This document discusses trade and economic development in Latin America. It provides an overview of recent economic growth in countries like Peru, Colombia, Chile, Argentina, Venezuela, Mexico and Brazil. It also examines issues like the rise of China as a trade partner and industrial capturer for the region. Additionally, the document looks at Brazil's role in South American integration and infrastructure projects. It analyzes what China has done to sustain its growth through policies promoting innovation, technological development, and a knowledge-driven economy.

1. TRADE AND ECONOMIC
DEVELOPMENT IN
LATIN AMERICA
Luiz Calado, PhD
6th December 2013

2. 1. China, LA-TAM and NZ: a broad range of
opportunities and similarities.
2. China and the world today: What do we have to learn
from them?
3. What is the order of the day: BRAiN Goals – São
Paulo as a financial HUB for Latin America
4. Future in business in Brazil: space for all
SUMMARY

3. Reading List
• "Reputation Economics - Why Who You Know Is
Worth More Than What You Have - Joshua Klein
• Every Nation for Itself: Winners and Losers in a G-
Zero World – Ian Bremmer
• Subsidies to Chinese Industry: State Capitalism,
Business Strategy, and Trade Policy – Usha Havey
• DEPOIS DA CRISE: A CHINA NO CENTRO DO
MUNDO? Luiz Carlos Bresser-Pereira

4. NZ GDP per capita
116% HIGHER
NZ HDI (2011)
26% HIGHER
BILATERAL MAP

5. Bilateral Trade Brazil – New Zealand

6. Brazil Trade Balance with New Zealand

7. FAR AWAY, BUT TOGETHER IN A LOT OF SIMILARITIES.
RELATIONSHIP BASED ON COMMON VALUES SUCH AS RULE OF
LAW, DEMOCRACY, HUMAN RIGHTS, SOCIAL JUSTICE AND
INTERNATIONAL PEACE.
BOTH GOVERNMENTS PLANS TO RAISE PRODUCTIVITY
GROWTH AND DEVELOP INFRASTRUCTURE.
GDP
DIVISION BY
SECTORS

8. THE REASONS WHY IT IS NOT HOW IT COULD BE:
LACK OF
COMPLEMENTARITY
POSSIBLE SOLUTION?
EXPORTS DIVERSIFICATION
• Acai (BZ fruits)
• Meat
• Oil
• Aircrafts
• Soccer players
POSSIBLE SOLUTIONS?
Improve AIR and naval
transport to LOWER the
shipping.
Investing in exchange of
services at a distance and
technological products and
manufactured products with
higher added value.
ASIAN ORIENTATION
LACK OF SCALE
POSSIBLE
SOLUTIONS?
Focus on SME

9. BRAZIL NEW ZEALANDWHAT ARE OUR AGREEMENTS AND WHICH OPPORTUNITIES WE HAVE?
RESEARCH AND PROTECTION IN AREAS
OF ENVIROMENTAL PROTECTION
SUMMER JOBS PROGRAMME
MUTUAL VISA EXEMPTION
ON
COMMUM INTEREST AGREEMENT
TECHNICAL COOPERATION
AND
PROCEDURES ON SANITARY
AND PHYTOSANITARY ISSUES
AGREEMENT IN
AIR SERVICES
COMMERCIAL EXCHANGE AND SCIENTIFIC, TECHNOLOGICAL,
INDUSTRIAL AND ECONOMIC COOPERATION
INVESTMENT IN BUILDING BRICKS TO
INNOVATION
COOPERATION TO BOOST CO-
DEVELOPEMENT IN STRATEGIC AREAS
CATALISE ACADEMIC AND TALENTS EXCHANGE BETWEEN BZ
and NZ RESIDENTS: MORE COOPERATION BETWEEN
UNIVERSITIES, COMPANIES,
TRANSVERSAL OPPORTUNITIES SUSTAINED BY
TECHNOLOGICAL, INDUSTRIAL AND ECONOMIC
AGREEMNET AND COMMOM INTEREST PLUS THE
INTERNATION ACADEMIC AND BUSINESS MOBILITY
BETWEEN BOTH ECONOMIES

10. • Ambassador Eduardo Gradilone – New Zealand can be a connection
hub to China
• Joint Ventures in Agriculture and related technologies (EMBRAPA)
• Biofuel & Renewable Energy
• Environmental Issues
• Investment in Infraestructure
• Education
• Culture & Sports
Investments and Partnership Opportunities

11. BRA>CHI
U$ 41.3 BI - 17% OF TOTAL BRA X
BRA>NZ
U$ 62 Mi
Animal,vegetable fats and oils, cleavage products, etc
Coffee, tea, mate and spices
Products of animal origin, nes
CHI>NZ
U$ 3,9 Bi - 0,2% of total CHI X
Machinery, nuclear reactors, boilers, etc
Electrical, electronic equipment
Articles of apparel, accessories, knit or cr
CHI >BRA
U$ 33,5 Bi - 1,6% of total CHI X
Electrical, electronic equipment
Machinery, nuclear reactors, boilers, etc
Optical, photo, technical, medical, etc apparatus
NZ>CHI
U$ 5 Bi - 14,9%
Dairy products, eggs, honey, edible animal product nes
Wood and articles of wood, wood charcoal
Meat and edible meat offal
NZ>BRA
U$ 65 Mi
Miscellaneous chemical products
Machinery, nuclear reactors, boilers, etc
Albuminoids, modified starches, glues, enzymes
CHI | BRA | NZ - TRADE FLOWS 2012

12. China
12%
Brazil
1%
New
Zealand
0%
Others
(228
countries)
87%
COUNTRY TOP #3 EXPORTS %
CHINA
USA 17.20%
Hong Kong 15.80%
Japan 7.40%
BRAZIL
China 17.00%
USA 11.10%
Argentina 7.40%
NEW ZELAND
Australia 21.40%
China 14.90%
USA 9.20%
WORLD TOTAL EXPORTS (2012) % TOP #3 EXPORTING COUNTRIES
*In some ways, Chinese influence in New Zealand has grown faster and more strongly than anywhere else in the world.
ANALYSIS OF THE TRADE FLOWS

13. EVERY WEEK ON THE NEWS WE HEAR ABOUT CHINA:
BEST PRACTICES OF CHINA AND HOW BRAZIL AND NEW ZELAND CAN TAKE
ADVANTAGES OF THAT…
GEOPOLITICS
UN ‘ MEMBER OF SECURITY BOARD
ATOMIC POWER
CONTROL OF INTERNET
TRANSITION TO MARKET ECONOMICS
GDP GROWTH
U.S. TREASURY SECURITIES
HAS OVERPASSED JAPAN AS 3RD BIGGER ECONOMY
TRADE | INVESTMENTS | PRODUCTS
30 YEARS AFTER 1979 REFORMS EMERGED AS A MAJOR GLOBAL ECONOMIC AND TRADE POWER

14. The Chinese government has maintained an active policy of
boosting trade and investment ties around the
world, especially with countries in Asia. To that end, China has
entered into a number of regional and bilateral trade agreements, or
is in the process of doing so.
China currently has free trade agreements (FTAs) with
ASEAN, Chile, Costa Rica, Peru, Hong
Kong, Macau, New Zealand, Pakistan, and
Singapore.
China is currently in the process of negotiating FTAs with other
countries
CHINA’S REGIONAL AND BILATERAL FREE TRADE AGREEMENTS

15. From 2008 to 2010 - China spent 91 billions in acquisiton (emerging Asia, Latin America, Africa) to
secure long term subsidised suplies of oil, gas, metals, minerals and other commodities that China
needs.
Source: The Dragons are on the Move: Five Steps to Maximizing Value from Natural Resources M&A, ACCENTURE 2013
CHINESE INVESTMENT OVERSEAS

16. CHINA, BRAZIL & LATAM
The Chinese exports profile during the 80’s was basically products
intense in LABOUR CAPITAL with VERY LOW UNIT COST.
THE GROW OF THE TRADE FLOW THAT, IN THE PERIOD OF 2002-2012 GREW FROM US$ 4,1B TO US$ 75,5
a year WITH AN AVERAGE GROWTH RATE OF 38,8%.
SINCE 2009, CHINA IS THE LARGEST BRAZIL’S COMMERCIAL PARTNER.
A fundamental instability: bilateral trade agreement has shown an imbalance of a high
concentration in few products. The problem is not the export of commodities itself, but the HIGH
CONCENTRATION OF BRAZILIAN EXPORTS (C4 above 80%), as opposed to a RELATIVE
DIVERSIFICATION OF IMPORTS FROM CHINA.
The 4 larger exported Brazilian products are: Iron, Soybean, Oil and Cellulose
WHAT DOES IT MEAN FOR BRAZIL?
AN OPPORTUNITY TO RE-BALANCE ITS ECONOMIC RELATIONS:
TRADE FLOWS DIVERSIFICATION AND EXPANSION OF FDI
KEY FACTS:
• CHINA IS AN IMPORTANT IMPORTER OF
NATURAL RESOURCES
• CHINA IS NOW ONE OF THE MOST IMPORTANT
BUYERS OF COMMODITIES LIKE OIL, MINERALS
AND METALS.
• THE EXPORTS FROM LATIN AMERICA TO CHINA
TRIPLED FROM 2000 TO 2007.
• THE TRADE VOLUME AND CHINA'S DIRECT
INVESTMENT IN LATIN AMERICA INCREASED
FROM 621 MILLION USD IN 2001 TO 44 BILLION
USD IN 2010
As we saw today, Chinese imports include cars, smartphones, and the
country even compete in the high speed trains market

17. CHALLENGES AHEAD FOR CHINA
For China’s Communist Party leadership, a growing economy is its main source of political
legitimacy. However, every year numerous protests occur in China over a number of
issues, including POLLUTION, GOVERNMENT CORRUPTION, AND LAND SEIZURES.

18. Questions raised over ‘China fever’
From Financial Times, Nov 28th
Corporate filings in Hong Kong show that Ms Shiu (Chinese Investor) changed her Chinese name after a
2008 ruling by a Hong Kong court that declared her bankrupt for failure to pay a loan.
Several companies registered under her former name have been dissolved on the Chinese
mainland, including one in Jiangyin, and the address of Sam Wa’s headquarters in Beijing turns out to be
a closely guarded military hotel that does not allow outsiders to enter.
“There are a lot of governments and companies in the west that are starved of capital, and so when the
promise of Chinese billions comes along they tend to get ‘China fever’. Unfortunately it can sometimes
be fatal,” says James McGregor, chairman for greater China at Apco Worldwide and author of the book
No Ancient Wisdom, No Followers.
• “In China you need to do due diligence on investors.”
• Ms Shiu declined interview requests and did not respond to a list of emailed questions.
CHALLENGES AHEAD FOR CHINA

19. Pop: 198 million
GDP pc: $12,100 PPP
HDI: 0.730 (85th)
GINI: o.52 (17th)
Pop: 41 million
GDP pc: $11,585
HDI: 0.811 (45th)
GINI: 0.46 (36th)
Pop: 30 million
GDP pc: $12,700
HDI: 0.748 (71th)
GINI: 0.39 (69th)
Pop: 114 million
GDP pc: $15,600 PPP
HDI: 0.775 (61st)
GINI: 0.48 (25th)
Pop: 47 million
GDP pc: $10,900 PPP
HDI: 0.791 (91st )
GINI: 0.58 (8th)
Pop: 30 million
GDP pc: $10,900
HDI: 0.741 (77th)
GINI: 0.46 (34th)
Pop: 17 million
GDP pc: $18,700
HDI: 0.819 (40th)
GINI: 0.52 (15th)
AN OVERVIEW OF LATAM

21. Results of different trade strategies in: Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
Latin America is being divided according to trading models
Trade has played a key role in defining development
TRADE AND ECONOMIC DEVELOPMENT IN LATIN AMERICA
• Peru, Colombia and Chile: fast ( strong
minerals export)
• Argentina and Venezuela: Recovered fast this
year
• Mexico & Brazil : recovering from crisis
OVERVIEW RECENT ECONOMIC GROWTH
• Mercosur and South America
• Energy integration –
Gasodutes, oils, eletricity, transmition lines
• Infrastructure integration (railway links into pacif trade
routes)
• Incresing BNDES presence in latin america
BRASIL’S ROLE

22. RISE OF CHINA AS TRADE PARTNER AND INDUSTRIAL CAPTULATION
It is imposible to compete without the same subsidies and labour conditions
– Protectionism to preserve industry or free trade to increase access to increase
commodity exports?
Is it safe to not apply anti-dumping?
– Mercosur/WTO or trade agreements?
– Adjust China’s increasing influence?
ISSUES
BRAZIL’S CROSSROAD

23. WHAT HAS BEEN CHINA DOING TO SUSTAIN ITS GROWTH?
The Chinese Economy: Reform and Innovation For Sustained and Healthy Development
“[…] We took a host of innovative policies and measures with a holistic
approach to pursue steady growth, conduct structural readjustment and
promote reform, which served to ensure a smooth economic
performance.
First, keeping the macro economic policy stable with consideration given to
both immediate and long-term needs
[…] We are implementing the strategy of innovation-driven
development at a faster pace, aggressively promoting technological
innovation and deep integration of science and technology
with the economy and building a social environment
friendly to innovation and business start-up activities.
Changes call for innovation and innovation
leads to progress.[…]”
PISA SCALES IN READING, MATHS & SCIENCE #1
GROSS CAPITAL FORMATION, %GPD #2
FIRMS OFFERING FORMAL TRAINING, % OF FIRMS #1
KNOWLEDGE CREATION #3
KNOWLEDGE IMPACT #2
CREATIVE GOOD EXPORTS #1
DOMESTIC RESIDENT PATENT PPP$ GDP #1
Speech by Li Keqiang at the World Economic Forum Annual Meeting of the New Champions 2013:
CHINA is the GLOBAL TOP #5 IN:
INVESTMENT IN THE BASE OF THE ECONOMY > KNOWLEDGE DRIVEN DEVELOPMENT
Available at: http://www.fmprc.gov.cn/eng/wjdt/zyjh/t1075946.shtml

24. CHINA AND NEW ZELAND HAVE SHOWN THE IMPORTANCE OF INVESTING IN
INNOVATION…
… CAN IMPACT DIRECTLY IN THE ECONOMY
GOVERNMENT INSTITUTIONS
NZ #3
BRAZIL #95
CHINA #113
GLOBAL INNOVATION
INDEX
NZ #17
CHINA #35
BRAZIL #64
HUMAN CAPITAL & RESEARCH
NZ #16
CHINA #36
BRAZIL #75
INFRASTRUCTURE
NZ #26
CHINA #44
BRAZIL #51
MKT SOPHISTICATION
NZ #12
CHINA #35
BRAZIL #76
CREATIVE OUTPUTS
NZ #13
BRAZIL #72
CHINA #96
KNOWLEDGE & TECNOLOGY
OUTPUTS
CHINA #2
NZ #29
BRAZIL #67
BUSINESS SOPHISTICATION
NZ #28
CHINA #33
BRAZIL #42

25. • Those figures reflects
that Brazilians does
not register patents –
• Clips – airplane -
Wristwatch – Showers
> are Brazilian
inventions
• Biodiesel
• Government efforts to
improve it – Science
without borders

26. BRAZIL: THE COUNTRY OF THE FUTURE
The future is bright and if Brazil continues to reduce barriers, entrepreneurship can be an
engine to maintain the momentum the country has experienced.
FORBES, OUT 2013
New entrepreneurship index, Endeavor
Entrepreneurship as
desirable career
choice:
10%
Vs
6.4
Level of new entrepreneurs
Levels of unemployment
over the last few years
have hovered around the
historical record low
(currently circa 5%).
http://www.endeavor.org.br/ppp/observatorio_do_empreendedorismo.swf

27. GOVERNMENT (FEDERAL AND STATE) SPENDITURES ON
SCIENCE, TECHNOLOGY AND INNOVATION IN 2013
ESTIMATED TO BE AROUND $31 BILLION (USD), AN
INCREASE OF 8% FROM 2012
THE IMPACT AND QUALITY OF BRAZILIAN RESEARCH IS
OF A WORLD-CLASS STANDARD IN MANY
AREAS, CITATIONS ARE THREE TIMES GREATER THAN
THE WORLD AVERAGE IN SECTORS SUCH AS:
BRAZIL: THE COUNTRY OF THE FUTURE –
INNOVATION AND ENTREPRENEURSHIP GOV POLICIES
AGRICULTURAL SCIENCES
PLANT AND ANIMAL SCIENCE
ENVIRONMENT AND ECOLOGY
BIOLOGY AND BIOCHEMISTRY
BROAD RANGE OF OPPORTUNITIES FOR COOPERATION WITH:
ACADEMIA, PRIVATE SECTOR, R&D, TRADE, KNOWLEGDE
IMPACT, EXCHANGE, ETC

28. The recent crisis have shown that the world as we knew is
under several changes
04/30/11 01/07/12

29. And it’s a fact that Brazil has reached
a higher level
1999
2009
GDP per capita (US$) 3,414.77
FDI (US$ billion) 28.6
Average years of schooling 5.8
Child mortality rate 28.37
GDP per capita (US$ - 2011) 12,969 +470%
FDI (2011, US$ billion) 66,7 +133%
Average years of schooling 7.2 +24%
Child mortality rate (2008) 17.56 -38%
Source: UNCTADStat, IPEA

30. Latin America has also improved significantly
Source: UNCTADStat, IPEA
1999 2009
GDP / capita:
+84%
FDI1:
+ 53%
In 10 years
1 2010

31. Latin American financial services market is
relatively small but has great potential
N. America
Asia - Pac.
EMEA
Latin Am.
Value (US$ T, 2011) % of ww. 2006-2011 CAGR
Market
Cap.
(US$)2
Mutual
fund AUM
(US$)3
Banking
assets
(US$)1
Insurance
premium
(US$)4
Penetration over GDP (20115)
LatAm is still a
small market…
…with large
potential
N. America
Asia - Pac.
EMEA
Latin Am.
N. America
Asia - Pac.
EMEA
Latin Am.
N. America
Asia - Pac.
EMEA
Latin Am.
…but growing
faster…
2.2
12.9
14.7
17.6 37%
31%
27%
5% 10%
-6%
4%
-4%
1.1
7.3
2.9
12.4 52%
12%
31%
5% 18%
-1%
4%
2%
68%
242%
164%
105%16%
31%
50%
3% 20%
5%
15%
4%
0.2
1.8
1.4
1.3 29%
30%
38%
3% 17%
3%
10%
1%
3.5
57.8
34.0
17.7
3%
7%
7%
8%
41%
51%
70%
104%
26%
34%
15%
74%

32. But to continue growing, LatAm will need funding
The only effective solution is to strengthen the capital markets
Banks
Capital Markets
Government
Multilateral organizations
For example: Brazil needs $300 billion per year to grow GDP by 5%
But most traditional funding sources are currently very limited:
Basel III
Fiscal
Austerity
Limited
Capacity

33. CAUSES OF CHINA’S ECONOMIC GROWTH
ECONOMISTS GENERALLY ATTRIBUTE MUCH OF CHINA’S RAPID ECONOMIC GROWTH TO TWO MAIN FACTORS:
1. LARGE-SCALE CAPITAL INVESTMENT (FINANCED BY LARGE DOMESTIC SAVINGS AND FOREIGN INVESTMENT)
2. RAPID PRODUCTIVITY GROWTH.
10TH QUINQUENAL PLAN
Unemployment bellow 5% | Inflation bellow target

34. It’s time for a more integrated network of investment and
business hubs with global projection
Chicago
Boston
New York
San Francisco
Miami Qatar
Bahrain
Dubai
Mumbai
Tokyo
Hong Kong
Shanghai
Singapore
Sydney
OMX
Helsinki
London
Oslo
Stockholm
Tallinn
Riga
Vilnius
Moscow
Brussels
Kopenhagen
Reykjavik
Euronext
Madrid
Frankfurt
Zurich/Geneva
Dublin
Lux.
MilanLisbon
Amsterdam
Paris
Abu Dhabi
Europe
Middle East
Asia
USA and Canada
Toronto
51
12
33
22
86
Multilatinas in
South America
and Mexico
29
20 21
7 9
CHLBRA OTHARGMEX

35. 76.5
74
27
25.7
14.8
3.5
71
Electricity
Others*
Logistic
Railways
Ports
Airports
Highways
Total Infrastructure Investment Estimate:
USD 221.7 billion over the next four years (2014-2017)
Source: BNDES.
Exchange rate: USD 1 = BRL 2,30
* Telecom and water and sewerage.

36. 36
Non-exhaustive examples of potential goals
Integrating Latin American markets and stock
exchanges
Attracting more listed companies, both Brazilian and
international
Increasing financial education and investor
sophistication
Allowing broader and more international investment
options in the funds industry
Developing and regulating new derivatives / futures
products
Latin America's financial markets must be more varied,
liquid and sophisticated

37. THIS IS WHAT BRAiN WANT TO SEE IN A NEAR FUTURE...
Chicago
Qatar
Bahrain
Dubai
Mumbai
Tóquio
Hong Kong
Xangai
Cingapura
Sidnei
Helsinki
Londres
Oslo
Estocolmo
Tallinn
Riga
Vilnius
Moscou
Bruxelas
Copenhague
Reykjavík
Madri
Frankfurt
Zurique/Genebra
Dublin
Lux.
MilãoLisboa
Amsterdã
Paris
Abu Dhabi
Toronto
Miami
São Paulo
Santiago
Bogotá
Lima
Cidade do México
São Francisco
...WITH THE MAIN PROPOSE OF LEVERAGING BRAZIL (AND LATAM)
AS A FINANCIAL HUB
Boston
Nova Iorque

38. WHAT HAS BRAiN BEEN DOING TO BOOST BRASIL TO BECOME A HUB IN LATAM?
Chile Colômbia México Peru
Integración financiera en América Latina:
realidades, desafíos y propuestas estratégicas
Letters of LATAM’S Regulatories agents

39. BEST - Brazilian Excellence in Securities Transactions
175 178 181 183 183 183 185
189
121
122 125
129
127 126
130
116
100
110
120
130
140
150
160
170
180
190
200
2007
2008
2009
2010
2011
2012
2013
2014
POSIÇÃO DO BRASIL NO RANKING NOS ULTIMOS ANOS.
Doing Business Report WB – The evolution of Brazil
BRAiN’s MAINS ACTIONS AND PROJECTS

40. BRAZIL AT A GLANCE : THE IMPORTANCE OF FINANCIAL INDUSTRY IN BRAZIL

41. CHINESE BANKING SYSTEM
speech at Stanford ‘ may 2013
The Banking System
China’s banking system is largely controlled by the central government, which attempts to ensure that capital (credit) flows to
industries deemed by the government to be essential to China’s economic development. SOEs are believed to receive preferential
credit treatment by government banks, while private firms must often pay higher interest rates or obtain credit elsewhere
Strengthen regulation and supervisory oversight, especially in areas exhibiting rapid growth such as trusts and wealth
management products.
To be sure, China has plenty of banks and insurers. But many of them are state-sponsored relics of its communist past.
Many U.S. firms find it difficult to do business in China because rules and regulations are generally not consistent or
transparent, contracts are not easily enforced, and intellectual property rights are not protected (due to the lack of an independent
judicial system).

42. BRAZIL AT A GLANCE: SECURITY

43. Middle Class
• Last Decade + 40 million Brazilians
• Last three years + 14 million BRazilians

44. BRAZIL AT A GLANCE: OPPORTUNITIES
Both the FIFA World Cup and the Olympics are opportunities to increase recognition of the New Zealand
brand in Brazil as well as to build people-to-people linkages.
It is a particularly relevant for the international education and tourism industries.

46. Waste Land received unanimously positive reviews as "an uplifting portrait of the power of art and the dignity of the human spirit."
Waste Land is a feature documentary film
that premiered at the 2010 Sundance Film
Festival and went on to be nominated for
the Oscar for Best Documentary Feature at
the 83rd Annual Academy Awards, as well
as win over 50 other film awards including
the International Documentary
Association's Best Documentary Award.

48. BRAiN welcomes all interested in
participating in future strategic dialogues or
working groups created to enhance
connectivity of latin america
LUIZ CALADO, PhD
Interested parties should contact
lcalado@brainbrasil.org