Latin America Enters a New Global Age Without a Roadmap

All week the discussions at the State of the World Forum focused on the finer points of the globalization debate, such as global financial systems and super-profits, or socially conscious investment. But at a small gathering of Latin American businesspeople, politicians and scientists, the discussion turned to the more basic questions of what happens when globalization takes place in a society that lacks basic democratic tools such as comprehensive education, governmental ethics and working judicial systems.

"We won't have a successful globalization unless we have functioning democracies," declared Ingrid Betancourt, a Colombian senator known for her outspoken position against corruption. According to Betancourt, Latin governments have failed their constituencies by not protecting the social fabric. "We need to have proper checks and balances in our societies," she argued. Corporations won't automatically work for the larger good of Latin societies if the system is not reformed. Her argument was not a mere restatement of the old rich-against-poor debate, but a reflection of the new thinking prevalent among younger politicians like her, who don't represent traditional power elites.

Betancourt said there is a dire need in Latin America for robust government policies and an informed civil society that demands an end to corruption, pork-barrel politics and the widening gap between the haves and havenots.

"Corporations have a role to play in our societies but the responsibility to set the law falls on our governments," she said. Regulation is not a negative, either, she pointed out. "Look at the United States, this is the place that has benefited the most from globalization, and it is the most highly regulated place in the earth."

Her frank exposition did not sit well with Susana de la Puente, a Peruvian banker and managing director of JP Morgan Investment Bank, who said she was frightened to hear a discussion of corporations again being subjected to governments. "In Latin America, governments think they must impose their will on corporations," she warned. "But the government is often corrupt and uninformed. The private sector must be allowed to operate with little government control." Betancourt said that option would work, but that presently in Latin America local business elites use their privileges to cut deals and obtain unfair contracts, without thinking about the impact their behavior will have on the overall society.

Juan Infante, a small-business development consultant from Peru, agreed with both de la Puente and Betancourt, but added his own spin. "I was in Washington during the protest against the World Bank the IMF a few months ago, and I heard people get up and speak for Peru and Latin America, and I wondered, if I was asked to speak, what I would tell the crowd who wanted to hear what Latin Americans want," he said.

"I think I would tell them why don't you tax yourself one percent of your earnings and send it to Latin America. That would amount to several million dollars a year, and perhaps we could solve some of our problems," he added, in a polite way of saying put your money where your mouth is. "It must be remembered that our countries are poor and we are begging for foreign investment, so we don't see foreign investment as a danger to our future," he said.

But those attending the small gathering got different readings from Infante's remarks. De la Puente, ever the fiscal agent, said that if the fund that Infante would like to see hypothetically was in reality sent to Latin America it would be wasted, spent and used in corrupt practices by mediocre country leaders.

Then Diego Arria, convenor of the meeting and a former Venezuelan ambassador to the United Nations, agreed that the problem in Latin America was ineffective governments and heavy bureaucracies. "When privatization overtook our countries, it was announced that bureaucracies were going to be reduced. But it hasn't happened," he added. Arria served under former President Carlos Andrés Pérez, who was convicted of embezzling $250 million in public funds in 1998.

But Betancourt said it is time that businessmen and citizens stop blaming the politicians and become involved in public service. "We have to stop seeing public service as something that only the monsters do. Government work is for all of us, and we should get involved," she said. "Only that way will we bring change to our institutions."

Mexican businessman Enrique Gomez Junco took the debate one step further. To him the debate was not over whether countries should worry about attracting foreign investment, but over educating the local citizens and promoting local businesses. "We are destined to become a hemisphere of maquiladoras if we don't promote the development of national businesses," he said. Junco runs Celsol, a solar energy company he founded in 1987 shortly after graduating from the university in Monterrey, Mexico. Since then he has gone back to his university, Tecnológico de Monterrey, and provided a fund to promote an entrepreneur program called "Emprendedor" which has inspired university graduates to launch 300 new businesses a year, he said.

His remarks were welcomed by several participants in the meeting who said that one of the greatest deficiencies in Latin America was the brain drain of business leaders. But none of the participants knew how to promote the development of such a new business class. "Higher education is expensive and mostly out of reach for the normal citizen. Who should take the lead in providing funds for everybody who wants to get educated, to get access to that education?" asked one young man.

"The corporations," answered another participant.

"No, the government," retorted another.

As the meeting closed, it was obvious that leaders of the region have not figured out what the impact of globalization will be on their societies, since many of the elements necessary for a strong and robust economic system with all the checks and balances are still missing. That, together with the old protectionist policies of the past, mires the debate in a thicket of charges and countercharges.

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