International Business Strategy

Doing Business in Latin American Countries

Article #4

By: Dr Samuel Aluri Obua

Executive Director Institute of Corporate Directors Research Center Pretoria South Africawww.icdrctrainingcenter.com

AbstractsLatin America is not absent from attracting foreign investment despite difficult laws and regulations. Latin America is not yet fully develops. For instance: infrastructures, Innovations, Technology and Education amongst another thing. Latin America is viewed by many as a fragile and peril environment business environment. Many would find difficulties accepting these notions given their historical assertions and many evidences throughout the years pertaining to declining economic growth of this region. Past is gone, but the future is bright for Latin America.Latin American Business Environment Attracting investment lies in the hands of leaders and policy makers, this means their understanding as to where their economy is standing. It is also notable to know how a country is rank compared to the other economies within the block according to (http://.worldbank.org/curated/en/2014/06/19618002/doing-business-2014-latin-america). Latin America faced the danger of compliancy in the past and ready to bounce back and grows even faster with the many commodities in Latin America. And with attractive prices if there is political stability then the rebound will be even stronger. The banking sector managed by Central bank that monitors industries and banking capabilities have improved remarkably. The financial and banking sector of Latin America has grown dramatically in the last years because of the recognition and acceptance of foreign international banks concentration in the region and with the presence and global integration. One reason for these is the amalgamation of Latin Americas financial systems. Concentration of banks might create some confidence in the other investors and boost consumer benefits in relation to service quality according to (Claudia Girardone, 2011)Banking policies remain a problem with major bank concentrating their activities with possible tendency to collude according to (Claudia Girardone, 2011); Macroeconomic policies of Latin America are outstanding couple with varied commodities that is apparently Latin America strength in the global market. These have made countries like Brazil a major player in the region being the second largest producers of soya beans, with now oil now in Latin America; the area should attract massive foreign investments going forward. However, the regions have focused less on education, technology that impedes confidence.

Problem Facing Investment in Latin AmericaThe poverty between Mexico and Brazil is rated at over sixteen million people in poverty, with Brazil wage pay below Mexico and other Latin economies (Griffin, C. H. 2010). Corruption in Brazil and Mexico is above board. Over the years, corruption in Mexico is amongst the state officials, local government and besides all the issues of drug curtail has dealt a blow in business operation that can be seen all over news media. Mexican violence has affected even local indignant people and so foreign willing investors, foreign tourist as well as locals (Griffin, C. H. 2010). Brazil and Mexican environment of business present a challenge to their informal legal framework. The legal structure is based on the civil law with the history far back to Napoleonic law according to (Garcia, C. & Martinez, Z. L. (2012). Investors can come under legal scrutiny anytime and this in effect impedes investmentsLatin America Investment RiskAccording to (Rafael Castillo- Traina 2004), there are a number of risk types that might affect foreign investor entering Latin America. Market Risk includes risk such as; Country Risk, Political Risk, Regulatory Risk, talent Risk and Economic Risk. Operational Risk is; funding Risk, competition Risk regulatory Operating Risk and Legal RiskLatin America Opportunities Rafael Castillo- Traina (2004), alludes that Latin America have a high potential since the blocs rate of growth is focused at ten times that of United States of America. If certain permitting factors are all considered and taken care thereto. These growths would culminate into a high power of purchase compared to the United States of America. The region is a market driven culture as opposed to that of the United States according to (Rafael Castillo- Traina 2004)

List of ReferencesClaudia Girardone, (2011) Banking Sector in Latin America: Market Power versus EfficiencyGarcia, C., & Martinez, Z. L. (2012). A Comparison of the Business Environments of TwoEmerging Economies American Journal of Economics and Business Administration, 4 (1), 59-64Rafael Castillo- Traina (2004) Managing the Risk doing Business in Latin AmericaWorld Bank Group. http://.worldbank.org/curated/en/2014/06/19618002/doing-Business-2014 Latin-American