The US recently announced it would levy anti-dumping penalties against Canada. These actions specifically target softwood timber, dairy, and steel. While the full effects are yet to be fully assessed, and opposition has been raised by an unexpected source: Florida.
H.E. Claudia Fritsche
Ambassador extraordinary and plenipotentiary
When I met Prof. Michael Czinkota in 2003, it had been less than 2 years since I had the privilege to establish the Liechtenstein Embassy in Washington. He immediately was very generous in offering to share his knowledge and experience. Since the field of economics is not my expertise, I was immensely grateful for his support in not only raising the profile of the Embassy but also helping me become acquainted with the many nuances and layers of the U.S. economy and its global impact. Since Prof. Czinkota was born and raised in Germany and was partly educated in an Austrian school very close to Liechtenstein, he is familiar with my country, with its history, its economic system as well as the trans-Atlantic cultural differences, therefore able to understand how the U.S. economy is viewed even from the perspective of a small country. Professor Czinkota further broadened his engagement with my country by teaching at the University of Liechtenstein.
By Jerry Haar and Krystal Rodriguez
The dictionary definition of crucible is “an extremely difficult experience or situation; a severe test or trial”. This is precisely where most of Latin America finds itself with its excessive dependence on commodities as the linchpin of its economy. In good times governments spend commodity windfalls on projects or programs to garner support for the political party in power. In bad times, politicians engage in handwringing and scapegoating, and the governing party borrows excessively to make up the shortfall in revenue from commodity sales.
The last few years have not been kind to Latin America, economically speaking. And that is an understatement. The region has experienced two consecutive years of negative growth (-0.1% and -0.5%). 2017 will bring a slight improvement only.
Recognizably, the main culprits in the projected contraction are Argentina, Brazil, Ecuador and Venezuela–accounting for 50% of the region’s GDP. As for foreign direct investment (FDI), inflows reached $171.84 billion in 2015, down almost 12 percent from the $195 billion in 2014. This contrasts with a 36% increase in FDI around the world. Add to the mix a continuing depression in commodity prices (slowdown in China), corruption scandals, high interest rates, and urban crime and violence, and the forecast is gloomy overall.
However, among the storm clouds that will continue to hover over the economies of the region, there are indeed a number of pockets of sunshine—the brightest being the rapid proliferation of start-ups, both tech- and non-tech based, and the pace of innovation throughout the Hemisphere. Last year, start-ups in Latin American ballooned to 1,333 and accelerators to 62, with investment approaching $32 million. Chile leads the way, with 3 times the investment of Brazil. In terms of numbers of start-ups, Chile had 442, Mexico, and Brazil 297.
While start-ups pop up serendipitously, it takes the formation of an “ecosystem” to fuel the growth, interaction, and dynamism necessary to foster and expand innovation. Ecosystems of innovation, as referred to here, are communities of interacting parties–business, government, academe and non-profit organizations. They can be national and subnational (Chile, Uruguay, Costa Rica) or can be found in clusters (aerospace in Querétero, Mexico; IT in Campinas, Brazil; sugar cane, Valle de Cauca, Colombia). As Ricardo Ernst and I point out in our new book Innovation in Emerging Markets, an ecosystem’s drivers are innovation are national policies, facilitating institutions (such as Colombia’s Colciencias), and firm-level innovation. We find also that facilitating institutions, themselves, can have far greater impact than government or individual firms. Examples include Techstars, 500 Startups, Endeavor, Wayra, and NXTP Labs.
Just what are the key ingredients that comprise a successful ecosystem of innovation? Any research-based assessment and extensive conversations with entrepreneurs, other business professionals, and government officials would most likely agree that the list encompasses:
- Large pool of skilled talent
- Installed and diffuse technological base (e.g., broadband networks)
- Dedicated infrastructure of research universities, labs and entrepreneurship instruction
- Ample funding (angel investment, venture capital, convertible debt, microfinance, crowdfunding)
- Networks and collaboration among financiers, entrepreneurs, scientists, technologists, and designers
- An environment that nurtures, supports and sustains creativity
- Mechanisms for the fast transfer of knowledge
- Strong intellectual property laws and surety of enforcement
- Pro-market economic, tax and regulatory policies
- Well-functioning administrative, legal and judicial systems
- Federal, state and local industrial policies—especially those targeted at “clusters”
Although Latin American ranks low on the 2015 Global Innovation Index–Chile is #1 in Latin American but #42 overall–it is the second most entrepreneurial region in the world, according to the World Bank. Its Internet and mobile density is higher than the world average.
Although covered only minimally in the North American and European media, every nation in Latin America–and the Caribbeaan–is home to start-up activities. To illustrate, Dev.F (Mexico) brings software development techniques to that nation; Platzi (Colombia) provides an online learning platform for IT and programming courses; HubUnitec (Honduras), Impact Hub (Guatemala), and Atom House (Colombia) provide co-working and meeting spaces for young techies; and initiatives like Laboratoria (Peru), Epic Queen, and WomenWhoCode assist female start-up entrepreneurs to achieve success.
As for financing start-ups, here, too a myriad of resources such as Venture Club (Panama), Kaszek Ventures, Guadalajara Angel Investors, and Ideame, a crowdsourcing financing platform.
Successful ecosystems of innovation result from the synergy created by universities, R&D centers, talented human capital, investors (venture capitalists and angel investors), professional associations, and the private sector and government working to achieve sustainable competitiveness.
While 2017 will usher in another lackluster year for the region in terms of economic performance, with only a few countries achieving notable success, the rapidly emerging ecosystem of innovation will continue unabated and provide limitless opportunities for both technology- and non-technology entrepreneurs across the region.
Jerry Haar is a business professor at Florida International University and a global fellow of the Woodrow Wilson International Center for Scholars in Washington, D.C. He also holds non-resident appointments at Georgetown and Harvard. His latest book is Innovation in Emerging Markets.
By Jerry Haar
In the aftermath of the barbarity inflicted by Islamic terrorists in France, five Syrians heading to the United States with fake Greek passports were arrested in Honduras. When queried, one of them stated they were “students.” At that point, it became alarmingly clear that Latin America could well serve as a launch pad for Islamic terrorists to attack the United States.
In his March testimony before Congress, General John Kelly, head of the U.S. Southern Command, warned lawmakers that Islamic extremists are radicalizing converts and other Muslims in Latin America, and that the Islamic State could exploit trafficking organizations in the region to infiltrate the United States.
Additionally, it has been increasingly common for Muslims from Mexico to change their Islamic surnames to Hispanic-sounding names to facilitate moving across the border.
Islamic terrorism is not new to Latin America. In 1992 Islamic Jihad bombed the Israeli Embassy in Argentina, killing 29 and injuring 250. In 1994, Iran and its proxy, Hezbollah, were responsible for bombing AMIA, a Jewish community center in Buenos Aires, killing 87 and injuring over 100 people.
Beginning in 1999 with the rise to power of Hugo Chávez, the locus of terrorist-supported activity gravitated northward from Argentina to Venezuela. The Venezuelan leader and Iran’s then president, Mahmoud Ahmadinejad, quickly forged a close relationship between their two countries and ramped up their adversarial campaign against the United States.
Venezuela became a de facto subsidiary for Iranian terrorism in the Western Hemisphere through Hezbollah’s Rabbani and Nasseredine networks and has established more than 80 “cultural centers” to promote their brand of Islam in the region.
While Iran’s Shi’a Islamists have had “first mover” advantage over Sunnis in penetrating Latin America, both are actively spreading their reach in the region, which is home to 4 million Muslims, more than half residing in Brazil and Argentina and the rest primarily in Central America, Ecuador, Chile, Mexico and Trinidad and Tobago.
Radical Islamists are especially active in the Tri-Border area (Argentina, Brazil, Paraguay), a notorious locale known for smuggling, piracy, money laundering and drug dealing. Strategic alliances abound between radical Islamists and criminal networks such as Colombia’s FARC and Mexico’s Zetas.
Unfortunately, Latin America’s horrendous prison system is a breeding ground for jihadists, via conversion to Islam among prisoners; and far too often governments take a stance of neutrality toward Islamic terrorism, thereby making the region a safe haven for them. While counterterrorism and surveillance efforts, including bilateral and multilateral cooperation, have improved in recent years, the lack of sufficient financial resources and highly trained personnel remains a critical issue.
For Islamic terrorists to target the United States, the best foreign region from which to operate is Latin America. Intelligence agencies report that there are sleeper cells in the Tri-Border area; and it is conceivable that they could link up with their counterparts in U.S. cities such as Dearborn, Michigan, and Paterson, New Jersey.
In the wake of the Paris bombings and shootings, I queried several U.S. intelligence experts about the chance of an ISIS attack on the U.S. homeland, emanating from Latin America. Their uniform response? “Highly likely.”
With porous borders, transnational criminal organizations, sophisticated smuggling networks and the dubious ability of Latin American governments to detect and intercept terrorists, it is imperative that the U.S. government double or even triple its efforts in aiding our neighbors to the south to prevent radical Islamists from conducting heinous activities in the Western Hemisphere. “Not in our backyard” should be the watchwords of the day.
This article is originally published in the Miami Herald.
Jerry Haar is a business professor at Florida International University and a Global Fellow of the Woodrow Wilson International Center for Scholars in Washington, D.C. He is also a research affiliate at Harvard University’s David Rockefeller Center for Latin American Studies.