Introduction

This research is about Latin America's Trade Performance in the New Millennium. Trade liberalization began during the 1990s for most Latin American countries. After decades of inward-looking economic policies and the struggles to develop a strong industrial base, countries such as Brazil, Mexico, and Argentina are considered today to be emerging economies with competitive industrial sectors.

Discussion

One of the results of trade liberalization has been a transformation in the composition of exports, with an increase of manufactured goods as a share of total exports. However, trade performance has not been homogeneous for the whole region. While Mexico's exports are concentrated in manufactured products directed to the U.S. market, countries from South America are more diversified in terms of their export destination and share a significant intraregional trade. MERCOSUR plays an important role for the region as well as the Andean Community. (Helwege, 99-123)

The rise of China in the global economy has been a turning point for Latin American primary goods. Since 2003, these countries have become one of the main origins of exports as well as destinations for imports coming from China. In industrial sectors such as textiles, China has been a serious competitor with Mexico and Central American countries in the U.S. market.

The financial global crisis of 2008 will have an important impact on Latin American economies. At the beginning of 2008, the economic growth rate prediction for the region was around 3%. At the beginning of 2009, that percentage was dropped to -0.1%. (Balassa, 58-78)Latin America faces the current global financial crisis as a new test of how it can manage an external shock without entering a recession. The crisis will hit countries that depend on the U.S. market for their exports more severely, such as in Mexico and Central America. Moreover, incomes from remittances also will diminish during this period. Meanwhile, South America will experience the impact of financial restrictions and the decline in the demand for primary goods. The crisis will also help countries such as Peru to cope with imminent inflation problems. (Giles, 261-337)

In the second era of globalization, Latin American countries are much better prepared to face external shocks. The region has stronger institutions with significant international reserves as well as fiscal and monetary discipline that will help to ease negative impacts. The financial crisis has been analyzed as evidence of market failures. For this reason, Latin America is taking this time to reassess, searching ...