Malfunction of National Governance

There are many different national and regional government situations across Latin America which present high-risk scenarios for doing business: Brazil’s government corruption scandals, Mexico’s corporate governance issues, Venezuela’s huge governance crisis, among others. The issue is that every time any of the South American countries (Chile could be more stable), changes president a whole new world of rules, regulations and economic decisions are built. This surely affects local and foreign investment as international companies feel insecure on an unstable environment.

The situation is: today its great! What to expect tomorrow?

This feeling is unique for Latin American executives: 44% of LAC executives name the failure of national governance in their top 3 risks.

Fiscal Crises

Today the fiscal regulatory environment in LAC is complicated and unstable. Its common to say that this fiscal crisis affects business development in the region in a similar way as the 1980’s Latin America’s debt crisis did.

The management and quality of the actual fiscal policy in LAC has a direct relationship with the crisis of national governance, as all legal, economic, and political aspects of the government are responsible to deliver a reliable and secure business atmosphere for LAC and foreign executives.

For this to happen fiscal results must be stabilized. Improvements of the fiscal crises in South America are to be seen during the next few years. Argentina and Brazil have already presented a new fiscal framework to increase fiscal clearness and reliability.

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Social Instability

This is the biggest risk in LAC as negative social factors represent fundamental risks to a successful and fully-functioning operating environment for business. With high levels of social inequity and a unprotected lower middle class.

It is critical that governments of several countries in South America, work together aspects as government issues, private sector, and civil society to reduce social inequity in the region. This can be achieved with a bigger access to housing, health, and education. The idea that different countries of the region get together to improve social instability makes sense as South American countries share historical, social, and demographic similarities such as language and religion.

Challenges like these can also be opportunities for international and national companies
to introduce solutions across the region.