If a Martian had descended on earth last week and read the headlines, he would have thought that Latin America is the world's new superpower.

Time magazine had just released its ranking of the 100 Most Influential People in the world, with Brazilian President Luiz Inácio Lula da Silva topping the list. President Barack Obama was No. 4.

Simultaneously, a story by the EFE news agency quoted Francisco Luzon, a top executive of Spain's giant Santander Bank, as saying that "Latin America has the best financial system in the world."

Hours earlier, the spring annual meetings of the World Bank and the International Monetary Fund released projections showing that Latin America's economy will grow by a healthy 4 percent this year, and by another 4 percent in 2011 -- much more than the United States, Europe and Japan.

One of the World Bank reports on Latin America, entitled From Global Collapse to Recovery, carried unusually upbeat headlines, such as "After the fall, Latin America stands tall," and "Things are looking good overall."

Among the report's projections:

-- Brazil will be the economic star of the region this year, followed by Peru, Chile, Panama and Mexico, in most cases thanks to high commodity prices and responsible economic policies. Brazil will grow by 5.5 percent this year, while Peru, Chile, Panama and Mexico will expand by between 4 and 5 percent.

-- Argentina, Bolivia, Colombia, Costa Rica, Dominican Republic, Paraguay and Uruguay will show moderate growth rates of between 3 and 4 percent.

-- Venezuela, the Bahamas and Antigua & Barbuda will be the only countries showing an economic contraction in 2010. Venezuela's economy will contract by 2 percent this year.

But are all these political and economic assessments realistic? Would our Martian friend do a good job if he reported back home that Latin America is becoming one of the major international players?

If one looks a little deeper into the headlines, one might come out with a different story. Brazil's President Lula makes a nice success story of a high-school dropout turned president who doesn't fight with anybody, and he deserves credit for having carried out good domestic macro-economic policies.

But his international clout is at best doubtful.

He has not succeeded in achieving his top foreign policy goals, such as reforming the U.N. Security Council to land a seat for his country and re-negotiating the Doha round of world trade negotiations.

And he has not done much to make Brazil more competitive in the global economy. Brazil is one of the most bureaucratic countries in the world, and this year fell to the 129th place among 183 countries in the World Bank's ranking of how easy it is to do business.

Regarding Latin America's financial system's superiority, if it's true, it may have to do with the weakness -- or greater transparency -- of U.S. and European systems.

As for Latin America's economy in general, it's looking good compared with that of rich countries affected by the global crisis. But it doesn't compare well with China, which is projected to grow by nearly 10 percent this year, nor looks very promising when you look beyond the next two years.

A projection buried in one of the new World Bank reports is very telling: It shows that while Asia's commercial penetration will rise from 16 percent to 22.5 percent of world trade over the next four years, Latin America's will fall from 4.2 percent to 4.0 percent, largely because of the region's failure to come up with new products through innovation.

My opinion: I hope I'm wrong about this, but I fear that the latest headlines are a fleeting phenomenon influenced by a generalized feeling of despair in the United States and Europe.

When things are bad, people tend to look for new heroes who they hope will spark new hopes.

But the fact remains that economic progress in the global economy will depend on who comes up with the best new products.

And while the United States registers 77,000 patents a year and South Korea 7,500, Brazil registers only 100, Mexico about 50 and Argentina 30, according to U.S. Patent and Trademark Office data. These figures may give us a more realistic view of where the region is, and what challenges it faces to become a major world player.

 

 

 

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