The region offers rich returns, but social and economic inequities must be addressed, speakers say
5/23/2011 - With its tremendous potential for economic growth, Latin America is becoming a driving force in the world economy.
But even though the region is ripe with abundant natural resources and investment from Asia, it must still address many of its social and economic inequities to remain attractive to investors.
These topics and more were up for discussion at Kellogg’s Latin American Business Conference
May 7, themed “Shaping the Decade to Come.” The event brought together more than 170 faculty, students, alumni and business leaders from around the world to discuss how to best capture the region’s growth.
During his morning keynote address, Alfredo Capote ’98 pointed to the region’s young population, an “exploding middle class,” a growing economy and a strong GDP and said those are just a few of the reasons that Latin America is appealing to both regional and global investors.
But Capote, a managing director at Goldman Sachs Mexico, painted another picture of Latin America — a region where 132 million people make below $2 a day and where the mostly poor population averages only a few years of schooling.
This has led to what he called the region’s “human capital deficit.” Capote explained that the problem is not the lack of capital but the lack of entrepreneurs.
“This is the challenge for Latin America,” Capote said, and called on students to consider returning to the region to create job-creating enterprises or to lead in the political, education and nonprofit sectors.
The conference’s first panel, “Unlocking Value: Access and Main Sources of Capital in Latin America,” was moderated by Kellogg Finance Professor Paola Sapienza
. Pablo Coballasi ’01, managing director of PC Capital (Mexico), discussed both the favorable conditions and barriers to attracting capital in Latin America.
Coballasi said that although the private equity industry took a dive in 2008 along with the U.S. economy that year, it rebounded in 2010.
“If we want private equity to really take off, we need more investment in private companies,” he said.
Eduardo Mendoza, managing director of BMO Capital Markets U.S. Securitization group, explained that Asia increasingly has looked to invest in Latin America as a consequence of the economic slowdown in the United States. China, he added, has become a huge trading partner for the region.
The panelists agreed that Latin America must address inequalities in education and wealth distribution as well as achieve political stability to realize its full potential. Security challenges and violence have also been problematic for many Latin American countries.
Additional conference panels included “Beyond Borders: Capital Growth in Latin America” and “Social Entrepreneurship and Sustainable Innovation.”
Conference co-chairs Rodrigo Pineda and Carlos Salame, both ’11, observed that attendees were inspired by the keynotes’ motivating speeches.
“We were left with the conclusion by keynote Tomas Malaga (chief economist, Itau Private Bank International) that the region has a very positive outlook for the next 10 years, but it comes with many challenges,” said Salame. “Similarly, we were exhorted by keynote Alfredo Capote to step up to those challenges, as there is no one better prepared in our countries than ourselves to do it.”