Thinking long on China's economic impact

Useful stats on the regional economic projections over the next 20-40 years.

Mexico will join the Big 7 by 2030 and Indonesia by 2050. By then, the United States will be the only advanced country to rank among the world’s seven largest economies. At the same time, China will become the center of world trade, representing by far the largest trading partner for most countries. Its share of world trade will reach 24 percent by 2050, up from about 10 percent today.

The rise of emerging economies other than China will create major opportunities for Latin American countries. Today, about 40 percent of Latin America’s exports go to other developing countries, including China; this figure will surge as developing countries’ share of world exports will more than double from 30 percent in 2006 to 69 percent in 2050. 

Beyond the China angle, a few other things stand out. First, Mexico and Brazil will be increasingly important markets for the hemisphere and the US will remain one of the top trading partners, even looking 40 or 50 years into the future.

Second, watch out for Indonesia. Most regional analysts are watching China. Some are watching India and expect that to be one of the next big things in the coming decade. If Indonesia is going to be one of the world's top seven economies in forty years, then they are going to be one of the top economies for trade with Latin America and the Caribbean. I don't think many Latin American countries are thinking through their Indonesia relations, but perhaps they should start.

Today's memories in 20 years

The past decade has seen a surge of cases related to human rights abuses from the 70's, 80's and 90's. In many cases, the evidence is based on old paper documents from archives and witness testimony.

The human rights cases of 2032 that are filed against abuses of the 2000's and 2010's (assuming that occurs) will look very different. With increasingly ubiquitous cell phone cameras, video cameras and the ability for people to document their experiences through self-publishing, there should be more and better evidence. It will be more difficult (I think) for a government or military to simply lock up an archive and not allow access.

Beyond the evidence at a trial, it changes the nature of memory when it comes to these historical experiences. We're going to have far more photos and videos of events and more witness testimony documented near the time of the event rather than related decades later.

Adopting someone else's currency

El Salvador and Ecuador chose to dollarize their economies about ten years ago (Panama has long used US currency). Going with the dollar gave the two countries a level of currency stability and trust that they did not have previously, but took away monetary policy control from the country and tied them to whatever the US is doing. Essentially, the move got rid of some problems and added some new ones. Debates still continue over whether it was a good move and whether the countries should consider going back to their own currencies.

In the next 10-20 years, could another Latin American or Caribbean country adopt a foreign currency? The Dollar is always possible (in fact, it's used as a de facto alternate currency in several countries), but so would be the Chinese Renminbi, the Brazilian Real, the Mexican Peso or, if they get their act back together, the Euro.

This is a different debate from the question of whether countries should create a unified currency. This is about a country completely surrendering monetary control and giving up managing its own currency supply.

What sort of political leadership would it take? What sort of crisis would drive Guatemala, Peru, Paraguay or Haiti to decide to sack their own currency and jump on with another country? Would the US, Brazil and Europe compete to be the new currency, would they push against it, or would they just ignore it as it happened?

Who will be back in 20 years?

A number of current and recent Latin American leaders were also in power in the 1980's: Alan Garcia, Oscar Arias, Daniel Ortega, Desi Bouterse.

So which of today's leaders have a shot of leaving power and being back around 2030 or so? Age plays an important role in this question, but political strength clearly doesn't. If anything, Alan Garcia and Daniel Ortega prove that a leader can leave in disgrace or face serious scandal and make a political comeback anyway.

Just based on age, top picks should be Mauricio Funes, Laura Chinchilla, Rafael Correa, Ollanta Humala, and Michel Martelly.