Poor Infrastructure Hobbles Growth in Latin America:

Latin America and the Caribbean region has registered strong economic growth in recent years. Yet infrastructure spending by countries in the region has fallen sharply and currently averages less then 2 percent of GDP. A World Bank study suggests that to keep pace with infrastructure development in China and Korea, spending levels of 4 to 6 percent are needed.

So while the Asian Tigers charge ahead, Latin America’s potential to continue to grow and reduce poverty is being stymied by clogged ports, poor roads, and uneven access to electricity—particularly in rural areas. As economies diversify their exports, manufacturers are hitting a literal roadblock as they try to move their goods out to market. One study puts logistics costs for Brazilian producers at a staggering equivalent to 25 percent of production costs. Add to this a public apprehension in the region toward the private sector and a significant challenge unfolds.

Infrastructure Deficit Prevails

The Latin American and Caribbean region is home to 58 million people without water and more than 130 million without sewage treatment. In Brazil, sanitation access in urban areas is at 83 percent compared with 35 percent in rural areas. Countries in the region lag far behind other middle-income countries in the proportion of paved roads—with pavement rates of only 27 percent in 1999. In Costa Rica alone, the country needs to spend an average of $75 million annually in road maintenance—a figure that does not include the massive amounts of investment needed to build new roads. While electricity coverage is nearly comprehensive in urban areas throughout the region, coverage remains very thin in rural areas. And slow growth in generation capacity means that economies are not keeping up with emerging demands.

The public sector alone cannot meet the region’s infrastructure needs. The private sector, although not sufficient on its own to offset the public retrenchment, is a key part of the investment equation. Yet private sector investors remain somewhat reticent to invest due to a handful of high-profile expropriation cases in the 1990s that have exacerbated perceptions of risks. The good news is that investors and governments today have a better understanding of what went wrong and of how to mitigate potential risks, and are forging partnerships that bring to the table the know-how and financing of the private sector, as well as the public interest and regulatory backing of the public sector. And successful public-private partnerships are showing that when there is a genuine partnership and consumer expectations are managed, benefits to all can be.............
http://www.miga.org/news/index_sv.cfm?stid=1523&aid=828


Corruption & Mismanagement:
"The worry now is that a bonanza of oil will weaken an already infirm resolve to drill deeper into the economy's structural problems. These difficulties include an oppressive tax system and a labour code that makes firms wary of hiring. Between them these have confined some 40% of the workforce to the informal economy. Though he needs to spend much more on infrastructure, Lula has squandered a chunk of record tax revenues on padding the public payroll."
http://www.economist.com/opinion/displaystory.cfm?story_id=11052873


Brazil is second only to the United States in producing soybeans:
http://www.choicesmagazine.org/2006-2/tilling/2006-2-11.htm