Globalization, Business and Economy in Latin America

Globalization, Business and Economy in Latin America Fundación J. Ortega y Gasset, Buenos Aires Argentina Marcelo F. Simon, January 2012

DESCRIPTION: An in-depth analysis of the globalization process and its effects on regional markets, regional economic integration and free trade pacts. US and European business strategies for the Latin American markets.

INSTRUCTOR: Marcelo Simon (MBA, Pace University NY, USA; MS, BS in Industrial Engineering, Instituto Tecnológico de Buenos Aires, Buenos Aires, Argentina)

METHOD OF PRESENTATION: Lectures, discussions, writing assignments and visits to business and economic institutions.

LANGUAGE OF INSTRUCTION: English

REQUIRED WORK AND FORM OF ASSESSMENT: Class participation (20%); weekly reports (10 %); mid-term test (25%): final report (10%); and final exam (35%).

REQUIRED READINGS: Globalization, Business and Economy in Latin America (Fundación J. Ortega y Gasset Buenos Aires, January 2012)

RECOMMENDED READINGS: - Foreign Direct Investment in Latin America (ECLAC annual reports) - The Competitive Advantage of Nations by Michael Porter (Free Press, June 1998). - Globalization and Its Discontents, 1st edition, by Joseph E. Stiglitz (W.W. Norton & Company, June 2002). - The clash of civilizations by Samuel Huntington (Touchstone Books; January 1998) - The world is flat by Thomas L. Friedman (Farrar, Straus and Giroux, LLC, April 2005) - The end of poverty by Jeffery Sachs (Penguin Press, New York, 2005) - The ascent of money by Niall Ferguson (Random House. 2009)

COURSE CONTENTS (Divided in 14 class sessions of 3 hours each one, total: 42 hours)

Session 1: 1. Course Introduction and Argentina Today - Background - The last military government (1976-1983) - The Alfonsin Presidency (1983/1989) - The Menem Presidency (1989/1999) - De La Rua´s Presidency (1999/2001) - Presidency of Adolfo Rodriguez Saá (the 8 last days of 2001) - What caused Argentina's crisis? - Lessons from the failure of the Argentine convertibility experience - The designation of Eduardo Duhalde (2002/2003) - President Kirchner (2003 until today) - The Argentine Banking Crisis

Sessions 2 and 3: 2. Historical processes towards the current Latin American political division - The Fall of Constantinople and Henry the Sailor - Spain becomes a united country and finally defeats the Moors. Christopher Columbus - Spanish and Portuguese on the advanced guard in the conquest of America - Initial conquering methodology. Map - The conquest of the South American Region. Map - The Viceroyalties, Captaincies and Audiencias. Map - Some additional comments on colonial Administration and History - The gradual loss of power of Spain - A brief explanation of the emancipation process of the Spanish and Portuguese colonies in America - But in fact, it was a Civil war between “Spanish Americans” - The rebellions in Southern South America (BA) and Northern S. America (Caracas) - A brief History of Brazil. A brief history of Argentina - A brief description of the national history of the other Latin American countries - Wrap - up: Historical Chronology - Latin America - U.S. RELATIONS (By Warren Dean)

Session 4: 3. Integration processes in the region. Global and regional institutions and Latin America - Sub-regional integration schemes and intra-regional free trade agreements - The historical and cultural patterns, the countries and the FTAs in Latam - Macroeconomic Indicators Mercosur - Global and regional institutions and Latin America

4. Economic, demographic, and Social Highlights of the region - Selected Latin American Countries Economic Briefs - Immigration pattern - Human Development - Inequality in Latin America. The Gini Index - Educational deficits and gaps in the region - Globalization and employment - Social protection - The social agenda

Session 5: 5. Globalization: A historical and multidimensional perspective - The globalization process - Non economic dimensions of globalization - Opportunities and risks arising from globalization

6. The economic dimension of Globalization - International trade and investment - The Washington Consensus - International mobility of several chosen factors - The BRIC Countries

Session 6: 7. Inequalities, asymmetries and criticism to the global order - Inequalities in global income distribution - Globalization and its Discontents by Joseph E. Stiglitz - The World Social Forum (WSF) - Globalization: the dangers and the answers

8. International finance and globalization - The abandonment of the gold standard - Anatomy of capital flows to Latam - Vulnerability to volatility and sudden changes in the global financial markets - Recent trends within the financial markets - Financial deregulation and the sub-prime crisis - The sub-prime crisis impact on Latin America crisis

Session 7: Mid-term

Session 8: 9. An agenda for the global order - The international agenda - The key role of action at the regional level - National strategies for dealing with globalization

Session 9: 10. The end of the poverty (Jeffrey Sachs) - Introduction to J. Sachs and the book - Types of capital based on Sachs - Some Sachs’ comments of world economic history - China: Modernization and growth after half a millennium - The market reforms in India: the triumph of hope over fear - The extreme poverty - The continent without voice: Africa and the diseases - The UN Millennium Assembly. Investments to eradicate the extreme poverty - The challenge of our generation

11. Globalization and environmental sustainability - The Rio Declaration on Environment and Development (June 1992) - Changes in the production structure and the effects on environmental sustainability - The Kyoto Protocol (December 1997) - The way to Copenhagen - The UN climate Summit of Copenhagen (Dec.2009) - The UN Cancun Convention on Climate Change (UNFCCC) (Nov-Dec 2010) - Additional information - Environmental advantages and disadvantages of Latam Session 10: 12. Systemic competitiveness in Latin America - Strategic planning - Competitive Advantage - The Five forces of Porter - Competitive Strategy - The Competitive Advantage of Nations - Recent Work of Porter - Porter concepts and Latin America - Latin American Countries Competitiveness Index

Sessions 11 and 12 13. The integration of Latam in global trade and production systems - The cycle of FDI flows to Latam - The decreasing percentage of Latam in global FDIs: - Trade specialization in Latam. Strategies, modalities and sub- regional FDIs patterns - Several comments in relation to the FDIs of the TNCs in Latam

- The composition of trade and the dangerous weaknesses of the region: export concentration of few low value-added products or concentration in few destination markets - The commodity prices and Latin America - A recent trend; the appearance of Latam TNCs - The exposure of Latam to competition from China and India - Update. Country per country Analysis

Session 13 14. Argentina: FDI and Corporate strategies - Foreign Capital in the Argentine Economy - Strategies of TNCs in Argentina during the 1990s - FDI Today

Session 14: Final test

CHRONOGRAM

Session 1 Chapter 1 Session 2 Chapter 2 Session 3 Chapter 2 Session 4 Chapter 3-4 Session 5 Chapter 5-6 Session 6 Chapter 7-8 Session 7 Mid-term Session 8 Chapter 9 Session 9 Chapter 10-11 Session 10 Chapter 12-13 Session 11 Chapter 14 Session 12 Chapter 14 Session 13 Chapter 15 Session 14 Final Test

STUDENTS´ WEEKLY REPORTS The students will deliver a 1 page weekly report about the subjects mentioned below or about any other subject required by the professor (including translations of some economic news). Examples of the research subjects for these reports are:

Chapter 2 1. Bolivar and San Martin Summit in Guayaquil 2. The Congress of Panama of 1826 (proposed by Bolivar)

Chapter 3 2. Human Development Index for different sectors of Latam

Chapter 4 3. A brief description of the S. Huntington´s book “The clash of civilizations”. Identify the groups of countries of the different cultures and the leader of each one, as described in the book.

Chapter 5 4. The advancements of the negotiations of the WTO (Doha Round)

Chapter 6 5. A personal research on the BRIC Countries.

Chapter 7 6. A brief research on the arguments and reasons exposed by Joseph E. Stiglitz and other critics of the globalization process

Chapter 8 7. The National Agenda: a brief report on the US twin deficits 8. A brief analysis of the impact of the sub-prime rate crisis in Latam

Chapter 10 9. An update of what is going on with the Kyoto Protocols negotiations and the UN Climate Change Conference in Bali

Chapter 12 10. Competitive Advantages: Identify and describe Latin American industries with competitive advantages

Chapter 14 11. A brief comparison between the Chilean and the Argentine economic evolutions since 1982. Chapter 16 12. A brief report of a Multinational Company’s performance in Argentina (any one you choose)

STUDENTS´ FINAL REPORT All the topics mentioned below, have to be included in this 3-5 page report:

1. Your opinion in relation to the impacts of globalization in Latin America

2. Your opinion -from a Latin American point of view- of the advantages (or disadvantages) of the FTAA (Free Trade Agreement of the Americas)

3. The growth of the BRIC countries and its impact on Latin America

4. An update of the negotiations at the UN Climate Change Convention and its impact on Latin America. The effect of the global environmental policies on the Latam countries (advantages or disadvantages).

5. Your conclusions of this course.