THE BANKER: How to stop hot money burning Latin America’s growth prospects

The World Bank's chief economist for Latin American and the Caribbean, Augusto de la Torre, discusses ways to increase the value of foreign direct investment in the region and how to manage short-term capital flows.

Capital inflows used to have a very pronounced affect in Latin America, given their association with the financial instability of the 1990s. The region used to be regularly shaken by what one economist called "sudden stops", massive reversals in capital inflows, says Augusto de la Torre, chief economist for Latin American and the Caribbean at the World Bank.

“Our analysis shows that the region is now more integrated into international capital markets and inflows are not nearly as vulnerable today,” says Mr de la Torre. Residents used to save in dollars because of credibility issues with local currencies. Financial dollarisation is slowly disappearing in the region. “More flexible exchange rates mean that currency movements, instead of amplifying shocks, have now become a shock absorber. Today, the fear of currency depreciation has been replaced by a fear of appreciation. The concept of sudden stops has to be revisited."

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I've been researching and writing on Brazilian financial markets, industry and economy since 2006 for a wide range of specialist media, consultancies and investors. Before that I spent over 10 years in London and New York writing for and editing magazines and journals dedicated to finance, investment and economics in developing markets, mostly for the Euromoney Institutional Investor group and Thomson Financial. Areas of coverage Below are samples of areas that I cover and some of the common themes that I investigate. Capital markets BM&FBovespa markets *capital raising trends: via equities (IPOs and secondary issuance), debt and loans *the asset management industry: legislation and coverage of the key hedge, pension and investment funds * corporate governance: how the regulator is seeking to strengthen best practice and limitations * debt markets: the nascent corporate markets, attempts to boost liquidity and new insturments. * private equity market: why this market has been so successful, who’s involved. *electronic, high frequency trading and alternative trading platforms: what does the future hold? Banking *credit: the growth of consumer and business credit and competition between banks and models *Public versus private: the role and market share of public and private sector banks and the politicization of the industry * internationalization: which Brazilian banks are expanding overseas and where * investment banking: the growth of the domestic market and who’s winning which mandates *regional banks and development banks: what role they play in the industry and how they compete Mining *licensing: the complex process of obtaining environmental, water, land and operating licenses at a state and federal level. * capacity: the feasibility and sustainability of capacity increases * financing: how miners are raising finance in Brazil and abroad *competition: the interplay Vale, MMX and junior miners *logistics: rail, road and port connections Oil and gas: the fund raising issues related to the massive of pre-salt (link) Multilatinas: Who are they and how and where they are expanding Meatpacking: Are debt burdens sustainable, what are the different business models for areas such as branding and distrbution Agriculture: How are farms consolidating, what are environmental risks, how can foreign investors be involved. IT and software: Can Brazil take on India and build a viable long-term IT industry? For more information on clients and work, please see the media and consultancy sections.
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