover 05). World Bank. Retrieved mayo 26, 2015, from http://www.bancomundial.org/es /country/paraguay/overview

The Global Economy. (2015, Mayo 20). theglobaleconomy.com. Retrieved from http://www.theglobaleconomy.c om/Paraguay/kof_overall_glob/

Ultima Hora. (2014, Abril 26). ultimahora.com. Retrieved Mayo 25, 2015, from http://www.ultimahora.com/para guay-cuenta-la-segunda-peor- infraestructura-vial-las- americas-n789440.html

Wold Bank. (2014, Octubre 05). Banco Mundial. Retrieved Mayo 25, 2015, from http://www.bancomundial.org/es /country/paraguay/overview

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155

Location: Western South America, PERU bordering the South Pacific Ocean, between Chile and Ecuador

Area:

Total: 1,285,216 sq km

Land: 1,279,996 sq km

Water: 5,220 sq km

Country comparison to the world: 20

Population: 30,147,935 (July 2014 est.)

Country comparison to the world: 43

GDP: $376.7 billion (2014 est.)

Peruvians economy reflects its GDP - real growth rate: 3.6% varied topography - a coastal (2014 est.) lowland region arid, high central highlands of the Andes, the dense Country comparison to the world: 80 Amazon jungle, with tropical lands GDP - per capita (PPP): $12,000 bordering Colombia and Brazil. A (2014 est.) wide range of important mineral resources are found in mountainous Unemployment rate: 7.6% (2014 and coastal areas and Peru's coastal EST.) waters provide excellent fishing grounds. Peru is the second largest Population below poverty line: producer of silver and third largest 25.8% (2012 est.) copper producer. Taxes and other revenues:

30.9% of GDP (2014 est.)

Public debt: 15.9% of GDP (2014 est.)

Inflation rate (consumer prices): 3.3% (2014 est.)

Current account balance:

-$10.63 billion (2014 est.)

Capital: Lima Exchange rates: Nuevo sol (PEN) per US dollar -2.836 (2014 est.)

156

Introduction economic recovery. In June 2011, the former army officer Ollanta Ancient Peru was the site of many Humala was elected president, I've important Andean civilizations, Carried on the sound, market- especially the Incas whose empire was oriented economic policies of the invaded by the Spanish conquistadors in three PRECEDING 1533. Peru's independence was declared administrations. in 1821 and the remaining Spanish forces were killed in 1824. After a dozen years Globalization of military government, Peru returned to In Peru, globalization is understood democratic leadership in 1980, but went as a process of liberalizing the through economic problems and the movement of capital, goods and growth of a violent insurgency. The services. Since early 90s a beginning of a decade that saw a radical development model based on change in the economy and progress in competition was adopted to seeks reducing guerrilla activity was marked economic activity in the country. by the election of President Alberto Fujimori in 1990. But an economic The process continued with the recession in late 1990 the president's trade agreements and has deepened increasing reliance on authoritarian with the Economic measures caused mounting discontent Complementation Agreements and with his regime, which led to his Free Trade Agreements (FTA) resignation in 2000. signed by Peru, in which goods and services are freely traded. In the spring of 2001 a transition government oversaw new elections, There are significant advantages in which installed Alejandro Toledo globalization, mainly in the Manrique as the new head of state, economic and cultural exchanges the first democratically elected that enrich the people with president of the indigenous ethnic information and until recently group of Peru. In 2006, Peru saw unexpected opportunities. the return of Alan Garcia Perez who However, globalization also went through a disappointing presents significant degrees of presidential term from 1985 to uncertainty and risks as yet 1990 and then monitor a solid unmeasured are the reactions of

157 excessive nationalism, economic country and, the number of international protectionism, etc. All this demand organizations to which the country is a continue analyzing and reviewing member and the number of UN peace the scope of this process in time. missions a country participated in. In addition, we include the number of

treaties signed between two or more states since 1945. These data are taken from the Europa World Yearbook

(various years), the CIA World Factbook (various years), the UN Department of Peacekeeping Operations, and the Political Globalization United Nations Treaties Collection.

Number of embassies

• Embassy of Peru in Germany

• Embassy of Peru in Australia

• Embassy of Peru in Brazil

• Embassy of Peru in Bulgaria

• Embassy of Peru in Canada

• Embassy of Peru in China

• Embassy of Peru in Colombia

• Embassy of Peru in Denmark

• Embassy of Peru in Ecuador

• Embassy of Peru in the United States of America (USA)

To proxy the degree of political • Embassy of Peru in France globalization they employ the number of • Embassy of Peru in Britain embassies and high commissions in a

158

• Embassy of Peru in Greece

• Embassy of Peru in Honduras

• Peru Embassy in Panama

• Embassy of Peru in Poland

• Embassy of Peru in the UK Foreign embassies IN PERU • Embassy of Peru in India • Consulate General of Spain • Embassy of Peru in China in Lima

• Embassy of Peru in Sweden • German Embassy

• Embassy of Peru in Thailand, • Embassy of Chile Vietnam, Laos and Cambodia • Embassy of El Salvador • Embassy of Peru in Uruguay • Embassy of Spain

• Embassy of the United States

International organization of America participation: • French Embassy • APEC, BIS, CAN, CD, CELAC, EITI (compliant • Embassy of Israel country), FAO, G-24, G-77, IADB, IAEA, IBRD, ICAO, • Embassy of Italy ICC (NGOs), ICCt, ICRM, IDA, IFAD, IFC, IFRCS, • Embassy of India IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM, IPU, • Dutch Embassy ISO, ITSO, ITU, ITUC (NGOs), LAES, LAIA, • Embassy of Mexico Mercosur (associate), MIGA, MINUSTAH, MONUSCO, • Embassy of Switzerland NAM, OAS, OPANAL, OPCW, Pacific Alliance, PCA, SICA (observer), UN, UNAMID, UNASUR, Economic Globalization UNCTAD, UNESCO, UNHCR, UNIDO, Union Latina, UNISFA, UNMISS, UNOCI, UNWTO, UPU, WCO, WFTU (NGOs), WHO, WIPO, WMO, WTO.

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Statistics (October 2014). More specifically, trade is the sum of a country’s exports and imports and portfolio investment is the sum of a country’s stock of assets and liabilities (all normalized by GDP). While these variables are straightforward, income payments to foreign nationals and capital are included to proxy for the extent that a country employs foreign people and capital in its production processes. Restrictions: The second index refers to restrictions on trade and capital using hidden import barriers, mean tariff rates,

Source: website- KOF- PeruBroadly taxes on international trade (as a share of speaking, economic globalization has current revenue) and an index of capital two dimensions. First, actual economic controls. Given a certain level of trade, a flows are usually taken to be measures of country with higher revenues from tariffs globalization. Second, the previous is less globalized. To proxy restrictions literature employs proxies for of the capital account, an index based on restrictions to trade and capital. data by Gwartney et al. (2014) is Consequently, two indices are employed. This index is based on the constructed that include individual IMF’s Annual Report on Exchange components suggested as proxies for Arrangements and Exchange globalization in the previous literature. Restrictions and includes 13 different Actual Flows: The sub-index on actual types of capital controls. The index is economic flows includes data on trade, constructed by subtracting the number of FDI and portfolio investment. Data on restrictions from 13 and multiplying the trade are provided by the World Bank result by 10. The indices on mean tariff (2014), stocks of FDI (normalized by rates and hidden import barriers are also GDP) are provided by UNCTAD STAT derived from Gwartney et al. (2014). (2014). Portfolio investment is derived Mean tariff rates originate from various from the IMF’s International Financial sources. Gwartney et al. allocated a rating of 10 to countries that do not

160 impose any tariffs. As the mean tariff Social Globalization rate increases, countries are assigned lower ratings. The rating will decline toward zero as the mean tariff rate approaches 50 percent (which is usually not exceeded by most countries among their sample). The original source for hidden import barriers, finally, is the World Economic Forum’s Global Competitiveness Report (various issues).

GDP Indicator

According to the KOF index classifies social globalization in three categories. The first covers personal contacts, the second includes data on information flows and the third measures cultural proximity. Personal Contacts: This index is meant to capture direct interaction Peru's GDP from 1990 to 2012 has among people living in different shown a significant increase, countries. It includes international approaching the average for Latin telecom traffic (traffic in minutes per America and the Caribbean; person) and the degree of tourism improving their competitiveness, (incoming and outgoing) a country’s becoming a more attractive country population is exposed to. Government for business and investment. and workers’ transfers received and paid (in percent of GDP) measure whether and to what extent countries interact, while the stock of foreign population is included to capture existing interactions

161 with people from other countries. The national hit lists or movies shown in number of international letters sent and national cinemas that originated in received also measure direct interaction Hollywood. However, these data lack for among people living in different the majority of countries in our sample. countries. Telecom traffic is provided by Instead, we thus use imported and the International Telecommunication exported books (relative to GDP), as Union (2013), while the number of suggested in Kluver and Fu (2004). letters is taken from the Universal Postal Traded books proxy the extent to which Union’s Postal Statistics Database. The beliefs and values move across national remaining three variables are from the borders, taken from the UNESCO World Bank (2014). Information flows: (various years), and the United Nations While personal contact data are meant to Commodity Trade Statistics Database capture measurable interactions among (2014). According to Saich (2000, p.209) people from different countries, the sub- moreover, cultural globalization mostly index on information flows is meant to refers to the domination of U.S. cultural measure the potential flow of ideas and products. Arguably, the United States is images. It includes the number of the trend-setter in much of the global internet users (per 100 people), the share socio-cultural realm (see Rosendorf, of households with a television set, and 2000, p.111). As an additional proxy for international newspapers traded (in cultural proximity we thus include the percent of GDP). All these variables to number of McDonald’s restaurants some extent proxy people’s potential for located in a country. For many people, receiving news from other countries – the global spread of McDonald’s became they thus contribute to the global spread a synonym for globalization itself. In a of ideas. The variables in this sub-index similar vein, we also use the number of derive from the World Bank (2014), Ikea per country. International Telecommunication Union

(2013), the UNESCO (various years), and the United Nations Commodity Analysis of Globalization Trade Statistics Database (2014). Peru has relationship with several Cultural Proximity: Cultural proximity is countries and has signed economic arguably the dimension of globalization agreements and free trade most difficult to grasp. Dreher (2006) agreements that have allowed it to suggests the number of English songs in

162 actively participate in Asian countries, for the production international, regional and of secondary goods that these subregional (Security Council UN European countries need to Inter-American Commission on recover. Allowing activities or Human Rights, among others) industries would be a reduction real instances. It is a very active wages. country in support of international security and the inclusion of the poorest and promoter of initiatives Peru has shown an improvement in to combat poverty and hunger. their macroeconomic indexes and has come to the fore because of its Globalization has been a key factor economic dynamism. Trade in structural changes in economic liberalization grew 26% in the 200 activity, with consequences on the and 32.7% in 2004; the per capita territorial organization. The income of Peruvians has grown changes are seen through changes between 2005 and 2009, and has in the sectors of the economy and also begun to reduce poverty rates. spatial transformations Within the limits of continuity in the process of globalization is first the lack of physical and ideological structure to accompany the process, either by physical limitations of space or natural resources and distrust generated by the crisis of the globalized world. One of the main problems arising from globalization is the growing open unemployment and casualization of existing jobs. This massive unemployment affects more strongly to European countries, but is a result of increased competitive advantages and lower costs for

163

Competitiveness

Source: Global competitiveness index-report

Source: Global competitiveness index-report 2015

164

The 12 Pillars of Peru

Source: website- Globalization index – Peru - Based on the ranking of global competitiveness report, improvements in the last periods were in infrastructure, health and

primary education, secondary education, business sophistication and innovation. Peru has only improved over the five pillars of the 12 that are measured, fell in five and remained his score on two of them over the previous period.

165

The pillars that have been falling The institutions pillar is worrying because it had a falling nine places and is the worst located of the 12. The pillar of macroeconomic development is the better located in Peru, however it shown a decline in relation to previous years. Also the pillar of financial market development and market size remained the same position.

Source: website- Globalization index – Peru -

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confidence, enabling the country be in the top half of the ranking. Peru

has 4.25 points competitiveness Analysis of competitiveness index, which measures the way a country uses its resources and capacity to provide its citizens a high level of prosperity.

Nevertheless, Peru has fallen four positions in the period 2014-2015 and is now located on the 65th Rank; and in comparison to the region, Peru won the sixth position with what remained in the first half of Latin American economies.

Chile is the undisputed leadership The table shows the evolution of the position in Latin America as in 33 position of Peru in the Global Rank, while Colombia is closer to Competitiveness Index. (Source: website Peru occupying position 69. Datos Macro-Indice competitividad Corruption, restrictive labor Peru-) regulations and bureaucratic Peru has established itself in recent inefficiency of government were years as one of the countries with the three most relevant factors the highest growth and considered as the most problematic development perspective, climbing for doing business in the positions in global competitiveness countryQuestions reports (RCG) issued by the World • How globalization can Economic Forum. The sustained affect the competitiveness increase in these levels of in Peru? competitiveness has allowed Peru through the 86th in the ranking • Where Peru aims in terms since 2007-2008 to 61 in 2013- of globalization and 2014 which shows the success of competitiveness? economic policy and reflect the

167

• How should the national market context, except perhaps in companies confront the price. Also another company with competitiveness in this lower levels of productivity, with a world now fully globalized? unique product, could become competitive in certain markets. All Globalization and companies must face the competitiveness competition of a globalized market Today the world has been becoming and so to survive and develop; the a mega-market, where citizens have situation is further exacerbated for ceased to exist as such, because the SMEs (small and medium population are seen as consumers enterprises), which must face their and countries as companies. The organizational and structural presence of globalization in Peru problems and also the challenge of and generally throughout the world global competition. On the other has shown positive effects, but also hand, globalization has influenced negative. Moreover, the cultural sphere promoting the competitiveness is understood as cultures of smaller towns disappear the ability of an individual, because they are classified as company, region or country to primitive or retrograde, affecting position itself advantageously in cultural diversity. the market, which is constantly evolving. It is true that you cannot develop high levels of competitiveness without a market Recommendations analysis to establish the best product, good or service. • One way to improve the country would seek reforms

that increase productivity As for globalization and and contribute Peru, competitiveness, Peru is focused on stabilizing macroeconomic the business world, so in general, a indicators and improving the company can have a reasonable business environment with level of productivity but not other countries. Although necessarily competitive in their Peru is a progressive

168

country, it must improve • La globalización del Perú aspects of innovation and Available on: strengthening the pillars of ciga.pucp.edu.pe/index.php? institutional and option=com_content&task=s implementation. eccion_ciga§ionid=15& id=389 The education system, the low level in science, technology and innovation and transformation of • Embajadas y consultas de Peru the productive system are the most Available on essential for Peru to increase its www.ohperu.com/sociedad/e competitiveness elements. It is also mbajada.htm important that companies improve the ability to produce higher levels • Method of Calculation - KOF of wealth and prosperity for those Index of Globalization Available who compete in the global world be on: the corporations, not the state. This globalization.kof.ethz.ch/me is achieved by implementing dia/filer_public/2015/03/04/ policies to improve the economic method_2015.pdf environment to boost productivity, • Peru's Globalization Problem Available on: which is key for citizens to live foreignpolicy.com/2009/11/ better. 10/perus-globalization- problem/

• About Peru-Available on: theworldfactbook.com

Peru Globalizacion y Competitividad Available on: www.uimunicipalistas.org Uruguay

Bibliography

169

Legal system:

Civil law system based on the Spanish civil code

GDP (purchasing power parity):

Dollar $69.78 billion (2014 est.)

Country comparison to the world: 95

GDP - real growth rate:

2.8% (2014 est.) President: Country comparison to the world: 121 Tabaré Vázquez GDP - per capita (PPP): Location: $20,500 (2014 est.) Southern South America, bordering the Country comparison to the world: 80 South Atlantic Ocean, between Argentina and Brazil Labor force:

Geographic coordinates: 1.712 million (2014 est.)

33 00 S, 56 00 W Country comparison to the world: 127

Area: Unemployment rate:

Total: 176,215 sq km 6.7% (2014 est.)

Land: 175,015 sq km Country comparison to the world: 70

Water: 1,200 sq km Population below poverty line:

Country comparison to the world: 91 18.6% (2010 est.)

Population: Taxes and other revenues:

3,332,972 (July 2014 est.) 30.2% of GDP (2014 est.)

Country comparison to the world: 135 Country comparison to the world: 89

Government type: Public debt:

Constitutional Republic 64.7% of GDP (2014 est.)

Capital: Country comparison to the world: 48

Montevideo Inflation rate:

170

8.8% (2014 est.) annual rate of 2.65% between

Exchange rates:

Uruguayan pesos (UYU) per US dollar -

$ 23.18 (2014 est.)

Current account balance:

-$3.067 billion (2014 est.) 2004 and finally 2012 again Country comparison to the world: 157 (Factbook, 2015) increased a 4.91% cumulative annual rate.

(Horta, 2011) In recent years the Uruguayan economy has grown at an accelerated rate, Well if it is true, we say that for increased foreign direct investment and international comparisons of a country commodities. Similarly Uruguay's we have to take into account different economic growth in recent years has aspects such as social, cultural and been improving of welfare and quality of economic part. life of citizens. What is really important is to be clear Due to this change is needed: that competitiveness and the economy of knowledge, innovation and technology a country should be based on improving to increase productivity in the country, the welfare and quality of its citizens also, an economic factor contributing is based on GDP this determines how the GDP growth that reflected in the competitive and globalized these are. social and environmental aspects.

In the graph 3.1 table we can

analyze economic developments in Uruguay between 1985 and According to Tamara Schandy: 1998 there was a cumulative Uruguay is accumulating annual growth rate of 3.12% macroeconomic imbalances exposing between 1999 and 2003 shows the country in a vulnerable situation to that there a cumulative negative global change.

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In this scenario, despite the slowdown in the economy entered a new phase of the economic growth, inflation will continue economic cycle, brought a number of at high levels that must be said is problems involving the achieved level "worrying". Not long this was attributed and loss of competitiveness. Otherwise, to the fact that demand was growing the progress would be achieved in terms faster ago. In this scenario despite slower of competitiveness, attacking the above economic growth, inflation will continue factors, would not allow full at high levels which must be said is development of the potentialities of the “worrisome”. Not so long ago this was Uruguayan economy if it fails to obtain attributed to the fact that demand was favorable access for their products to the growing faster and the pressure on prices widest possible external markets. was important. But the economy has Table 1. Global Competitiveness cooled and inflation has not yielded. Index (URUGUAY, 2013)Introduction

(Marco Press, 2013) The Uruguayan country has a decade of

Uruguay’s economic situation has a free market characterized by an export- oriented agriculture, a well-educated work force, and high levels of social spending. Economic growth for Uruguay averaged 8% annually during the period 2004-08 but the 2008-09 global financial crisis affected them and reached 2.6% in 2009. Nevertheless, the uninterrupted economic growth in which country managed to avoid recession the productive structure was significantly altered to boost mainly through higher public international trade and openness. The expenditure and investment and GDP domestic market was also dynamic and growth to 8.9% in 2010. Uruguay's main responded to opportunities with strong increases in consumption and trade partners are Argentina and Brazil. investment. However, when the list of achievements is set up and you start to The domestic market was also dynamic think about the future, is showing a sense and responded to opportunities with of the economy having difficulties. strong increases in consumption and The companies’ symptoms observed is investment. However, since 2012 when that of an increasing level of difficulty to

172 meet the needs of customers to current price levels. It is something that happens This complexity means that the problem to producers of goods and services is not a simple solution; many oriented to the external market and to improvements must be achieved concentrate on the domestic market. The simultaneously. At the same time, the concept that best suits the purpose of challenge is multiplied, because those diagnosis for this problem is the loss of are relative concepts among nations. competitiveness, applying the term Each country has to do better than the competitiveness to the scope of a country rest of the world (particularly with or an economy. One of the definitions respect to its competitors and those who most commonly used is made by the buy from their). OECD (Organization for Economic Today, improving competitiveness and Cooperation and Development): globalization is widespread concern "Competitiveness is the degree to which among key players of the national a nation can, under conditions of trade productive sector. and free markets, producing goods and services that support the test of Finally, the purposes of this paper is to international markets while analyze and compare the terms of simultaneously maintaining and competitiveness and globalization, then, expanding the real incomes of the in terms of these concepts make an population in the long term” analysis of those for Uruguay. (URUGUAY, 2013, p. 6). Therefore, it is a relative concept to a nation that Politics considers a range of factors that make the In the course of a few years Uruguay has macroeconomic environment, the had to face several changes in the microeconomic conditions of regulations international system and the regional and markets, even the decisions and environment that have resulted in behavior of those who generate the changes and adjustments to its foreign country's wealth. (URUGUAY, 2013, p. policy. This has led to priorities and 6) instruments of integration of the country Also, it is important to mention here the to the international environment were concept of globalization: modified in line with the definition of “The worldwide movement toward foreign policy. economic, financial, trade and communications integration” The "international" integration, which is (businessdictionary, S.F) the action and effect of inserting, meaning include one thing into another, In this case the poor grouth of involves the part of the person who globalization in Uruguay affects its performs the same; in this case the capacity to opening local and nationalistic perspectives to a broader political community of the inhabitants of outlook of an interconnected and the territory takes a series of decisions. interdependent world with free transfer These decisions concern the action itself, of capital, goods, and services across the management of it and where it is national frontiers. addressed, so the inclusion of a country

173 that is defined by its foreign policy, will Economy be delimit by their own context structure. As a result of the Investigation made: The change in the international context post-Second World War is the “Overall economic policy is maintained. explanatory factor of adaptation and Within government policy it is to adjustment of foreign policy from the promote domestic and foreign forties and fifties of last century. The investment.” advent of an authoritarian regime in line The existence of differences between with the changes of regime in the region two economic trends became apparent and the democratic transition in notorious in 2011 for the treatment of transitions confluence with Argentina various projects such as the Tax on Rural and Brazil provided further adjustments Properties Concentration (ICIR) or the in foreign policy. In the late eighties law effected several differential IVA there was another major change in the rebates. However, since the government structure of the international system with has repeatedly said that the government's the fall of the Soviet regime and the end economic policy is one and that "There of the Cold War. As the contexts that is no economic team working behind the arise from international, regional and scenes." global levels have changed in recent decades, a process that began before the (Fundación Wikimedia, Inc, 2015) turn of the century, it should be inferred The analysis aims to show the growing that foreign policy has also had to adapt, functional diversification and adjust or change, especially if it turns out specialization of tasks leaders, as well as to be a small country on the periphery. the influence of internationalization The regional distance should be processes. Distinguishes various complemented by the political system, to components in the economic elite; ensure their subsistence, through agricultural elite, in turn, is defined institutions capable of ensuring internal around the concentration and ownership peace. Since then, from the late of land and historical trade organizations nineteenth to mid-twentieth century such as the Association and Rural there was a match between the position- Federation. The agricultural-livestock country and the political system in terms and commercial classes are of foreign policy and priorities for the distinguished by family-personal country's integration into the continuity. It also identifies the industrial international system of that time. elite, but in a weaker position due to the Uruguay Maritime Europe articulated decline of import substitution both commercially and culturally industrialization and increasing foreign constituted the axis of Uruguayan ownership, and that I cannot impose an foreign policy since the late nineteenth industrialist ideology. It also notes the century until the Korean War. presence of the elite of the media, but in a dependent relationship with politics (Serna, scielo, 2013, p. 7) and the rest of the economic elites, banking, agricultural and industrial.

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These dominance covers of wealth, have the Globalization on Uruguay as he is concentration of control, the most been recognize since his labor with this consistent and secure. The dominant country since it was on his first year of economic elites have the unifying forces work as a President it was something of education, lifestyle and share common extraordinary as he put himself on a ideologies. The high economic class has simple citizen working hard as other internal mechanisms of socialization, of employees are doing every day, as we selected sites and participation of notice it´s impressive how can he change lifestyles and common consumption the image on the World by simply (housing areas, resort places, clubs and making his cultural and social activities centers, travel, tastes purchasing goods). be reflected with having for an example They note that holders of economic a Volkswagen Car also named the power seek to strengthen their cohesion “Escarabajo” from the 1987, that as well showing forms of social snobbery he drives, that´s not a common act for associated with social prestige of private any president, is showing another side of wealth. been president and represent a country on every step possible as the major (Serna, scielo, 2013, p. 4) working on the people side. Mujica also Social gives the 90% of his salary for charity, which is something another president on Considered flagship government of other countries don’t think about; he is a Mujica. It was released by the gentleman and work hard on the matter government on June 15, 2010, as a of Globalization on his country. He was continuation of the Emergency Plan of able on the last year he was as a President its predecessor, Tabare Vazquez. It is to legalize the Cannabis or know as supported by solidarity contributions Weed, as he states the “Cartels” been from private companies, with 90% of fighting, killing, and trying to have a monthly salary of Mujica and the sale of benefit making them “drug trafficking”, some of the state properties that have which is providing the sense of pain and fallen into disuse. The aim of the plan is murder on the population such as to give needy families a home to live. Mexico, as he said. The reason for him to The president himself, not a plan, but a have the Cannabis legalized is show the plan of ethics and a vision of future defined it. The plan began in mid- 2010. The first house was built in the informal settlement May Day. The houses are built with specialists, but also with the interested parties, with its neighbors and volunteers.

(Fundación Wikimedia, Inc, 2015)

The ex-President Jose Mujica, is one of the greatest representative of

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World this is a natural resource that is essence and by this way begin to think as able to be manage and distribute in a a species and not as individuals, in some good order of things for the people who way it’s a way to accomplish the subject fights for it every day. on life to follow that conqueror dream of that human kind genetic carry on. The (Mujica, 2015) dilemma is that we are just fixing On the following list we show the consequences and don’t think about the International organization participation causes in the bottom of the line. Uruguay with in the several countries and had to show their potential side in the associations that have been a part of the Globalization and thanks to Jose Mujica process of the globalization for Uruguay: and his controversy phrase at the ONU "are wasted two billion dollars a minute CAN (associate), CD, CELAC, FAO, G- in military spending worldwide. To say 77, IADB, IAEA, IBRD, ICAO, ICC there`s no money it`s a lie and be without (national committees), ICCt, ICRM, human values" (espejo, 2013). Cause a IDA, IFAD, IFC, IFRCS, IHO, ILO, pretty popular impression in the media IMF, IMO, Interpol, IOC, IOM, IPU, and countries who have imposed as a ISO, ITSO, ITU, LAES, LAIA, born and capable of displaying a bright Mercosur, MIGA, MINUSTAH, side leader, without much profit within MONUSCO, NAM (observer), OAS, their needs, because as clarifies, OIF (observer), OPANAL, OPCW, globalization as part of a military market Pacific Alliance (observer), PCA, SICA and as a matter of fact it carries the war (observer), UN, UNASUR, UNCTAD, for years, more countries involved, more UNESCO, UNIDO, Union Latina, massacres and devastation of land where UNMOGIP, UNOCI, UNWTO, UPU, they could build a future for WCO, WFTU (NGOs), WHO, WIPO, communities and encourage a level WMO, WTO. playing field is established, and with hope and strength of will in a (Factbook, 2015) government wishing to establish Table 2. Historic Globalization conditions under which the community (Institute, 2012) can make a profit after commercialize or attain knowledge by globalization, GLOBALIZATION ANALISYS resulting in a comprehensive value chain in which it takes every bit of what is learn Learning how does the movement of more mass methods, providing Mujica in regards of Globalization that opportunities for a new era of had established as a significant cultural Globalization. change within the planet, not just as part of the Uruguayan country but as a single In a big manner the way for the union that perform a "momentous" Uruguayan globalization to be effective change in his own words, as well as can’t be only by using the Politic or the homelessness and society, instead of Power of the government to show their managing globalization, this governs us. effort for the country by showing the If the power of humanity focuses on the kind and cooperation side of them as

176

Jose Mujica said, we don’t say is bad for taken his country on his hands as a matter of the globalization as actually what we think is that after all the information been evaluated with in the extended search of the records of what’s Globalization, takes us to a place where the Industry and the way for the Uruguayan people to look for the income isn’t that much recognize as is been hiding behind the comments and Political situations been through. It’s a matter of know how does the administrative framework within which Globalization is capable to take place in individuals firms and governments this country to innovate his options and interact to generate wealth. The show every single one of them as a institutional environment has become all the more apparent during the recent potential opportunity of getting involved economic and financial crisis and is into a new economy, new roads, new especially crucial for further solidifying subjects to be aware as a possible part of the fragile recovery, given the increasing their extension available and where we role played by the state at the find out are a lot of them by the international level and for the economies diversification on the industry labor and of many countries. as well the way the people on Uruguay Second pillar: Infrastructure: can be compromised for a subject on his life style and how this can be a part of the Extensive and efficient infrastructure is attractiveness on this country. critical for ensuring the effective functioning of the economy, as it is an important factor in determining the location of economic activity and the kinds of activities or sectors that can Table 3. Competitiveness (World develop within a country. Well- Economic Forum, 2013, p. 6) developed infrastructure reduces the 12 pillars of competitiveness effect of distance between regions, integrating the national market and First pillar: Institutions: connecting it at low cost to markets in The institutional environment is other countries and regions. In addition, determined by its legal and the quality and extensiveness of

177 infrastructure networks significantly impact economic growth and reduce income inequalities and poverty in a variety of ways.

Third pillar: Macroeconomic environment:

The stability of the macroeconomic environment is important for business and, therefore, is significant for the overall competitiveness of a country. This Pillar evaluates the stability of the macroeconomic environment.

Fourth pillar: Health and primary education a healthy workforce is vital to a country’s competitiveness and productivity. Workers who are ill cannot function to their potential and will be less productive. Poor health leads to significant costs to business, as sick workers are often absent or operate at lower levels of efficiency. Investment in the provision of health are well positioned to produce the right services is thus critical for clear mix of products and services given their economic, as well as moral, particular supply-and-demand considerations. conditions, as well as to ensure that these goods can be most effectively traded in Table 4. 12 Pillars Diagram (World the economy. Healthy market Economic Forum, 2013) competition, both domestic and foreign, is important in driving market efficiency, Fifth pillar: Higher education and and thus business productivity, by training Quality is crucial for economies ensuring that the most efficient firms, that want to move up the value chain producing goods demanded by the beyond simple production processes and market, are those that thrive. products. In particular, today’s globalizing economy requires countries Seventh pillar: Labor market efficiency: to nurture pools of well-educated workers who are able to perform The efficiency and flexibility of the labor complex tasks and adapt rapidly to their market are critical for ensuring that changing environment and the evolving workers are allocated to their most needs of the production system. effective use in the economy and provided with incentives to give their Sixth pillar: Goods market efficiency best effort in their jobs. Labor markets Countries with efficient goods markets must therefore have the flexibility to

178 shift workers from one economic activity general sense that trade has a positive to another rapidly and at low cost, and to effect on growth, especially for countries allow for wage fluctuations without with small domestic markets. much social disruption. Eleventh pillar: Business sophistication Eighth pillar: Financial market there is no doubt that sophisticated development: The financial and business practices are conducive to economic crisis has highlighted the higher efficiency in the production of central role of a sound and well- goods and services. Business functioning financial sector for sophistication concerns two elements economic activities. An efficient that are intricately linked: the quality of financial sector allocates the resources a country’s overall business networks saved by a nation’s citizens, as well as and the quality of individual firms’ those entering the economy from abroad, operations and strategies. Advanced to their most productive uses. operations and strategies spill over into the economy and lead to sophisticate and Ninth pillar: Technological readiness in modern business processes across the today’s globalized world, technology is country’s business sectors. increasingly essential for firms to compete and prosper. The technological Twelfth pillar: readiness pillar measures the agility with which an economy adopts existing The final pillar of competitiveness technologies to enhance the productivity focuses on technological innovation. of its industries, with specific emphasis Although substantial gains can be on its capacity to fully leverage obtained by improving institutions, information and communication building infrastructure, reducing technologies in daily activities and macroeconomic instability, or improving production processes for increased human capital, all these factors efficiency and enabling innovation for eventually run into diminishing returns. competitiveness. The same is true for the efficiency of the labor, financial, and goods markets. Tenth pillar: Market sizes the size of the market affects productivity since large (World Economic Forum, 2013, p. 6) markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have been constrained by national borders. In the era of globalization, international markets have become a substitute for COMPETITIVENESS ANALYSIS domestic markets, especially for small countries. Vast empirical evidence 1. Institutions: According to statistics from the first indicator of the basic shows that trade openness is positively requirements we concluded that the best associated with growth. Even if some results were associated with low recent research casts doubts on the economic cost associated with a ranking robustness of this relationship, there is a (19), on the other hand, terrorism and

179 confidence in the political system in the quality of education (92), it is very ranking (25), as well as the transparency important to develop activities in which of public policies is to a position (26). projects stand out for education and health are parts of future generations. Furthermore improvement plans for subscripts and property rights (41) and The Higher Education and Training intellectual property protection are pillar part of the group of indicators of developed. (49) efficiency enhancers, the drop that has taken the country in the ranking, The hardest thing for Uruguay as a especially in relation to the factors country was to develop action plans to referred to Quality Education System develop services that improve the quality (position 120) and highlights quality of of the performance of business (107) Mathematics and Science Education (124). 2. Infrastructure 6. Goods Market Efficiency Good results were obtained in terms of the number of cell phone users (21) and While it is not the pillar on which the best quality of energy supply. (37) position- was obtained which had better performance compared to 2011, mainly But they must take initiative to improve due to better positioning of the number the quality of airport infrastructure. (63) of steps and time required starting a As for the rail infrastructure was a business (29). subscript which for Uruguay was quite marked, the poor quality of public 7. Efficiency of the labor market services, this will have to collect data A key pillar as is the efficiency in the from previous years and to a quality labor market. system in which there is a restructuring plan to be a better quality of life. (115) The country is located in the worst ranking positions (position 139). 3. Macroeconomic stability This pillar is based on two variables that It is the pillar on which Uruguay is worse Uruguay ranks last in total countries, positioned within the basic requirements, which are: Flexibility in Determining mainly due to the deterioration in the Wages and Salaries Productivity position of the national savings rate (91). Associates. In both cases it is located at position 148. Anyway, it should be noted that although in the last year a relatively unfavorable 8. Financial market sophistication developments in this pillar is perceived, it is in very higher than those recorded In terms of financial market between 2007 and 2010 positions. As sophistication analyzed it has results of this pillar Uruguay is in a deteriorated significantly in funding position, which will have to face to through the local capital market with a improve its public debt (101) and post (134) we conclude that from 2007 to inflation. (109) 2012 has not improved. On the other hand the attention and strength in banks 4 Health and primary education obtained favorable results in 2012. (44) In this sub index we can expect in terms 9. Technological Availability of health and primary education, the position worsened, this is due to the low

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One of the best things that have Uruguay Finally, obtaining results of inefficiency is the technology that has led to a number in the research collaboration between of people to have social and telephone universities and industry (61). networks. (Departamento de Estudios Económicos, The most important thing is that the 2013) technology transfer has a very good location (13); on the other hand these indices have helped to generate economic value to the inputs of the country, since there are so many internet users as well as phone users. (43,45)

10. Market size

As this category is not much to say, we observed a low rate of size of both domestic and foreign markets taking place both a bad overall. (84) (97) 11. Business sophistication This sub-index, which comprises the distributional behavior for the country, has concluded that the sophistication of business in Uruguay also worsened its position. An unfavorable behavior stands in the control of international distribution (83).

The willingness to delegate authority

(96). Observe due to the intervening years it has been the worst result in what FINAL ANALISYS refers to the number of local suppliers, characteristic of a small economy like How can the Globalization be manage ours. (123) while the competitiveness is out of control, after verifying how does the 12. Innovation Uruguayan Country is able to contribute to different types of situations that affect The last and most important factor which them all the time and sometimes it can’t works in innovative new products and be control under the margin of the lead the country to make higher profits. government or the high economic In contrast to the statistics mentioned population. above for the 3 indices we find that the The point of knowing what can we do to third indicator was favorable for the improve both topics, well is a chance to country, which concludes that Uruguay have the country rise over a few that has not made decisions seeking to doesn’t take that advantage, as the improve the situation, acquire new Uruguay have the ways to do so. As this goods, open trade, developing business is now the position on getting the best of vision. their current goods and services.

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We identify that by using the money that trade benefits them and it’s Globalization on the power in the real for everyone that’s competitive. Government hands and how Uruguay can be seen for the rest of the World, that By saying this is just the way the better isn’t small, is getting bigger, getting into country with all motivation on the good a place to stand as a union and continue way of making relations of be associated with all the current competitiveness, this creates a sense on international organizations that can help the people that marks them and Uruguay them and making it more strong taking knows that all the good effort and good care of their difficulties, looking forward way of manage the international on the structure on their Airports or even relationship will show his country as the further than that is showing a better side point of where every other country is on their national savings rate, since they available to look instead of what the have a good behavior reputation and regular common sense does that takes eventually will help them on their them to Powerful countries like United economy management. States or European countries, as they know how does this countries are Even making trades with the must available to make trades, but it’s always extended and better trading countries a business where negotiate without next to them, they must look forward as creating a relationship could Couse Jose Mujica said, and as we think the problems by making trades and not “Cannabis” is dangerous for some sharing any knows of what could be countries that doesn’t look the way this better in a matter of Globalize their both President did to prevent more countries. devastation on his lands and his population, shows a good chance to have The way we look Uruguay is just a good new areas and countries available to have and simple country that’s honest and trades and learn how it can be manage on deserves a well treat for their own hard other countries and as well making them work. the sense of don’t cause anymore pain to Recommendations the population, no more wars over the world for getting benefits from natural * Science, Technology and innovation resources, be open mind and take new one of the most important thing to ideas with all the acknowledge that resolve the capacity to innovate a Globalization can show from Uruguay determinate good business competition and vice versa be able to learn how does to enter August 2013 40 sophisticated the other countries are able to keep the markets, strengthening the country's goods and needs the way they do in order capabilities in science, technology and to have this combined with Uruguayan innovation is key to improve conscience. competitiveness. We know the change can be difficult for * The use of knowledge and innovation any country but in this particular one, can in companies as a tool for competitive be adapt and innovate the development derives from the competitiveness even if Jose Mujica interaction between different actors that states it must work as a union with in the make up a National Innovation System. countries, it will no be always like that as a lot of countries look less for their * Productive and equitable markets. This population and more into the economy requires sound institutions that promote possibilities, everything is manage by the opportunity and Companies in a market economy to function properly.

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* As mentioned, a key aspect to consider We said there are companies that take are the markets that companies can more on his hands that even the country access, as the same point obstacles, roads does; ¿What are the competitive and incentives to pursue innovation companies that make my country processes. more globalized? * Strengthening centers that facilitate the As well if we look the technology as a articulation is considered important part of been Globalized, Uruguay isn’t between technological supply and too strong to innovate or getting into this demand. Such centers should support economic market as could be done by companies in troubleshooting, support in China or United States. Uruguay could finding solutions and access to financing be one of the greatest social and cultural instruments. politic on earth however this can’t be compared and show a Bigger Globalize * To achieve higher levels of economic side or for us it could be an easier way to development, to design a model of show the country can be more Globalize modern labor relations based on trust and and as well keep their own values. cooperation, as well as the balance between the parties, it is a priority. Let’s ask us; ¿Is the technology field Furthermore, any institutional an important part of my country to be framework, labor relations must include Globalized and Competitive? the protection of the freedom to work, freedom of enterprise, the power of By resolving this question we can find management of the company by the out if in the case of Uruguay could be a employer and the right to property. way to have this as an opportunity to have less poverty by generating more labor in the task to get the country more technology and innovate the current one Conclusions that it could be less however could be even bigger and better if there is how to The investigation had cover to terms on improve this on the people. Uruguay that are the fact of been Globalized and Competitive, therefore Uruguayan people listen to his with all information been evaluated we Government as per their ex-president can say Uruguay isn’t a country that Jose Mujica had added to them the way doesn’t have different ways to rise up to trust in their decisions and follow his within the both terms as they are rarely movements and we think is a point to making changes over their policies as show if a country can make by this way, they are rising them up but isn’t been even if takes more than expected will be reflected as it should because they hide in results that we think make them a over the countries that make big changes, country where everybody wish to be in they are kind and honest while making and invest on it. trades, exchanges, import, export, foreign investment and the only power As well making the Companies who are that could show they are still there is his been evaluated as small over Uruguay, President who didn’t continue rising his be a part of the innovation of the voice over the countries that doesn’t technology and infrastructure, getting respect what is the human kind as a over that “small” term and show the matter of recover his own personal man world they are still making it for their to man business as we learned from country, getting more involve in trades Mujica and his non common way to be a with more countries, keeping what they President for his people. already have and as well share it with

183 countries that agree with different ways Nacional de Comercio y to make business, be a part of their own Servicios del Uruguay. values and keep them like that. This Retrieved 2013, from Camara document is a prove of what is one Nacional de Comercio y country available to do and change over worldwide, so ¿Can a country be Servicios del Uruguay: Globalize an Competitive by adapting http://www.cncs.com.uy/wp- to other countries different cultural content/uploads/Informe-201- and social work? %C3%8Dndice-de- Competitividad-Global-2013- Finally at the end of our investigation, regarding the Uruguayan topics for been 2014.pdf involve on the Globalization and part of Espejo, J. (2013, SEPTIEMBRE 25). the Competitiveness that covers our world, the one more important to work José Mujica y su filosófico on by this country is the competitiveness discurso en la ONU sobre la as all the information find out over the globalización. Retrieved from records and historic information, there José Mujica y su filosófico are pros and contras that may be improve discurso en la ONU sobre la and show another side of his country, this globalización: report makes the must necessary points https://www.youtube.com/watch to work on by making it a total innovation. Our final question goes to ?v=LW-uFVE1POE the way this points can be manage with in making changes on their own Factbook, T. W. (2015, may 18). economic profile and avoid them; ¿Is Central Intelligence Agency: better making a change to improve the South America-Uruguay. Globalization or change Globalization Retrieved may 2015, from to be more competitive? Central Intelligence Agency: Globalization and Competitiveness https://www.cia.gov/library/publ comes from the internal part on the ications/the-world- country is getting more over the factbook/geos/uy.html systematic and same regular actions taken for all countries, so new ways for Fundación Wikimedia, Inc. (2015, making them bigger and better will show MAYO 31). Wikipedia with the time. Enciclopedia libre. Retrieved from Wikipedia Enciclopedia References libre: businessdictionary. (S.F). globalization. http://es.wikipedia.org/wiki/Jos Retrieved May 2015, from %C3%A9_Mujica business dictionary: Horta, S. P. (2011, Octubre 8). http://www.businessdictionary.c Universidad Catolica de om/definition/globalization.html Uruguay. Retrieved 2014, from Universidad Catolica de Uruguay: Departamento de Estudios Económicos. http://www.ucu.edu.uy/sites/def (2013, Septiembre 17). Camara ault/files/facultad/fce/i_competit

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Mujica, J. (2015, ENERO 14). Uruguay: José Mujica, el legado de un presidente sencillo. (L. Prensa, Interviewer)

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URUGUAY, A. P. (2013, August). Resumen ejecutivo. Retrieved May 2015, from ciu: http://www.ciu.com.uy/downloa ds/2013/documento_competitivi dad.pdf

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8 00 N, 66 00 W VENEZUELA • Area: - Total: 912,050 sq km Country - Land: 882,050 sq km - Water: 30,000 sq km - Country comparison to the world: 33 • Area comparison map: - Land boundaries: Total: 5,267 km - Border countries (3): Brazil 2,137 km, Colombia 2,341 km, Guyana 789 km - Coastline: 2,800 km

Population:

28,868,486 (July 2014 est.) Background Country comparison to the The Bolivarian Republic of Venezuela is world: 46 a country on the northern coast of South Government America bordering the Caribbean Sea and the North Atlantic Ocean, Between • Government type: federal Colombia and Guyana. The language republic spoken in Venezuela is Spanish; • Independence: 5 July 1811 although English is widely spoken in the (from Spain) tourism industry and the business environment. • Legal system: civil law system based on the Spanish Geography civil code • Location: Economy: Northern South America, bordering the Caribbean Sea and the North Atlantic • GDP (purchasing power Ocean, between Colombia and Guyana parity): • Geographic coordinates:

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- $545.7 billion (2014 est.) Country comparison to the world: 40 - $562.6 billion (2013 est.) • Labor force - by occupation: - $555.1 billion (2012 est.) - Agriculture: 7.3% Note: data are in 2014 US dollars - Industry: 21.8% Country comparison to the world: 35 - Services: 70.9% (4th quarter, 2011 est.) • GDP (official exchange rate): • Unemployment rate:

$209.2 billion (2014 est.) - 7.8% (2014 est.)

• GDP - real growth rate: - 7.5% (2013 est.)

- -3% (2014 est.) Country comparison to the world: 86 - 1.3% (2013 est.) • Population below poverty - 5.6% (2012 est.) line: Country comparison to the 31.6% (2011 est.) world: 213 • Taxes and other revenues: • GDP - per capita (PPP): 68.2% of GDP (2014 est.) - $17,900 (2014 est.) Country comparison to the world: 3 - $18,800 (2013 est.) • Inflation rate (consumer - $18,800 (2012 est.) prices): Note: data are in 2013 US dollars - 69.8% (2014 est.) Country comparison to the - 40.6% (2013 est.) world: 88 • Exports: • Labor force: 14.34 million (2014 est.) - $83.2 billion (2014 est.)

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- $88.76 billion (2013 est.) The Venezuelan currency is the "Bolivar". The exchange rate is fixed by Country comparison to the the government who controls currency world: 46 exchange. The only institution • Exports - commodities: authorized to perform currency exchange activities is the Venezuelan Petroleum and petroleum products, Central Bank through the authorized bauxite and aluminum, minerals, Banks and other financial institutions. chemicals, agricultural products The Law on Foreign Exchange Crimes • Exports - partners: prohibits and sanctions currency exchange activities outside the US 34.3%, India 15.9%, China authorized financial system. (Betancourt 14%, Netherlands Antilles 8.4%, Romulo, 2007) Singapore 6%, Cuba 4.9% (2013) It is characterized with extremely high Imports: biodiversity and in many ways was a leader considered among Latin - $50.34 billion (2014 est.) American nations. Their economic is - $51.93 billion (2013 est.) composing by agriculture, industry and services. Blessed with an abundance of Country comparison to the Natural Resources, the main products for world: 55 exportation are commodities like • Imports - commodities: petroleum, bauxite and aluminum, steel, chemicals, agricultural products, basic Agricultural products, livestock, manufactures and the industrials They raw materials, machinery and handle products than are construction equipment, transport equipment, materials, iron ore mining, food construction, materials, medical processing, textiles , steel, aluminum, equipment, petroleum products, motor vehicle assemble. (CIA, 2014). pharmaceuticals, chemicals, iron and steel products However, despite the intention of taking measures to encourage the development

of the country through its natural resources and export of these products, Venezuela is currently deeply immersed

188 into a dark and dense layer of corruption, President Maduro’s government has it has been submerged in a very deep faced ongoing protests and civil mismanagement and is submerged in a unrest since the beginning of 2014. very deep macroeconomic crisis, with There are growing signs that Maduro’s high levels of inflation, public debt, support in the region is dwindling, as deficit and combined with a weak neighboring countries have expressed government which does not allow concern about his government’s distributing all resources as should be, response to the crisis, including the Venezuela scared 51.63 in globalization aggressive treatment of protesters. (The index, which has placed it in the 104th New York Times, 2015) position. In economic globalization, Given the changes that had Venezuela Venezuela is placed in 127th position due to the oil crisis and the multiple with a score of 43.38. Regarding social variations of the economy the to globalization, it is located in 100th relationship of the globalization and spot with 49.01. in terms of political competitiveness in the country are globalization, Venezuela has 66.94 analyzed in order to identify the points and is the 95th country in the list strengths and weaknesses facing the respect to other countries in the world. country and identify possible tools that (The global economy, 2014) allow to increase its economic and political development. Venezuela imports 40% of its needs, making it an attractive market for foreign This new competition has accentuated companies. Venezuela is one of the the interdependence of the different world’s largest producers and exporters levels of globalization, with the of crude oil. It has the largest reserves of globalization process rapidly and crude oil in the world and one of the intensely spreading, the firm approaches largest natural gas reserves in the in search of competitiveness within an Americas. It is a founder member of the industry become more and more Organization of Petroleum Exporting challenging. Countries. The Venezuelan tax system is split into national and local taxes. Tax However, it is a high priority to identify legislation differs for each tax. (Trade what your evolution been economic and Investment, 2015) social policy level, as well as identify the location within twelve pillars of

189 competitiveness. Since this has this its a member of anti-globalization relationship based on the level of movement, as people know they are anti- development and productivity can have a western, and this comes because they are country. oppose to large multi-national corporations having unregulated Finally, We analyze various factors political power and also the deregulation affecting Venezuela to be competitive, of financial Market. (sites.google, 2015) the perspective one way have towards the future of this country and the events that led to that currently is suffering In addition, the government accuses this economic and political crisis, will corporations of seeking maximize their therefore be important to note what is profit, sabotaging work safety, labor your current position against political, hiring standards, environmental economic, social and cultural issues. conservation principles. Venezuela is moving backward in culture, environment, technological, this is

affecting the country.

GLOBALIZATION

As many countries globalization is a tool Globalization in Venezuela is quite use to develop their economy, difficult to explain, due to their productivity and financial growth. Even presidents Hugo Chavez and Nicolas though Venezuela is trading a lot of Maduro are against western ideas and products, is not making an advance in the people can see it reflected in their economic and financial growth. economy. Event ought globalization is a change that happens in all the countries, Venezuela actually is going backwards. ECONOMIC GLOBALIZATION

The government of Venezuela thinks that globalization is a western idea, and

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essential for international trade and debt payments has been in their lowest.

After Hugo Chaves dead the country has going on their lowest in all aspects, also entering in a deep economic crisis, marked by recession, clipping inflation and shortages of gods like milk and Char1. Venezuela Economic shampoo. Likewise, corruption has been Globalization. (Globalization.kof) affected economy due to stolen through import frauds, government agencies and

government-run companies had been As it was mention before Venezuela is fraudulent. (Nazemroaya, 2015) “remain highly dependent on oil Other aspect that is making Venezuela revenues, which account for roughly don’t globalized is that export companies 96% of export earnings”. (CIA,2015) don’t want to trade in Venezuela One of the issues that the economy of currency but in dollars, this affect all this country has or not to be able to imports most when Venezuela needs develop is that the governments want to basic goods, food, and raw materials. control the economy by nationalizing This affecting businesses and people to firms in the agribusiness, financial, get basic supplies. construction, oil and steel sector. In addition, for companies to be able to (CIA,2015) import to Venezuela they will have to During the last years what the economy obtain a permission to import the product of the country is focus in an economic and then apply nation’s currency control, system that benefits the few and this make inflation goes higher. (Ixkaliu, powerful to ordinary people. Besides the 2015) economy has complex currency system Economic Globalization will not happen has led to exorbitant schemes by soon, first because the country doesn’t importers. Right now, what is affecting even have products besides oil to gain the most is the drop in the price of oil, more economical power, second the being Venezuela major export. This government is interfering in all indicated that the currency reserves,

191 economical process and being ships with countries that can provide corruption. help in this moment of crisis. Even though is a democratic country, has

struggle for the corruption and a POLITICAL GLOBALIZATION government can look for the benefits of the people.

Venezuela has dysfunctional political systems, they has constantly change their constitution, Venezuela’s president has control of the judicial system and the Central Bank. Venezuela politics is incompetent and has a lot of corruption

for them to be able to control the country. These politics issues that Venezuela is Char2. Venezuela Economic living inside, also is being reflecting Globalization. (Globalization.kof) outside, first because Venezuela doesn’t have a lot of alliances with other countries, they are getting far from Venezuela is a federal republic, for the countries that can help them growing pass 20 years has a lot of constitution, with their economy. Their alliances are Globalization in the political has not less and less because they don’t want to occurred, first because Venezuela be a western country, they only want to political climate has become have alliances with countries that are increasingly polarized, right now “against” The United States. Venezuela is shown as an anti- (Nazemroaya, 2015) government. Anyone that is opposing to the “Partido Revolucionario” will be a political prisoner. (Global Exhange,

2015)

Also, Venezuela has lot issues with other countries and a lot of enemies, in SOCIAL GLOBALIZATION addition doesn’t have good relations

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Venezuela is growing in corruption and government blocks communication.

In addition, Venezuela´s globalization was never rapid or intense, actually has experience too little of it, Venezuela has purported to alleviate social ills while at the same time attacking capitalist In the administration of Chavez the globalization and existing democratic poverty was reduce nearly 50%, increase institutions. school enrolment, also the government At the present time, Venezuela´s has programs for education, nutrition, economic, political and financial is and healthcare even though this was practically in crisis, right now the people helping the society. This increase in the is worry about a weakening of sections has helped the country but one democratic institutions, political of the negative that ahs is that it depends polarization, a politicized military, in oil. rampant violent crime, overdependence Nowadays, education and health care on the petroleum industry with its price spending may increase economic growth fluctuations, foreign exchange controls and reduce income inequality. Right for private-sector investment, high Now, social has going backward due to inflation, an a decline in the quality of corruption and economical financial human right (Nazemroaya, 2015). problems.

For the last 20 years globalization has This document will show how not happening for many reasons, like it globalization has been affected the three was mentioned before the government main areas in the country, political, was against globalization, so this defines economic and social behaviors. Venezuela as a country that has Venezuela is known for the production insufficient integration with the rest of and exportation of oil and the the world, there is social deterioration, international flows associated with it economy reform are not being suitable to have always constituted the most be competitive, beside this problems powerful link between Venezuela and the rest of the world.

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As shown in the report so far Venezuela is in a transition between the Factor-

Driven Phase 1 and Phase 2 Efficiency Driven Keep in mind that each pillar affects every country differently due to

the stage of development you are to better understand the location of Venezuela, clarify each of the existing

stages; Factor-Driven stage is driven by the factors of production economies they compete based on their factor COMPETITIVINESS endowments, primarily unskilled labor and natural resources. The Efficiency stage - Stage of Development Driven Analyzing the situation in Venezuela Economies Efficiency Driven by the compared to emerging economies found country begins to develop more efficient that Venezuela is very bad positioning, production processes with higher finding the lack of progress in recent quality. The Innovation-Driven years. Economies Stage Driven by Innovation stage is necessary for their companies' products are unique and very innovative. Venezuela is in the transition between Factor-Driven and Efficiency - Driven Stage of Development, however needs major changes to achieve such progress. (The Global Competitiveness Report 2014-2015).

According to the World Economic Forum - WEF, Venezuela occupies the 131th place in the competitive compared

194 to the rest of the world, this means that STAGE OF DEVELOPMENT their situation is poor and has VENEZUELA deteriorated since 2013 is ranked at 126th this It is not a good position either. (The Global Competitiveness Report 2014-2015). This classification allows us to see how Venezuela was not successful and did not use its resources efficiently and has provided its inhabitants an improvement in the level of prosperity and quality of life has been unproductive.

Venezuela was also ranked as the second least competitive economy in Latin America and the Caribbean Of the twelve pillars there, the Market size and Health and primary education The low level of competitiveness that has are strong and valuable as they are in Venezuela is undoubtedly the result of 40th and 74th place respectively. In inflation is very high, a lot of corruption, education there is a high percentage of poor government decisions has been students enrolled in higher education and highly inefficient public debt, deficit and a good technological fit with almost half misallocation of resources. of the population with internet access. World Economic Forum reports that It is important to Venezuela as an their situation is hampering the positive emerging country, that is, look for factors, such as: the high levels of changes by the structural reforms needed population who are enrolled in the to enhance its global competitiveness. education sector has the 16th place and That is why Venezuela should work on the use of ICT information technology in strengthening the four pillars as the 60th place and Most half the institutions, infrastructure, population uses the Internet. (The Global macroeconomic environment and health Competitiveness Report, 2015). and primary education, allowing more efficient allocation of resources, and

195 facilitate the transition to more At this point depending on where each of productive activities. the pillars of Venezuela, the country is not prepared to compete internationally. Venezuela has the worst institutional quality in 144th place because there is very little trust of the business community in the political or judicial independence and have low macroeconomic stability in the 139th place by weak macroeconomic management resulting in higher inflation rates 20% and a budget deficit above 5% of GDP this is due to the instability of its macroeconomic structure precisely the weak macroeconomic management

(place 126th) resulting in inflation rates over 20% and a budget deficit above 5% of GDP this is due to poor management of public debt and mismanagement of economic and financial resources, ANALYSISDeveloping countries are domestic policies also affect its economy facing major changes arising from both because it reduces the chances of internal and external conditions, such as attracting foreign direct investment. tighter competition, technological Additionally place in innovation is low progress, economic changes and capacity when this is so important in a globalization of the economy, among globalized world. others. So that competitiveness has become a requirement for survival and a The main factors that hinder the prerequisite for success. economy of Venezuela are restrictive labor regulations, inflation, political Improve the environment of instability, inefficient government globalization and competitiveness, is a bureaucracy, corruption, insecurity, low task that must be actively involved work ethic of the workforce. various sectors of society, such as public administration, the private sector and universities, each in its area of

196 responsibility, as each one of them has a used to living with the imbalances of the fundamental task in achieving this goal product of decades of inefficient governments macroeconomics alone (the Today competitiveness becomes a government) are limited to solve the dynamic concept that is transformed problems superficially and not the real over time, as some factors that played an causes of the problem. important role in the past, today are no longer in force, while others arise as a result of globalization and the business Following this Venezuela is losing dynamics. No doubt the changes confidence to generate necessary generated in the world economy require investments to project the country to the the State and therefore institutions and path that leads to economic success and organizations to take action to enable therefore the welfare of the population, them to acquire advantages over their although in the last 10 years due to the competitors and achieve a better position economic boost that gave oil the in global markets. Venezuelan economy, the government's Latin America "is affected by operation sound economic policies, evolved of the weak institutions, poor enough, Venezuela is emerging as a infrastructure and inefficient allocation promising and hopeful country of production factors," said in a economically in the region and the statement the WEF (World Economic world, despite the current crisis. Forum) that is the product of an Index of Competitiveness for Growth is insufficient level of competition and a based on three central ideas: gap in education and training, technology and innovation, which • This is a measurement based on three prevents many companies move towards factors that contribute to creating the higher value activities, everything that conditions for sustained growth: the represents a scenario of globalization. macroeconomic environment, the quality of public institutions and Developing countries show enormous technology. These factors are the pillars difficulty integrating into the world on which rests the process of economic globalization and Venezuela does not growth. escape this. Venezuela does not have a strong competitive economy and get

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• The technological factor is regarded as has a high incidence of the flight of talent one of the momentous factors for and acts of street and perhaps if these growth, especially in the long term as it issues are not addressed can undermine is considered closely related to the the situation in Venezuela and make the generation of GDP. state more viable.

• The index distinguishes between In the Global Competitiveness Index countries that develop the theme of 2013-14, prepared by the World technology and those who do not. Economic Forum, Venezuela descends positions in recent years, evidence In the case of Venezuela this is at the presented in several variables, such as 94th place with regard to the institutions, infrastructure, macro macroeconomic environment, in terms economy, health, primary and higher of public institutions is in the 89th and in education, efficiency market the technology index occupies the 58th development of financial and labor position in overall terms for the index markets, business sophistication and Competitiveness growth (CGI) is located innovation, among others. in Section 82 of 102 countries. (World Economic Forum). The Venezuelan Venezuela in the last decade faced a economy as a whole, is not being very number of both political and economic welcomed by its international partners, problems (Banking Crisis, Social which becomes a momentous event Strikes, etc.); One of the requirements finally as are signals that are sent to you are looking Globalization is the international markets to attract balance and financial stability, but this is investment. where the main problem of the Venezuelan nation to maintain a balance Venezuela's current position is leveraged in the "globalized world", as is the by favorable and unfavorable factors. weakness in its banking, ie The financial The country does not have demographic crisis facing because when entering the pressures and still get significant income global economy and do not have an from a pension, in this case oil. But effective system of financial regulation contrary presents elements of concern and supervision, would aggravate the such as utilities and violence between groups that live in society; as a result it

198 situation and drag other financial The economic interdependence between markets. nations resulting from globalization creates the need for the Venezuelan State In scope of globalization and assumes an economic and productive competitiveness Venezuela perhaps model that is based on the different maintains a position concerning the structures through further supported by statement above is not the best today different institutions and organizations despite its situation during recent times, to enable them to face the joint yet the State promises due to its activity environment and get some own higher value such as the oil industry to a competitive advantages of the global turn through state economic policies and context. This situation leads to say that aimed at economic balance, taking into for the sectors are competitive and are account strengthening their located in an advantageous position in a competitiveness factors. market that is becoming increasingly The current economic model, in which globalized and where competition is very trade liberalization and the flow of difficult, it requires readjust to market exchange of goods and services is conditions through a profound structural increasingly internationalized, requires change. the Venezuelan government and the 1. What happened in Venezuela in the sectors where they lie face new last 20 years to go back on challenges and adapt to change that globalization and competitiveness? situation involves identifying some strategies that enable competitive sectors Clearly, over the last decade Venezuela obtain an advantageous position in the is facing a crisis in which adopted a global world network. Based on this political system with high government analysis, the goal is to achieve a intervention in all areas of society. The competitive position in the global market institutional order became highly and for that we must establish new discretionary to implement populist and patterns of action, such as behavior clientelist policies, exerting an almost integration, development of core unique power directed to the use of force. competencies, cooperation with outside The political, economic and civil agencies, expertise, solidarity and social freedoms have been increasingly contribution. restricted, since the authoritarian regime has changed and settled the constitution

199 and laws to the interests of the ruling by "speculators" that raise prices as part group. This has led to abuse of political of an "economic war" against Venezuela. power, corruption, high levels of However, analysts close to the insecurity, shortage, inflation, opposition say the cause of inflation in restrictions on the rights of association the big money printed by the Central and expression, among others. Bank to meet the huge state spending oil revenue, which is in the hands of the The political division of power between government fail to supply. (BBC report) his supporters and his critics has generated the most representative in Now the country faces an impending terms of tissue destruction in which shortage commodities regulated by the generates a completely unworkable state as toilet paper, milk and oil are hard country. Inflation in Venezuela is one of to come by. Moreover, in Venezuela the highest in the world. The product there is a black market dollars creates price rose about 54% in 2013, due to the distortions in the economy, generating existence of price controls. impact on domestic production and marketing of commodities that caters In the context of globalization and incredibly basic needs of people, so competitiveness Venezuela's current Venezuela depends on imports. But for position is leveraged by favorable and that reason it has become a barrier to unfavorable factors. The country does companies buying dollars, weakening not have demographic pressures and still the import, making Venezuela a country get significant income from a pension, in with little chance of investment and this case oil. But contrary presents production because it does not present a elements of concern such as utilities and scenario of profitability. violence between groups that live in society; as a result it has a high incidence The country is surrounded by a of the flight of talent and acts of street Government paradoxically government and maybe if these issues are not is not meeting the basic requirements of addressed can undermine the situation in the rule, which represents a setback for Venezuela and make the state more globalization and which places viable. Venezuela in the last position according Indices of competitiveness; your unable According to a BBC report, the to meet the needs of market demand, it government says inflation is "induced"

200 generates that the offer is inadequate and that more deficit spending means more there is a shortage. debt to foreign creditors (China) and internally (BCV).

• Unequal access: infrastructure Following are some factors affecting the networks and economic development decline of Venezuela in field of strategies are geographically globalization and competitiveness: concentrated and marginalized leave • Business scenario: Venezuela has whole areas of the territories. deteriorated in the way negotiations take • Exclusion: part of the population their obstacles, barriers and promoting remains outside the sphere of global high unexplained lower investment communications and competitive costs, production, employment activities. generation and wealth ever.

• Money, inflation and price controls: Venezuela's international reserves 2. What is the Relation between backing the issue of money have Globalization and competitiveness In declined in recent years, in recent years Venezuela? the issue of money has increased to the In the given context Venezuela has faced extent that international reserves are strong pressure for years to lead the reduced, which it has generated a country to some of the right directions. monetary liquidity. The current political system and its most • Oil industry: the oil industry to the representative institutions are questioned Venezuelan economy has become and the socioeconomic context. Pro vulnerable due to a society that has the Search will determine the balance. Under power and subrogated the right to current conditions, ensure the effective dispose of resources. Weak institutions, rule of law, socio-economic equity and discretion, privileges and corruption are stability of the political system have part of the operation in the oil industry in become major challenges facing which affects all of society. Venezuelan society.

• Income, expenditure and public debt: The relation between globalization and The Chavez regime has maintained an competitiveness in Venezuela is that it irresponsible fiscal policy to the extent hasn’t change or develop during the

201 years. First because Venezuela political hyper inflection, high unemployment, history has proven they are against corruption and irresponsible economic western ideas, they don’t want to depend management is not making easier on powerful economic countries, they Venezuela globalization and want to be powerful by their own rules. competitiveness.

Even though Venezuela doesn’t want to • What measures can increase have western ideas, they have social and the competitiveness of cultural globalization; they had been Venezuela? connected to the word. Globalization is The competitive advantage of nations not only for trade among countries is advocates new, constructive, and bigger than that it is. actionable roles for government and Ideas, information even terrorism is a business in the pursuit of way how world connects. competitiveness and prosperity. More importantly, clusters enable innovation For Venezuela globalization and and speed productivity growth. competitiveness is hard because for a Therefore, they can use measures to long period of time they only trade with improve their current situation, Its some countries, they are getting away necessary to diversify its market and from globalization and competitiveness increase the added value of export itself, this are making it weaker. products, as commodities are elastic and Because, they only rely in oil production their prices tend to fluctuate constantly, and exports, but there economy is this will require rethinking sectorial suffering the consequence because oil is policies to stimulate economic recovery in the lowest. They didn’t explore more and generate labor productivity in the product, markets or create bigger trades agricultural, manufacturing, mining, with different tourism and technology sectors. In Countries, this is making the country to addition, monetary policy should change have a political-economic crisis. the Central Bank of Venezuela establishing a new budget with the aim Besides this crisis they are having, and of reducing the public sector deficit, being against western ideas, Venezuela implementing plans of reorganization or is too boring for international analyst, financial restructuring. they don’t see intellectual challenges, the

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Based on the states of development improvement, but these are internal Venezuela, it is important to generate a factors They could remain the same. It is change of mentality in society to restore noteworthy that Venezuela is a country credibility in the institutions, as well as with great potential, and if routed its increase labor market efficient creating efforts on improving political relations better opportunities, increasing FDI and and make your workforce more promoting the creation of new productive could improve its businesses competitive variable. But you can not ignore all the events that are impacting Considering the historical the country and it will continue with the competitiveness of Venezuela and excessive public spending without your current location, It is considered institutional regulations, rampant to be the future of Venezuela to level corruption, hard price controls and the competitiveness? lack of an economic program with clear Although according to historical goals, among others factors, Venezuela competitiveness according to the WEF will continue to be one of the nations has been declining over the years cannot worst performers. say for sure in the future what will be the place that occupies in the ranking of competitiveness a country like Venezuela, many things can happen and important and momentous changes they can make an important twist to his current situation, taking a positive view of the future we may consider some situations that might generate such changes as parliamentary elections are expected by the end of 2015 and in April 2016 elections Communist Party CONCLUSION Congress, Venezuela could find a new way even a change in the economic and institutional leadership of the country, The ability to adapt rapidly and this could lead to increased confidence in effectively to the changing conditions of institutions and macroeconomic the world's economy, national

203 development strategies now oriented to participation mediate obviously the issue moving up the industrial ladder, by is troubling trend in the economy of the capturing rapidly shifting advantages in region, the dynamics of the globalized high value-added, skill-intensive world imposes new daily rhythms and manufacturing industries. The use of the growing discontent of the masses, modern technologies and the creation of who are repeatedly ignored. stable export networks are an important Venezuela shows a centralist policy that part of this process. dismantles the private sector and Despite the controversies regarding undermines public institutions, with very globalization and its consequences, the low development in the core areas process has encouraged a growing (Health, Education, Infrastructure), interest in identifying factors that make a unsustainable production and country competitive internationally, distribution of a considerable delay in the meaning the ability to produce are and establishment of technology and market their goods and services in the innovation. For Venezuela, the global market, in order to ensure recommendation is to invest in all areas sustainable sources of prosperity that of education. will allow for a rising standard of living for its inhabitants. - Moreover, in the field of Venezuela is in a context where the legal globalization, there is a lack of uncertainty persists and the socio- depth in areas relevant to the political crisis deepens. Represented by development of a balanced and dissatisfaction among different social equitable economy aspects: groups, it has lost credibility in the elite, together with the connection between - Establish a decentralized state economic and political reforms, and who should be the real starting between each of them together, point of the economy and the negatively impacting the quality of life national employment. of Venezuelans - Promote and defend an The State seems increasingly smaller and autonomous Central Bank less accountable to their citizens, constantly monitors the national references are lost and macroeconomic balance, aiming

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to reduce inflation in order to increase competitiveness and

productivity through sound policies in exchange and monetary matters.

- Search and foster strategic

alliances with international trade and economic agreements such as Mercosur, European Union

and other free trade agreements binational integration.

- Locale foster conditions that REFERENCES promote the continued growth of Ellner, S. (2015, May 12). investment, job quality and Venezuelanalysis. Retrieved production capacity. from venezuelanalysis: http://venezuelanalysis.com/anal - Demand legal certainty and ysis/1418 respect for the agreements and Ixkaliu. (2015, May 15). contracts signed by the country. Retrieved from Ixkaliu, - Labor law must be flexible if you Venezuela Hostpot: want to promote formal https://ixkaliu.wordpress.com/ employment and industrial Nazemroaya, M. D. (2015, May)

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Porter Michael E. ( 2010)

Competitive Advantage of Nations: Creating and Sustaining Superior Performance

Global competitiveness (2014)

World economic forum , May 2015 Site web: http://reports.weforum.org/the- global-competitiveness-report- 2013-2014/

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