US/Cuba Trade Flounders

While the US has a trade embargo with Cuba, some US products can be sold there. There are, however, an assortment of pre-conditions that modify these trade options. On the anti-US side, they include cash up front payments and significant overhead for financial transactions. On the other hand, trade with other nations is discouraged by such regulations as ships which have docked in Cuba cannot dock in a US port for six months.

The US trade embargo on Nicaragua in the 1980s, while short-lived compared to the Cuba embargo, had a similar effect. That is, Nicaragua had to look for other trading partners. While the US remains Nicaragua's number one trading partner, other countries are moving up. These embargos don't just hurt the embargoed country but also US producers.

An article in Fox News Latino talks about the trade with Cuba issues. From the article:

So when a plunging global economy pulled Cuba down with it five years ago, Havana had every incentive to hunt for a better deal from friendly nations where government-run companies offer better terms and often won't complain publicly about rolling over late payments. Even private-sector companies in those countries may be more pliant, counting on guarantees by their governments.

While there is a lot more Cuba-specific meat in the article, this point is why I have brought up this subject. As the US continues to try to be different from others in the region (discussions in the OAS support this assertion) it seems that this is encouraging more and more trade within Latin America and with sources other than the US.

What is being called a world economic meltdown is having less effect on Latin America than in much of the world. While I am not suggesting Latin America try to isolate itself from other regions, it does seem like we have a great opportunity to look at regional markets first. If Latin America can move in the direction of trade self-sufficiency and the cooperation to do so is established within the region itself (Mercosur and ALBA are but examples) rather than externally controlled, all the countries of the region could benefit.

This cooperation is not going to eliminate outside trade but it could help the region, and even the little players such as Nicaragua, be more independent of the economics of the US and Europe. What each individual country needs to produce will require a lot of analysis but, starting with the assumption that producing for use within the region is the first priority could have significant advantages over the typical produce for world export model.

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BIDES vs. World Bank

Just another data point, once again from Brazil. While this article is specifically about BIDES, the Brazilian state development bank, financing a hydroelectric plant in Ecuador, the following from the article comes as a big surprise to me.

BNDES, based in Rio de Janeiro, last year disbursed almost twice as much in loans as the World Bank. In April, the bank said it planned to disburse up to 150 billion reais (about $73 billion) in 2012.

There's the whole value-added thing, too.

African countries with coal are finding out that if they ship raw coal to other countries, they make some money but it doesn't solve their own structural poverty issues unless the people making the money reinvest in African manufacturing that has more value-added. Brazil decided, apparently, to make things for export and local consumption rather than export raw materials -- and I flew between Miami and Charlotte in a Brazilian-made jet.

My front door padlock was made in Mexico; my bathroom sink was made in Nicaragua; my camera and lenses were made in Japan. One of the issues for the poorer countries is that capital to build complex manufacturing facilities may only be available through the nation as a whole (see the history of the industrial development of Japan for something that didn't end up a state-run operation) or through foreign investors who may not have an lasting stake in the country.

The more value added, the higher the wages for the work force and the more profit for the manufacturer. Brazil no doubt does better shipping out small jets than it would shipping out the coal, iron ore, and oil used to make the jets. They're cheaper than US produced jets of that size would be and they fill a need for smaller planes to handle the less traveled routes. Win-win.

Rebecca Brown

Embraer

The plane you flew in was made by Embraer. I have flown in their turbo-prop planes in the US and their newer jets for much of my regional travel. Nice planes at a size that makes sense in the region.

The company story is also an excellent example of a government getting something started. While there are longer versions of the story the Wikipedia page tells us what we need to see including their early relationship with Piper.

I don't think Nicaragua is ready to build airplanes but it certainly can produce other products for the region -- and purchase Embraer airplanes instead of the Airbus A319.

Thanks

That sounds more or less what the Japanese Meiji restoration Emperor did -- since the imperial government was the best source of development capital, it did things like that. The factories ended up in private hands, but with the government as a partner or overseer. I used to own a book called "The Industrial Development of Japan" which had the essential details on that.

I'm trying to help a college student here and found out that he's gotten into a little spamming for money -- knows enough to be able to work the system for gain, but... If there aren't legitimate jobs for people like him, they will be doing what they can with the various net hustlers, not sure how much I blame them.

The more the money stays in the region, the more the regional people with money can invest in the region. Brazil seems to be doing good things. Mexico's manufacturing that I'm aware of seems to be more semi-skilled labor, but some Mexican nationals who were in the US have been going back to Mexico for work.

Rebecca Brown