Economic Tectonics

Christian Manrique’s post

SAINT ANDREAS FAULT.jpg
Saint Andreas Fault

Besides forecasts by world organizations, the only certainty is that global economy is entering a laterality phase, which leads towards stagnation. Things will move again whenever the light comes back to show the path for the challenges the economy is facing today. This will take quite a long time, though.

Global context

On one side there are oil prices, fewer regulatory barriers and tax incentives. On the other side there are Brexit, China deceleration (probably under 6%) and low economic growth for commodities exporting countries, specially within Latin America). All these factors belong to the specific equation that turn economic growth a complete uncertainty.

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PRODUCTION MODEL DRIVERS II by Christian Manrique

Technology and environment

Geographic areas and their competitive core: USA-Canada and LAC

USA and Canada

The United States has a population of 321 million people and it is estimated that by 2050 it will reach 389 million people. Canada will increase its population from 36 million people in 2015 to 44 million by 2050.

The key point in the USA will be to maintain its determination for renewable energies, technological development and environment.

Context is quite optimal due to three main grounds:

  • A legal framework is being consolidated.
  • There’s investment potential and capability.
  • The USA owns most of the technological knowledge needed

USA’s competitive core for the 10 coming years are wind energy development, solar industry, environment parameters improvements for waste treatment and consolidating the technology for the electric car.

The Canadian pattern, which was based upon natural resources (oil) and service sector is being contracted since the beginning of the crisis.

One of its most relevant strengths has to do with diversification within the telecommunications and biotechnology (biomedicine) fields, areas where time, resources and knowledge were invested.

As in other areas, the future should have on account a strong interest on technology and knowledge, implementation of efficiency energy models and infrastructure development incorporating a high technological investment.

Latin America + Caribbean (LAC) 

Latin America has a population of 634 million inhabitants. By 2050, it could reach 784 million, 150 million people in 35 years.

Among these countries, the population of three of them will decrease their population (Cuba, Puerto Rico and Jamaica). Nonetheless, by 2050 two LAC countries will be among the world most populated (Mexico with 163 million and Brazil with 238 million). Both represent 51% of the area population.

This significant population rise will need better basic water and electricity supply, as well as water treatment, nowadays only covered in a 20%.

Latin America’s production model is based in a large scale in its commodities, provoking an extremely fragile situation, even worst among Mercosur countries than within the Pacific Alliance area.

This scenario, hold for over a decade, stuck all this countries in a comfort zone that did not allow them to push upward a new model based on its strengths and opportunities.

The region after a weakness and strength analysis (natural resources, public policies, government strategies, among others) offers a series of opportunities to encounter its intra-area empowerment main challenges.

Fields of activity that could be used for a new production model:

Assuring water supply and treatment along with solid waste treatment could be one important issue as well as developing more opportunities within renewable energies and bio-energy fields, such as bio-mass and ethanol which have a higher potential.

These activities not only generate value by themselves, but also their generation chain, like their maintenance and operations processes.

Within this production model there are countries who have taken steps forward (Chile, Peru, Uruguay, Mexico and Brazil), but they should empower this way with regulatory frameworks.

Among the isles, on their side, remarkable opportunities are given, specifically in relation with their environmental and energy needs, such as clean and renewable energies, as well as solid waste new management systems, looking towards values as Waste to Energy.

Like this, taking resilient steps against the unexpected climatic and nature odds on infrastructures and building turn absolutely vital.

Another line that could be supported within this field would be giving added value to commodities through innovation. In this way, they could hold on with clear competitive advantages in international markets.

All data about population was extracted from UNPD.