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T h e W a y t o P a r a d i s e ?
Emerging Debt Markets at the Beginning of the XXIth Century
Javier Santiso
Chief Development Economist & Deputy Director
OECD Development Centre
B a n q u e d e F r a n c e
Pa r i s M a y 2 9 -J u ne 2 2 0 06
1
1 A historical perspective
2 Some recent improvements in emerging debt markets
3 Post-Argentina Trauma: A Policy Proposal
2
Fasten your seatbelts: Serial defaulters and crisis
in emerging markets
Number of Crises (Distribution of Markets)
100
Sovereign default in Latin America (1825-1940)
90
Industrial Countries
1820
1835
1850
1865
1880
1895
1910
1925
1940
Emerging Markets % of time in
80
.
default
70 Argentina 57
Number of crises
60 Brazil 49
50 Chile 45
40
Colombia 39
30
Mexico 28
20
Peru 24
10
Venezuela 17
0
1880-1913 1919-1939 1945-1971 1973-1997 1997-2006
Average Industrial countries
Average Emerging markets
Note: Recent crisis episodes on the period 1997-2006 include Brazil (1998, 2002), Ecuador (1998), Pakistan (1998), Ukraine (1998),
Turkey (2000), Argentina (2001) and Uruguay (2001).
Source: OECD Development Centre, 2006.
Based on: M. Bordo and B. Eichengreen. “Crises Now and Then: What Lessons from the Last Era of Financial Globalization”,
2002. and N. Roubini and B. Setser. “Bail-outs or Bail-ins? Responding to Financial Crises in Emerging Economies”, 2005.
3
Serial defaults and crises are not a privilege
of today’s emerging markets …
Serial Defaults by Country (1500-2006)
14 1501-1900
14 1501-1900
1901-2006
12 12 1901-2006
Total
.
Total
Number of Defaults .
10
Number of defaults
10
8 8
6 6
4 4
2 2
0 0
Spain France Germany Portugal Russia Ecuador Venezuela Mexico Brazil Colombia
Source: OECD Development Centre, 2006.
Based on: Reinhart, C., Rogoff, K., and M. Sevastano. “Debt Intolerance”. NBER Working Paper 9908, 2003. 4
Volumes of traded emerging markets debt are
not as stunning …
Trading Volumes Relative to World GDP
5
1875 1905 2000 2005
.
4.5
Volume of traded bonds to world GDP)
4
3.5
3
2.5
2
1.5
1
0.5
0
Argentina Brazil Mexico Russia Turkey
Source: OECD Development Centre, 2006.
Based on: Mauro, P., Sussman, N. and Y. Yafeh. “Emerging Markets and Financial Globalization”, 2002, 2006 and 5
Bank of International Settlements, 2006.
Currently, financial integration is not at its
highest level
International Financial Integration Index
OECD Countries Non- OECD countries
9 9
8
Integration Index 1913 8
Integration Index 1913
.
.
Integration Index 2000
7 7 Integration Index 2000
Integration Index (0-10)
Integration Index (0-10)
6 6
5 5
4 4
3 3
2 2
1 1
0 0
United Germany France United States Japan Turkey Brazil Argentina Chile Russia India China
Kingdom
Note: Financial Integration Index calculated as the ratio between the share of
international investments and the share of world GDP.
Average 1913 Average 2000
Source: OECD Development Centre, 2006.
6
Based on Schularick 2006 and GDP figures from Maddison (1995, 2001)), Woodruff (1966) and Wilkins (1989) for 1913/14.
Countries have made considerable progress
to keep indebtedness at sustainable levels …
Total External Debt over GDP
1 60 Mexico 1 60 Chile
1 40 1 40
Percentage of GDP
Percentage of GDP
1 20 1 20
1 00 1 00
80 80
60 60
40 40
20 20
0 0
2004
2004
2002
2002
2000
2003
2000
2003
1998
1998
2005
2005
1999
1999
2001
2001
Colombia Brazil
1 60 1 60
1 40 1 40
Percentage of GDP
Percentage of GDP
1 20 1 20
1 00 1 00
80 80
60 60
40 40
20 20
0 0
2004
2004
2002
2002
2000
2003
2000
2003
1998
1998
2005
2005
1999
1999
2001
2001
Source: OECD Development Centre, 2006.
Based on: Dany Jaimovich and Ugo Panizza. “Public Debt around the World: A New Dataset of Central
Government Debt”. Inter-American Development Bank. March 2006.
7
… but more efforts are needed to reduce
well-known vulnerabilities
Total External Debt over GDP
Argentina Uruguay
1 60 1 60
1 40 1 40
Percentage of GDP
Percentage of GDP
1 20 1 20
1 00 1 00
80 80
60 60
40 40
20 20
0 0
2004
2004
2002
2002
2000
2003
2000
2003
1998
1998
2005
2005
1999
1999
2001
2001
Peru
1 60 Venezuela 1 60
1 40 1 40
Percentage of GDP
Percentage of GDP
1 20 1 20
1 00 1 00
80 80
60 60
40 40
20 20
0 0
2004
2002
2000
2003
1998
2005
1999
2001
2004
2002
2000
2003
1998
2005
1999
2001
Source: OECD Development Centre, 2006.
Based on: Dany Jaimovich and Ugo Panizza. “Public Debt around the World: A New Dataset of Central 8
Government Debt”. Inter-American Development Bank. March 2006.
Other emerging markets made improvements,
becoming less dependent on external sources…
50 Total External Sovereign Debt External vs Domestic Sovereign Debt
45
Latin America Emerging Europe 50 Total Domestic Sovereign
Debt (% of GDP)
40 Emerging Asia Total Emerging Markets 45 Latin America
,
35 40
Total Emerging Markets
Percentage of GDP
,
30 35
Percentage of GDP
30
25
25
20
20
15
15
Total External Sovereign
10 10 Debt (% of GDP)
5 5
0 0
1998 1999 2000 2001 2002 2003 2004P 2005E 2006E 1998 1999 2000 2001 2002 2003 2004P 2005E 2006E
External and domestic debt (Latin America)
External and domestic debt (World)
Source: OECD Development Centre, 2006
Based on: International Financial Statistics, IMF
9
However, the failure to boost internal
savings rates is persistent in Latin America...
Evolution of Regional Saving Rates Pension Assets under management
East Asia & Pacific Latin America & Caribbean
.
80
40
South Asia World
Net national savings (% of GDP)
70
35
60
30
.
50
25
% of GDP
40
20
30
15
20
10 10
5 0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Chile Bolivia Brasil Salvador Uruguay Argentina Peru
Source: OECD Development Centre, 2006.
Based on Global Development Finance, The World Bank, 2005. FIAP, 2005. 10
…making the region still dependent on
foreign capital
Net National savings by country (1996-2005)
40 40
35 35
Net national savings (% of GNI)
.
Net national savings (% of GNI) .
30 30
25 25
20 20
15 15
10 10
5 5
0 0
Venezuela Chile Mexico Peru Brazil Argentina Colom bia Singapore China Malay sia Thailand Indonesia India
Regional average
Source: OECD Development Centre, 2006.
Based on Global Development Finance, The World Bank, 2005. 11
1 A historical perspective
2 Some recent improvements in emerging debt markets
3 Post-Argentina Trauma: A Policy Proposal
12
2.1. Endogenous insurance mechanisms have
been developed in recent years
Foreign Exchange Reserves by Region
Latin America Asia
250
250
Billions of US $
2000 200 2000
200
Billions of US $
2005 2005
150 150
100 100
50 50
0
0
Mexico Brazil Argentina Venezuela Chile Colombia Peru Ecuador
Taiwan Korea India Malaysia Thailand Indonesia Philippines
Source: OECD Development Centre, 2006.
Based on: International Financial Statistics, IMF and Central Banks information.
13
2.1. These mechanisms continue to
consolidate even after recent repayments
International Reserves
Liquidity Ratio
Pre-IMF (International Reserves in % of Public Sector Borrowing
Repayment
Requirements +Monetary Base)
28,000 28,078
Post-IMF
Repayment 90%
23,000 21,769
80%
Repayment: 70%
18,000
9.5 bn -40%
60%
13,000
50%
40%
8,000
Mar-06
Mar-05
Apr-04
Nov-04
Aug-04
Jun-04
Apr-03
Nov-03
Aug-05
Jan-06
Jan-05
Jun-05
Oct-05
Oct-02
Jul-03
Feb-03
Feb-04
Dec-02
Sep-03
30%
20%
Pre-IMF
Repayment
Pre-Repayment Post-Repayment
67,935
65000 Post-IMF
Repayment
60,090 35%
60000
30% -35%
55000
Repayment: 25%
50000
15.6 bn
20%
45000
15%
40000
10%
35000
Nov-04
Nov-03
Jun-04
Apr-03
Apr-04
Jan-06
Mar-06
Jan-05
Jun-05
Jul-03
Mar-05
Aug-04
Aug-05
Feb-03
Feb-04
Oct-02
Dec-02
Sep-03
Oct-05
5%
Pre-Repayment Post-Repayment
Source: OECD Development Centre, 2006 and Intern. Financial Statistics, IMF, 2006 14
2.2 New instruments have been increasingly
used for sovereign bonds issuance
Emerging Markets Sovereign Bonds Issuance
Number if issues Volume of transactions
With CACs Without CACs Total With CACs Without CACs Total
100 97 % 90 98%
90 80
Billions of US dollars
91%
Billions of US dollars
80 70
Number of issues
Number of issues
70 92%
60
60 63%
50
50
40 65%
40
30 30
28%
20 20
100% 21% 100%
10 10
0 0
2002 2003 2004 2005 2006-Q1 2002 2003 2004 2005 2006-Q1
Source: OECD Development Centre, 2006.
Based on: Global Financial Stability Report, IMF 2006, Dealogic and Turégano and Santiso, 2005.
15
2.2. Despite the slackening in recent years,
corporate issuers are increasingly important
International Debt Securities by Nationality of Issuer
Corporate Issuers – Amounts outstanding
80
A frica & Middle East
Billions of US Dollars
70
Latin A merica & Caribbean
60
50 A sia & Pacific
40
30
20
10
0
1996-09
1999-09
1998-03
1993-09
1995-03
2002-09
2005-09
2004-03
2001-03
30 Latin America (2005)
30 Asia and Pacific (2005)
25
25
Billions of US Dollars
20
Billions of US Dollars
20
15 15
10 10
5 5
0 0
Mexico Brazil Chile Argentina Colombia Venezuela South India Malaysia Philippines Thailand China
Korea
Source: OECD Development Centre, 2006. 16
Based on Bank of International Settlements, 2006.
2.3. Latin American governments have increased
the size of their domestic bond markets
Domestic Debt Securities
All Issuers – Amounts outstanding
1 800
Billions of US Dollars
1 600 Latin America (7 biggest issuers)
1 400
1 200 Emerging Asia (7 biggest issuers)
1 000
800
600
400
200
0
1996-06
1998-06
1999-06
1989
1994-06
1995-06
1997-06
1993
1996-12
1998-12
1999-12
1991
2000-06
2002-06
2003-06
2004-06
2005-06
1994-12
1995-12
1997-12
2001-06
2000-12
2002-12
2003-12
2004-12
2001-12
600 Latin America (2005) 700 Asia and Pacific (2005)
500 600
500
Billions of US Dollars
Billions of US Dollars
400
400
300
300
200
200
100
100
0 0
Brazil India Mexico Chile Colombia Argentina Peru South China Malaysia Thailand Singapore Indonesia Philippines
Korea
Source: OECD Development Centre, 2006.
17
Based on Bank of International Settlements, 2006.
2.3. Domestic debt markets are comparatively
shallow and there is room for further expansion
Size of Local Debt Securities Markets
(amounts outstanding)
Latin America Other markets
90 Government 90
Government
80 Total 80
Total
70 70
60 60 Av erage
.
.
Total
% of GDP
% of GDP
50 50
Average Total
40 LAC 40
30 30
20 20
10 10
0 0
Brazil Chile Colombia Mexico Argentina Peru Korea Czech South Philippines Indonesia
Republic Africa
Source: OECD Development Centre, 2006.
Based on: Bank of International Settlements and IMF.
18
2.3. Issuance of local-currency bonds is on the
rise, outperforming US dollar bonds…
International Bonds and Notes by Currency
Amounts outstanding
Mexican Peso Colombian Peso
Billions ofof US Dollars .
.
4 4
Billions of US Dollars
3.5 3.5
Billions US dollars
3 3
2.5 2.5
2 2
1 .5 1 .5
1 1
0.5 0.5
0 0
1998-09
1998-09
1994-09
1995-09
1996-09
1999-09
2000-09
2001-09
2002-09
2003-09
2004-09
2005-09
1994-09
1995-09
1996-09
1999-09
2000-09
2001-09
2002-09
2003-09
2004-09
2005-09
1993-09
1993-09
1997-09
1997-09
Total Return in Emerging Market Bond Indexes
35
Emerging Markets
30
U.S
25
Return (%) .
20
15
10
5
0
2002 2003 2004 2005 2006
Source: OECD Development Centre, 2006.
19
Based on Bank of International Settlements, 2006 and JP Morgan Emerging-Market Bond Index (April 2006).
2.3. Changes in debt composition, maturities,
and rate structure have been observed
Short Term Domestic Debt Foreign Investors' Share in Total
Domestic Debt issuance (2004)
70
1996
.
60
2004 45
% of Total domestic debt
50 40
35
40
30
30 25
%
20
20 15
10 10
5
0 0
Brazil Mexico Chile Venezuela India Colom bia China Russia Uruguay Mex ico Argentina Brazil Peru
Average Remaining Maturity of Local Currency Fixed 80
Pension Assets under Management in Latin
Rate Marketable Debt 2003
America
12 70
2005
60
10
50
8
% of GDP
40
Years
6
30
4
20
2
10
0
Chile Mex ico Colom bia Brazil India South Indonesia 0
Africa Chile Bolivia Brasil El Uruguay Argentina Peru
Salvador
LAC
Asia
Source: OECD Development Centre, 2006.
20
Based on: Global Financial Stability Report, IMF, 2006.
2.4. The original sin was a persistent
phenomenon in Latin American countries
The inability of countries to borrow in their own currency
Measures of original sin by country
groupings (average)
1.2
1 1 993-1 998
Original Sin Index
Original Sin Index
1 999-2001
0.8
0.6
0.4
0.2
0
Latin Middle Other Financial
America East & Dev eloped Centers
Africa
Securities in currencyi
Note: Original Sin Index is defined as: OSIN i Max1 ,0
Securities issued by countryi
Source: OECD Development Centre, 2006.
Based on: Eichengreen, B. Hausmann, R. and U. Panizza. “Currency Mistmatches, Debt Intolerance and Original 21
Sin. Why they are not the same and why it matters”, NBER Working Paper 10036, 2003.
2.4. Original sin has been overcome through
the promotion of domestic financial markets
Ratio of domestic debt securities to nominal
Estimated domestic original sin GDP (Amounts outstanding)
(end of period) Latin America Asia
1.2 2000 60 Middle East and Africa All Emerging Economis
Original Sin Index
1 2004
50
Original Sin Index
0.8 40
% % of GDP
of GDP
0.6 30
0.4 20
0.2 10
0 0
Venezuela Brazil Chile Colombia Mexico Peru 1994 1996 1998 2000 2002 2004
Source: OECD Development Centre, 2006.
Based on: Mehl, A. and J. Reynaud. “The Determinants of Domestic Original Sin”. European Central Bank
Working Paper No. 560, Dec. 2005.
22
2.5. Credit worthiness and higher access to
capital can be reached through remittances…
Indebtedness Classification according to Remittances
-3.9% Ratio Debt/Ex ports
500
Debt as % of Exports (2004)
Ratio Debt/(Ex ports + Remittances)
.
-9.3% -5.5%
400
300
-17 .2%
-24.5%
200 -3.4%
-3.5%
-7 .6%
100
0
Argentina Peru Brazil Colom bia Ecuador Chile Venezuela Mex ico
Source: OECD Development Centre, 2006.
Based on: “Economic Implications of Remittances and Migration”. World Bank, 2006.
23
2.5. …which could have a positive effect on
sovereign credit ratings
Determinants of Sovereign Credit Ratings Potential Improvements in Credit Rating
through Remittances
Dependent Variable
Explanatory Variable Rating Moody's Rating S&P
Constant 3.408 -0.524
(1.38) (-0.22) A AA
GDP per capita 1.027 1.458 S&P Rating (May 2006)
AA
(4.04) (6.05)
A+
GDP growth rate 0.130 0.171 A+
(1.54) (2.13)
A Potential S&P with Remittances
Inflation rate -0.630 -0.591
A- BBB+
Rating (S&P)
(-2.70) (-2.67) BBB
B BB
Fiscal balance / GDP 0.049 0.097
(0.82) (1.71) BB+ BB+ BB+
BB + BB BB BB BB
Current account balance / GDP 0.006 0.001 BB-
(0.54) (0.05) BB - B+
External debt / Exports -0.015 -0.011 B
(-5.36) (-4.24) B
B-
CCC+
Developed country (dummy) 2.957 2.595 CC C+
(4.18) (3.86)
Default since 1970 (dummy) -1.463 -2.622 CCC -
(-2.10) (-3.96)
C
No. observations 49 49
Adjusted R2 0.905 0.926 Chile Mexico Brazil Colombia Peru Venezuela Argentina Ecuador
Standard error 1.325 1.257
Note: T-statistics are in parentheses. Parameters estimates that are
significant at the 5% are indicated in bold.
Source: OECD Development Centre, 2006.
Based on: Rowland, P. “Determinants of Spread, Credit Ratings and Creditworthiness for Emerging Market 24
Sovereign Debt: A Follow-Up Study Using Pooled Data Analysis”. Banco de la Republica de Colombia, 2005.
1 A historical perspective
2 Some recent improvements in emerging debt markets
3 Post-Argentina Trauma: A Policy Proposal
25
Considerable efforts for monitoring portfolio
flows could have been spared
• In 2000 no systematic databases
of portfolio investments were
available
• One year spent with a research
team of 3 economists to collect
microeconomic data
• Three hundred interviews
conducted with asset managers,
buy- side and sell-side strategists
Source: Palgrave, 2003.
26
The political economy of emerging markets:
actors, institutions and crises
100 Largest Emerging Markets Equity Funds, July 2000
Name Assets (USD mios) Ranking
Emerging Markets Growth Fund 22,638 1
Capital International Emerging Markets Fund 4,310 2
Schroder Emerging Markets Fund 2,781 3
Templeton developing Markets Trust 2,733 4
Templeton IF Emerging Markets Series 2,424 5
Genesis Emerging Markets 2,180 6
MSDW IF Emerging Markets Portfolio A 1,417 7
SEI Emerging Markets Equity Fund 1,377 8
UBS (Ch) Equity Fund Emerging Markets 1,227 9
T Rowe Price New Asia Fund 1,205 10
Templeton Emerging Markets Investment Trust 1,136 11
Mexico Fund 1,105 12
Vanguard Emerging Markets Stock Index Fund 1,102 13
GMO Emerging Markets Fund III 1,101 14
Deutsche GSF Global Emerging Markets Fund A 1,073 15
Batterymarch Global Emerging Markets Fund 1,063 16
Deutsche Profunds Pacific Fund A 1,007 17
Korea Fund 1,002 18
Source: Javier Santiso, “The political economy of emerging markets: actors, institutions
and financial crises in Latin America”. New York, Palgrave, 2003.
27
Since 2000 new databases have been developed
with higher update frequency
Net capital flows into
Emerging Markets 350
Weekly EMD inflow s/outflow s (US$ mn, 4w k mv g
200
(USD billions) 300 EMBIG Performing sov ereign av g) (bp) (RHS, inv erted scale)
spread
22.000
250 225
17.000 200
250
150
12.000
100
275
7.000 50
0 300
2.000
-50
-3.000 -100 325
2002 2003 2004 2005 Jan/2006 Jan-05 Mar-05 Apr-05 Jun-05 Aug-05 Oct-05 Dec-05 Feb-06
Source: BBVA, Capital Flows, EPFR
Sources: EPFR, Bloomberg, and Santander Investment.
Source: OECD Development Center, 2006.
Based on: http://www.emergingportfolio.com/
28
Back to the Argentinean Debt Default: CIPS+
as a strategic tool?
Recent Sovereign Debt Restructurings
Number of sovereign bonds issued before
the Argentinean crisis Jurisdictions involved
1 40
40
Number ofjurisdictions
Number jurisdictions
1 20
Number of sovereign bonds
1 00
30 Argentina Brazil Mexico Venezuela
80
20 60
40
10
20
0 0
Argentina Ecuador Pakistan Russia Ukraine Uruguay
1999 2000 2001
Source: Nieto and Santiso (2006). 2005 2000 1999 1998- 1998- 2003
2000 2000
The Argentinean giant debt default has been epic in scale.
It involved 152 varieties of paper denominated in six currencies and governed
by eight jurisdictions.
29
Back to the Argentinean Debt Default:
CIPS+ as a strategic tool?
Recent Sovereign Debt Restructurings
Total time in default Participation Rate
90 100
80 90
.
.
70 80
Months of default
Percentage (%)
60 70
60
50
50
40
40
30
30
20 20
10 10
0 0
Argentina Ecuador Pakistan Russia Ukraine Uruguay Argentina Ecuador Pakistan Russia Ukraine Uruguay
2005 2000 1999 1998- 1998- 2003
2000 2000
Argentina defaulted on bonds worth $81 billion in December 2001.
It represented the longest period of debt restructuring : no database of Argentinean
bondholders is available (Lazard was hired for this purpose).
Source: OECD Development Centre, 2006.
30
Based on Porzecanski, A. “From Rogue Creditors to Rogue Debtors: Implications of Argentina’s Default”, 2005.
Thank you for
your attention!
31
ANNEX:
Three essential challenges for
Latin America
32
Three essential challenges for Latin
American economies :
1 High indebtedness and vulnerabilities
2 Strong dependence on foreign capital
3 Low rates of savings and illiquidity
33
1. Debt ratios have decreased, but they
remain high with respect to other economies…
Average External debt as a share of exports (1996-2005)
500 500
.
Debt as % of Exports .
400 400
Debt as % of Exports
300 300
200 200
100 100
0 0
Argentina Peru Brazil Colom bia Chile Venezuela Mexico India Indonesia Philippines Thailand Korea China Malay sia
Average
Source: OECD Development Centre, 2006
Based on IMF, World Bank, National Data
34
1. Latin American public sector still has
important obligations
Public Sector Borrowing requirements
Latin America
PSBR measure the
financing needs of public,
35 2000 private and social entities
30 2005 that act on the
.
Government's behalf.
Percentage of GDP
25
20
15
10
5
0
Mexico Brazil Venezuela Chile Colombia Argentina Peru
-5
Asia Eastern Europe
35 2000
2000 35
.
30
.
2005
2005
30
Percentage of GDP
Percentage of GDP
25
25
20
20
15
15
10
10
5 5
0 0
India Philippines Indonesia Korea China Malaysia Thailand Turkey Hungary Poland Ukraine Bulgaria Russia
-5 -5
Source: OECD Development Centre, 2006.
Based on: International Financial Statistics, IMF and Central Banks information.
35
Three essential challenges for Latin
American economies :
1 High indebtedness and vulnerabilities
2 Strong dependence on foreign capital
3 Low rates of savings and illiquidity
36
2. Latin America’s investment ratios remain
low and limit growth potential
Outwards FDI flows by region
90
.
80
Billions of dollars
70
60
50
40
30
20
10
0
1988
1985
1994
2003
2000
1991
1997
Latin America Asia
Source: International Financial Statistics,IMF and UNCTAD.
37
2. Capital Flows puzzle is a symptom of the
region’s exposure to market sentiment
Capital Flows to Latin America
100,000
80,000
Millions of US Dollars
60,000
40,000
20,000
Russian Argentinean
Crisis Crisis
0
-20,000
Mar-00
Mar-03
Mar-04
Mar-02
Mar-98
Mar-05
Mar-99
Mar-97
Mar-01
Mar-06
Sep-00
Sep-04
Sep-02
Sep-98
Sep-03
Sep-05
Sep-99
Sep-97
Sep-01
Source: OECD Development Centre, 2006.
Based on: Latin Focus, 2006. 38
2. Latin American governments are still
dependent on international securities
International Debt Securities by Nationality of Issuer
Governments – Amounts outstanding
260 A frica & Middle East
Latin A merica & Caribbean
21 0
Billions of US Dollars
A sia & Pacific
1 60
110
60
10
1996-09
1999-09
1998-03
1993-09
1995-03
2002-09
2005-09
2004-03
2001-03
-40
70 Latin America (2005) 70 Asia and Pacific (2005)
60 60
50 50
Billions of US Dollars
Billions of US Dollars
40 40
30 30
20 20
10
10
0
0 Philippines South China Indonesia Malaysia Thailand
Argentina Brazil Mexico Venezuela Colombia Chile
Korea
Source: OECD Development Centre, 2006. 39
Based on Bank of International Settlements, 2006.
Three essential challenges for Latin
American economies :
1 High indebtedness and vulnerabilities
2 Strong dependence on foreign capital
3 Low rates of savings and illiquidity
40
