Andres Oppenheimer
Once again, Latin American tourists -- benefiting from their countries' strong currencies and a weak U.S. dollar -- are flocking to Miami and buying up whatever they can.
It's good for Miami, and it's good for the visitors, but the whole thing makes me nervous.
I've seen this happen before, and it didn't end well. Mainstream economists say this time it's different, but readily admit that the story may not have a happy ending.
Much like in the early 1990s, when South American tourists were known as "dame-dos" (give me two) by Miami merchants because they used to buy two sets of whatever they liked, there is a big increase in Brazilian, Argentine, and other Latin American visitors to
According to the
The tourists can be seen carrying heavy shopping bags along
A staggering 80 percent of all condos sold in downtown Miami this year have been bought by foreigners, says
The reason for the latest surge in Latin American visitors is clear: Most Latin American currencies have become increasingly stronger, and the U.S. dollar increasingly weaker.
Brazilians are coming on weekend shopping sprees.
Trouble is, some of the most recent Latin American financial crises have been preceded by years of strong currency appreciations. Before
Are we in front of a bubble that will burst once again? I put that question to several economists this week. They said most Latin American countries are more resistant to external shocks than they were in the 1990s, because they are managing their economies more responsibly, and because there is a new factor that is helping
But economists also warn that if Latin American countries allow their currencies to keep appreciating, it will become increasingly difficult for them to export -- especially non-commodity goods -- because their products will be too expensive in world markets.
"When currencies are too strong, it tends to hurt exports," says
My opinion: We should celebrate most Latin American countries' economic growth, and recognize that they have been more financially responsible in recent years. But I'm worried that we may see new financial crises in the region unless countries move faster to diversify their exports and come up with new and better products to sell abroad.
To do that, countries should invest more -- and invest more smartly -- in innovation and education. Currently Latin American countries together account for less than 2 percent of all world investments in research and development of new products, according to the Ibero-American Science and Technology Research Network.
If most countries in the region added a big push for innovation, science, technology and education to their generally sound economic policies, we would all breathe more easily, and could expect to see flush Latin American shoppers traveling to Miami for a long time.
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(C) 2010 Andres Oppenheimer