Chinese Tales

Andres Oppenheimer's latest book, Chinese Tales, advances a basic proposition: Latin America is falling behind the rest of the world in competitiveness. He gives many examples, from the declining share in global trade to the rapid relocation of the headquarters of many Latin American businesses to Miami.

I am reading the book while on vacation in Fort Lauderdale, Florida. Oppenheimer's argument is especially obvious in this city. Here is how.

This is my first visit to Fort Lauderdale and I was surprised to see the big build-up in hotels and housing. Ever the economist, I have been asking around why. The answer: Miami is getting very expensive and vacationers and retirees are moving looking further north. Only a 20-minute drive from Miami, Fort Lauderdale is benefiting from this migration. There is a new Hilton (I am staying here and like it), new Sheraton, and a nearly-completed Trump Tower. Many new condo buildings too.

The next question is why Miami is getting so expensive. Local residents have the answer: because Latin American businesses are moving to Miami. Oppenheimer is right about this trend, it seems.

The final question is why they are coming to Miami. Oppenheimer offers three explanations: to escape political instability (read Hugo Chavez and company), a bad business environment, and worsening crime rates. (The book is in Spanish, so I may have missed some subtler explanations.)

In my mind, the latter two are one and the same. Latin America is reforming slower than any other region in the world, which makes for few new jobs. Combined with large waves of migrants from rural to urban areas, few job opportunities spell crime. So absence of reforms denies people jobs, and some turn to crime. A simple, albeit sad, story for Latin America. The beneficiary is the Fort Lauderdale real estate market.

The one bright spot is Colombia - a top reformer in Doing Business 2008. Indeed, I am told that Miami is greeting new waves of Venezuelans, but Colombians are leaving for Bogota.