Latin America as seen from Budapest of today

by Zsolt BECSEY, Former State Secretary of Foreign Trade, University Professor

Today it’s almost a cliché to say that we live in a changing world and that new economic, cultural centres are evolving outside the developed world. In the beginning of the century, many people forecast that the economic-social catching up processes which started in the 2000s could be linearly projected and that between 2020 and 2030, Latin America would also start catching up quality-wise after a successful catch-up quantity-wise. However, since the outbreak of the world crisis in 2008, the realignment process has slowed down, because the decrease of raw material prices led to the prioritising of the tendency, according to which only countries with modern scientific facilities and technology are able to achieve sustainable development in the long run.

Latin America, which is in the focus of this issue, produces 8% of the world’s GDP. Its biggest state, Brazil is among the BRICS countries, the association of five major emerging national economies. The country’s GDP exceeds 1600 billion euros per year, which is more than what Russia produces, and is equal to the Italian GDP and is one and a half times higher than the South Korean GDP. Besides the two upper middle class airplane brands (the European Airbus and the American Boeing), the middle category Embraer company is also in Brazilian hands. Thanks to the UN’s reform, Brazil regularly comes up as an aspiring candidate for the permanent membership of the Security Council along with Germany, India and Japan, and is also the most successful football nation regarding world championship titles. Another great Latin American country is Argentina, land of Evita and Maradona, which has become part of the developed world more than hundred years ago thanks to the most intelligent groups of the European immigrants. Despite her financial crises she constitutes part of the G20 countries, just like Mexico. And Mexico is part of NAFTA, to where Hungary’s export is dynamically growing since several American enterprises that produce components in Hungary further assemble their products in Mexico. For instance, a Mexican investor interested in the production of car component equipments founded a production site in Győr not too long ago. The representatives of the country have also been present at the sessions of OECD for more than 20 years. Out of the other Latin American countries, I’d also like to highlight Chile, which carried out a real economic-social miracle with its openness, good quality and competitive export products, qualified work force, thus getting admitted to OECD despite being a middle-sized, faraway country. According to the statistical estimations of UN, the population growth of Latin America is expected to stop soon, significant growth will only characterise Africa between 2020 and 2050, which will be a new situation for the Latin continent: the countries must carry out reforms on the labour market, while avoiding the social polarisation of the population (frequently referred to as “Latin Americanisation”) and being able to fall into line with the rest of the world even if the price of raw materials doesn’t increase. And these prices are currently stagnating, Latin America’s GDP decreased last year, which means that this part of the World is still reactive to and dependant on the price of raw materials.

Recently, Hungary has been keen on strengthening ties with the continent. Before 1990, series of embassies operated on the continent, but the change of regime affected negatively these relations just as much as the ties with Africa. By the start of the 2000s, beside our special relationship network with Havana, only the embassies located in Mexico City, Buenos Aires and Brasília kept operating but our diplomats specialised in trade left the region. Several of the Hungarian-owned buildings were sold, others were left empty or were rented out at best. But what was the reason behind the drastic change? After the change of regime in Hungary, the classic state-owned trade enterprises (the “impexes”) stopped working. No state-operated systems combining experts, technology, trust and funding that could’ve been mobilised in interstate projects were left. Hungarian big companies capable of export vanished or were bought by western companies through privatisation. And if the newly settled world companies export to the Latin New World, then they organise their own global sale systems – irrespective of the Hungarian government.

Still, we managed to make our way back to the region since 2010. We opened several new buildings for our diplomatic missions: we started with the consulate general in Sao Paolo, to then return to Chile with a reopened embassy. We’re present in Ecuador, Peru and even Bogota, the capital of Colombia, which is currently working on her accession to OECD. (We probably won’t return to Caracas due to the local economic-political situation. In case of the further destabilisation of the Venezuelan situation, the resettlement of hundreds of Hungarian families could appears an important national task.) During our missions, we aim to build political and economic relations, and we even have an active trading house in the region.

From a Hungarian point of view, some colourful relations must be highlighted. A good example is Mexico. Hungary’s trade relations with the NAFTA member state have improved so much that it wouldn’t be surprising if the Hungarian export to the country reached at least 800 million euros this year, which is naturally the merit of the American foreign direct capital. In this case our export to the land of the Aztecs and other fascinating Indian cultures could even reach the amount of Hungarian export to the whole of Africa.

Another curiosity is Chile. After the take-over of power by Pinochet, the country fell into deep isolation until the live social experiment of the team of the University of Chicago conducted by the famous economist Friedman. The country started to open up with time and implement democratic patterns, thus building such a strong economy that produces internationally competitive products. Meanwhile, the country’s football team rightfully won the Copa America. Moreover, by now you can find good quality Chilean wines in Hungarian shops.

Cuba is a different story. It seems probable that the island country, which is still standing on socialist bases, can slowly shift from the North Korean model towards the Vietnamese or the Chinese models characterised by competitiveness and openness. Therefore, it’s quite important how other countries represent themselves on the island. Besides Cuban students at Hungarian universities and Cuban guest workers some decade ago, the country is known for long-lasting friendships. Investing in friendships and the future on the land of incredible athletes like Sotomayor, Juantorena and Stevenson is definitely worth considering.

Currently there are no direct flights between Hungary and Latin America, but considering the improving economic relations and the activity of Hungarian communities, this is only a matter of time. Just as we returned to Beijing with direct flights and just as we’ll appear in the USA in the next year, the names of Latin American cities can be expected to appear on the display boards of the Liszt Ferenc Airport in Budapest sooner or later.

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The GLOBS is the only magazine in Hungary that focuses on foreign affairs and trade. The topics cover the different aspects of social life, business and culture (especially business culture), research and development, investment opportunities, charity initiatives, and the everyday life of the diplomatic delegations.
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