Capital Flows to Latin America and the Caribbean: Recent Developments

For six years, the global economy has been driven by the U.S. Federal Reserve’s policies of easy money. Liquidity has flowed from developed to developing economies, financing infrastructure and corporate investment and allowing consumers to indulge in credit-fuelled retail spending. Thus the effective ending of the Fed’s third round of asset purchases (QE3) at the end of October represents both a watershed and the beginning of a new stage in the world economy. The end of asset-purchases comes at a challenging time for emerging markets, with China’s economy slowing, the Euro zone struggling to avoid a recession and the Japanese economy already in recession. The unwinding of the U.S. monetary stimulus, while the European Central Bank and the Bank of Japan step up their monetary stimulus, has underpinned an appreciation by the U.S. dollar, in which most commodities are priced. An appreciated dollar makes dollar-denominated commodities more expensive to buyers, thereby creating pressure for sellers to lower their prices. Latin American markets ended the third quarter of 2014 under pressure from a stronger U.S. dollar. In this changing external context, there are many signs that a slowdown in Latin American and Caribbean (LAC) financial markets, particularly debt markets, which have been breaking issuance records for the past six years, may slowdown from now on. Commodity prices – including those of oil, base metals and some goods – are in a prolonged slump. The Bloomberg commodity price index, a benchmark of commodity investments, has fallen to a five-year low as China’s economy slows down, and with it the demand for commodities. Investment into the LAC region has decelerated, in large part because of a deceleration of mining investments. Latin American currencies have suffered depreciations, as current account deficits have widening for a number of countries. And LAC companies, having issued record amounts of foreign currency bonds may now struggle to service their debt. In October, credit-rating agency Moody’s downgraded the bonds of Brazil’s Petrobras to tow notches above speculative grade because of the impact of falling oil prices and the weaker real on its debt. Growth prospects look brighter in 2015 relative to 2014, but a strengthening U.S. dollar, uneven global growth and weakness in commodity prices are skewing the risk toward the downside for the 2015 forecasts across the region. The Institute of International Finance expects the strengthening of the dollar to have a divergent impact across the region, however, depending on trade and financial linkages. The Institute of International Finance, Capital Flows to Emerging Markets, October 2, 2014. A stronger dollar lifts U.S. purchasing power, supporting exports, growth and capital inflows in countries with close trade links to the U.S. economy. However, rising dollar financing costs will increase pressure on countries with weak external positions. Given the effects of falling oil prices and a stronger dollar, some companies in the region, having issued record amounts of foreign currency bonds, may now struggle to service their debts. Prospects of Fed rate hikes resulting in tighter global liquidity amid the rapid rise in the corporate external bond stock has indeed raised concerns over some companies. However, there is still a shortage of bonds at a global level and the region still enjoys good economic policy management for the most part, so LAC debt markets may continue to enjoy momentum despite occasional bursts of high volatility – even if not at the record levels of recent years.

CEPAL Review no.56

Democracy and development / Fernando H. Cardoso. -- Can growth and equity go hand in hand? / Joseph Ramos. -- Stability and structure: interactions in economic growth / José Maria Fanelli and Roberto Frenkel. -- Pension system reform in Latin America / Andras Uthoff. -- Recent economic trends in China and their implications for trade with Latin America and the Caribbean / Mikio Kuwayama. -- Economic relations between Latin America and the high-performing Asian developing economies / Ronald Sprout. -- Economic relations between Latin America and the European Union / Roberto Smith Perera. -- Rules of origin: new implications / Eduardo Gitli. -- Globalization and restructuring the energy sector in Latin America / Femando Sánchez Albavera. -- The kaleidoscope of competitiveness / Geraldo Müller. -- The privatization of public water utilities / Miguel Solones. -- How much can we spend on education? / Guillermo Labarca. -- Women and migrants: inequalities in the labour market of Santiago, Chile / Ivonne Szasz.

Emergy diagnosis and reflections towards Brazilian sustainable development

This paper presents an environmental emergy-based diagnosis of Brazil compared with Russia, India, China, South Africa and United States. Reflections on the Brazilian sustainable development are presented and discussed based on the evaluations published since 1979. The variation of the emergy per capita for Brazil from 1979 to 2007 indicates that the country's growth is tied to the exploitation of non renewable natural resources which do not directly reflect in the welfare of the population. The total emergy exported per unit of gross domestic product increased in the period, suggesting that the country exports more emergy than that contained in the money received for the exportation. With the help of the emergy indices, the future development of Brazil is explored and discussed. The comparison among the BRICS (Brazil, Russia, India, China and South Africa) countries and United States indicates that what may be appropriate and usable within one country may not be within another and that to achieve the global sustainability two concomitant actions may occur: (i) the reduction of the total emergy use in developed economies, and (ii) the reduction of indigenous resources exportation in developing economies. (C) 2013 Elsevier Ltd. All rights reserved.

Self-initiated expatriates and their career success

Purpose This paper aims to provide conceptual clarity by distinguishing self‐initiated expatriates (SIEs) from company‐assigned expatriates (AEs), and skilled migrants; most importantly, it introduces an overarching conceptual framework based on career capital theory to explain SIEs’ career success. Design/methodology/approach This conceptual framework is based on a review of the relevant literature on SIE, expatriation, career studies, cross‐cultural studies, migration, and other related areas. Findings Protean career attitude, career networks, and cultural intelligence are identified as three major types of career capital influencing SIEs career success positively; the predicting relationships between these are mediated by cultural adjustment in the host country. Cultural distance acts as the moderator, which highlights the influence of macro‐contextual factors on SIEs’ career development. Research limitations/implications The current paper applied career capital theory and did not integrate the impact of family and labour market situation on SIEs’ career development. Further research should test the proposed framework empirically, and integrate the impact of family‐ and career‐related factors into a holistic approach. Practical implications When constructing international talent acquisition and retention strategies, organizations and receiving countries should understand the different career development needs and provide SIEs with opportunities to increase career capital during expatriation. Furthermore, the current framework suggests how to adjust to the host country in order to meet career development goals. Originality/value The multi‐level and sequential framework adds value by identifying specific types of career capital for SIEs and providing a conceptual underpinning for explaining how they interact and foster SIEs’ career success. Moreover, the framework embraces SIEs from both developed and developing economies.