Latin America s GDP ($1.9 Trillion or 6% of World GDP)

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2 Latin America s GDP ($1.9 Trillion or 6% of World GDP) Mexico Share of Region = 33% Share of Region = 31% Brazil Argentina Share of Region = 15%

3 Latin America s Population (480 Million People or 8% of World Population) Mexico Share of Region = 20% Share of Region = 36% Brazil Argentina Share of Region = 8%

4 Latin America GDP Growth Percent

5 Score 6.0 Latin America Ranking Low on Capital Access Index UK Hong Kong Canada Argentina Mexico Colombia Zambia U.S. Chile Peru Brazil Turkey

6 Latin America - Budget Balance Percent

7 Financing In Latin America US$ Billions I 1999 Bank Borrowing Securities Issued minus Repayments II III IV I 2000 II III IV I 2001 II

8 Financial Markets Promote Growth High Income Upper Middle Income Lower Middle Income Low Income Latin America Population GDP Bank Assets Equity Market Capitalization Bonds Market Capitalization Total Financial Assets

9 Structure of Financial Markets Bank Assets (% of GDP) Equity Market Capitalization (% of GDP) Bank Assets / Equity (%) Argentina Brazil Chile Colombia Costa Rica Ecuador El Salvador Mexico Panama Peru Venezuela

10 Latin America s Market Structure (Bank Assets / Equity Market Capitalization) Percent Brazil Colombia Chile Peru El Salvador Mexico Venezuela Argentina Ecuador Panama Costa Rica

11 Latin America s Bank Ownership (Percent of Total Bank Assets) Government- Owned Foreign- Owned Argentina Belize Bolivia Brazil Chile El Salvador Guatemala Guyana Honduras Mexico Nicaragua Panama Paraguay Peru Suriname Uruguay Venezuela

12 Capital Flight From Argentina Percent 6 4 Argentine Bank Deposits Rate of Change Uruguayan Bank Deposits Rate of Change

13 Latin America s Income Inequality Gini Coef. Between Country Within Country Latin America Developed Countries U.S N/A N/A

14 7 Remittances from the United States US$ Billions 6 5 Mexico El Salvador Dominican Republic

15 Percent 30 Remittances as Percent of GDP El Salvador Dominican Republic Nicaragua

16 Latin American Human Capital Flight $8.25 Trillion from

17 Brazil s GDP US$ Billions

18 Argentina s GDP US$ Billions

19 Mexico s GDP US$ Billions

20 Trade with U.S. as Percent of Total Percent Exports Imports 20 0 Argentina Brazil Mexico

21 Latin America s Top 10 Banks (US$ Billions) Country Bank Assets (2000) Market Capitalization (2001) Banco do Brasil Brazil Banco Bradesco Brazil Banco Itaú Brazil Banamex Mexico 34.9 N/A Unibanco-União de Bancos Brasileiros Brazil Grupo Financiero Santander Mexicano Mexico BBVA Bancomer Mexico 22.5 N/A Banco de la Nación Argentina Argentina 19.1 N/A Banco de Galicia y Buenos Aires Argentina Banco de la Provincia de Buenos Aires Argentina 15.0 N/A

22 Latin America s Bank Ownership (Percent of Total Bank Assets) Percent Government-Owned Foreign-Owned Brazil Mexico Argentina Venzuela Chile Panama

23 Latin America Foreign Direct Investment US$ Billions

24 Bolivia Panama Peru El Salvador Guatemala Paraguay Uruguay Honduras Brazil Colombia Ecuador Venezuela Mexico Costa Rica Argentina Chile Average US 70 Percent of GDP Latin America s Informal Economy

25 Latin America s Informal Economy Labor Force Percent of Population 26 Panama Mexico Costa Rica Ecuador Uruguay Colombia Argentina El Salvador Peru Brazil Paraguay Honduras Venezuela Bolivia Guatemala Chile Average

30 How Many Mexicans Own Assets That Are Dead Capital? That is, assets that cannot move freely in national and global markets, that cannot be leveraged to produce capital in the form of collateral to guarantee credits, shares to secure investment, or as accountable terminals for the easy collection of debts, rates or taxes. Dead capital includes: 78 Million Real estate assets Business Assets Urban: 11 million houses Rural: 137 million hectares Includes over 6 million unregistered micro, small and medium-sized businesses, which: Produce approximately 35% of the GDP Employ 47% of the economically active population 80% of the population

31 How Much Is the Poor and Middle Class Dead Capital Worth? Billions of US$ Real estate assets 245 Business assets 70 Total billion dollars which is: 62 times greater than CEMEX annual sales 31 times greater than foreign direct investment 26 times greater than federal public investment 10 times greater than the capital market s annual operations 7 times greater than the asset value of PEMEX

32 Why Are the Majority of the Mexicans Unable to Transform Their Assets into Live Capital? Many assets are untitled. Moreover, where title deeds, certificates or authorizations do exist, in the best of cases, these can only be used to identify the owner, but they cannot be used to transform their assets into live capital. The legal and administrative mechanisms for creating live capital either do not exist or their costs greatly exceed the monthly incomes of the average Mexican citizen. Some examples of costly mechanisms for: Time (months) Steps Cost (US$) Building under the condominium regime Creating a mortgage Foreclosing a mortgage Subdividing a piece of land of sq. m Selling a house which is worth US$ Regularizing a construction Obtaining legal access to business in society

33 Major Areas of Future Interdependence Democracy Getting Entrenched Coordination of Monetary Policies Increased Currency Stability Growing Dependence on Foreign Direct Investment

34 Foreign Investors Distinguish Among Countries Argentine Crisis Appears Isolated NAFTA Provides Benefits to Mexico Brazil, the Major FDI Recipient Venezuela: Localized Political Crisis

35 Argentina Did Not Hurt the Brazilian Real and the Mexican Peso Mexican Pesos per USD (lhs) Brazilian Reals per USD (rhs) /31/00 1/31/01 2/28/01 3/31/01 4/30/01 5/31/01 6/30/01 7/31/01 8/31/01 9/30/01 10/31/01 11/30/01 12/31/01 1/31/02 2/28/02 3/31/02 4/30/02

36 Even the Equity Markets Have Ignored It! (MS CI EMF LA Index - U.S. Dollars) Jan- 88 Jul- 88 Feb- 89 Sep- 89 Apr- 90 N ov- 90 Jun- 91 Jan- 92 Jul- 92 Feb- 93 Sep- 93 Apr- 94 N ov- 94 Jun- 95 Jan- 96 Jul- 96 Feb- 97 Sep- 97 Apr- 98 N ov- 98 Jun- 99 Jan- 00 Jul- 00 Feb- 01 Sep- 01

37 Foreign Direct Investment Flows to Latin America: F (Billion U.S. Dollars) E 2002F

38 Latin America Openness Ratio: F (Exports+Imports/Nominal GDP) % E 18.6% 21.3% 19.6% 19.7% 19.5% 20.5% 19.5% 21.8% 23.4% 23.9% 27.6% 32.1% 29.6% 36.9% 2002F 44.5% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0%

39 Latin America Total Exports: F (Billion U.S. Dollars) E F

40 Latin America - Capital Formation Percent

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