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What is triggering the rise of left-wing politics in Latin America?

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Beatriz Sanchez, Head Latin America at Julius Baer, prefers to see opportunities where others see challenges: "I can't think of a better region and of a more diverse group of peoples, of ideas, of cultures and of social, economic and political activities to stay on top of. So it's really exciting."

Latin America is a very diverse region, culturally, economically. So how would you describe its economic strength?
Beatriz Sanchez: Latin America's economic strength is really its people. It's the energy that its people bring to everyday life, to the future. It's the energy they bring to change by really looking at where they are today and where they need to be in the future. We have seen many examples of that, as more and more women are being educated and graduating from primary, secondary and tertiary schools, as the labour force becomes much more active in new technologies, as more and more start-ups emerge in Latin America.

And what about the challenges?
Clearly, there is still a large disparity of income. And clearly we need to continue to work on that income disparity, but the awareness of it has become a lot more acute. It remains to be seen what the political changes we are seeing in many countries will ultimately bring - in Mexico, for instance. But in Brazil, in Chile, and even in Argentina, which is going through so many problems economically, there is a sense that things need to be different, that young people need to get much more involved and that a dynamic economy, one that is focused on the future, on new technology, and on smart cities and smart energy use is really the way of the future.

Let's talk about investment cultures. Where do you see the differences, where the similarities across Latin America?
If we focus on the similarities first, Latin American businessmen and entrepreneurs in general have taken a lot of risks with their businesses in their countries. They have had to deal with devaluation, expropriation, inflation and sometimes even hyperinflation, as well as radical changes in government policy. So there is a lot of uncertainty, a lot of risk and volatility already inherent in their local businesses. Which explains why they tend to be much more conservative when it comes to their 'sleep-well money' - the money they save for the family, for the next generations. They tend to be much more fixed-income oriented. And while it may seem a bit counter-intuitive to diversify and invest in your own country's assets, they feel comfortable with their own country risk because they know it. They also tend to be very US dollar-based because of the geographic importance of the United States.

And the differences?
The differences lie in the extent to which the different entrepreneurs invest in their countries. Obviously, in countries like Mexico or Brazil, where you have a much deeper local market, a much better regulated market, and more options either in the equity market or in the fixed-income or short-term debt market, entrepreneurs tend to invest much more locally. In countries with a more limited scope - Argentina and Peru, for instance - they tend to invest more outside of their countries.

Having said that, I think today it's really no longer about what I invest in my country of residence and what I invest outside. It's about an asset allocation strategy. Where are the best opportunities, where are the best valuations and how can I diversify my liquid assets to minimise risk and to get myself a return that's attractive.

Where do you see the most promising investment opportunities in Latin America?
There are tremendous opportunities in many areas. Take Brazil, for instance: there are huge opportunities in private equity and venture capital, especially in the education space and in disruptive technologies such as FinTech. In Mexico as well, you have lots of biotech and nanotechnology pockets. In a country like Chile, real estate continues to be a very interesting investment. In general, I see new technologies, smart technologies and real estate continuing to be leading factors. And then, of course, you have the traditional investments that Latin Americans always invest in, which is their local fixed-income markets and equity markets.

Tell us about your daily challenges as head of such a diverse and changing region.
That's funny. I never really look at it as challenges. I look at it as opportunities. Every time there is a change, every time there is an uncertainty, it's really an opportunity to deliver advice and content and to forge a closer relationship with our clients and even with our colleagues. For me the important thing is to always be on top of what is going on in our countries, what is going on politically, economically, socially. What are the concerns of our clients, what is their day-to-day life like, and how can we inject ourselves into that day-to-day life - and the decisions they need to take - and add value. I can't think of a better region and of a more diverse group of peoples, of ideas, of cultures and of social, economic and political activities to stay on top of. So it's really exciting.

How much does your Cuban background help you in getting your daily work done?
Oh, it's essential. Having been born in Cuba, which was such a force in Latin America during the late 1960s, 1970s, 1980s - and even today if you look at what is going on in Venezuela and Nicaragua, etc. - it really drives me to better understand what the socioeconomic impacts of change can be. And it also allows me to be a neutral player, because I am not Mexican, I'm not Venezuelan, I'm not Colombian. I'm really something a bit more international, and so people tend to feel more comfortable opening up and asking certain questions or maybe going in certain directions than if I had a nationality too close to their home market.

Is there a common denominator in doing business in Latin America?
Entrepreneurs, they really don't want to waste time. They want to talk to individuals who are informed, who can give them a new angle, a new perspective, and who give them content that they can really use and which helps either their local business or their international diversification. Entrepreneurs also want access. They want access to ideas, to other entrepreneurs, to investment opportunities and to intelligence. They want access to whatever they can't get on their own. The role that we, Julius Baer, as private wealth advisers need to play is to make sure that we understand our clients - especially those very sophisticated entrepreneurs - and their needs very well, and then see what access we can provide them, whether its external or internal, to really make a difference in their decision-making.

What can we do to attract these entrepreneurs, or what does attract them to Julius Baer?
What attracts these entrepreneurs and these sophisticated investors to Julius Baer are various things. I sincerely believe that being a full-fledged, pure-play private wealth manager, where all our resources, all our investments and all our energies go into private wealth management, is very important. The absence of conflicts of interest is something that entrepreneurs and clients feel very comfortable about. But I also think it's our platform, it's our content, it's our know-how. It's really taking a stand on things like the next generation. The type of activities we're doing around mobility, smart cities, disruptive technologies. That's really the way of the future. If we continue to accompany our clients to that future, we will be able to attract them as well as the next generation of clients. That forward-looking, almost pioneering spirit is a very important element of our DNA, and we must not lose it.
Video production: Scott McNamara
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The economic strength of Latin America? Its people

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Beatriz Sanchez, Head Latin America at Julius Baer, prefers to see opportunities where others see challenges: "I can't think of a better region and of a more diverse group of peoples, of ideas, of cultures and of social, economic and political activities to stay on top of. So it's really exciting."

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1. Do you think Latinamerica is a good place to invest in the near future? Why? What are in your opinion the main risks investors could face?
2. Mention as much trends as you can identify according to the information provided by the videos/graphics/texts
3. In your opinion what are the most similar/different patterns when comparing Latinamerica and Europe?
4. What are the most/less dynamic countries?

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Latin American firms develop new products less frequently than their counterparts in other developing regions. In fact, in Ecuador, Jamaica, Mexico and Venezuela this rate of product development is less than half than that of Thailand or Macedonia. Consequently, this lack of innovation harms competitivity and slows growth and rebounds on quality job creation - a significant development challenge, especially in Central America.

Possible reasons are four-fold:

Human capital: Science and technology graduates and engineers are at a premium in Latin America and it's a scarcity that has a direct effect on innovation. In fact, Scup co-founder Daniel Heise admitted he has been trying to fill ten positions for around a year, but with little success. Closely related to the quality of education, the report recognizes this will be a major challenge for the region.

Intellectual property: With separate laws governing copyright in every country, ensuring intellectual property rights can be a significant bureaucratic undertaking for the region's entrepreneurs. The complicated panorama lends less protection to the product creators, deterring much needed investment for new product research and development.

Risk taking: No-one likes to fail, but in Latin America a deep cultural shame of failure is hindering innovation by dissuading entrepreneurs from taking risks. This is evident as much in individual reticence at a business level as in the low levels of investment in research and development, especially from the private sector.

Logistics: Modernizing ports, transport, and customs can add a competitive edge to products from the region. Currently, poor public services, communication links and transport infrastructure are adding to the obstacles to boosting production capacity in the region.

Quality job creation
Launching the report in Miami, De la Torre proposed that size isn't always the best marker for growth potential and quality job creation. In fact, 'multinational' firms based in Latin America far less dynamic than their offices outside of Latin America and the region's 'multilatina' companies are also suffering from an innovation deficit.

Instead, it is more helpful to consider businesses, whether they be small, medium or large, in terms of their age. In all cases, younger firms far outshone more established ones in terms of job creation. The key, therefore, is to identify early on which startups have the most potential and the support their growth through start up programs, subsidies, business expansion support programs or policy as necessary.

Entrepreneurs are key actors in turning low productivity around to create quality jobs and lasting economic benefit for the region. Consequently the report recommends establishing an economic environment which enables them to innovate and compete, thereby reducing the grip of monopolies, increasing productivity and diversifying the business environment.

"It is about building an innovative entrepreneurial class in which top-notch firms-firms that export goods, services, and even capital-no longer look tepid in contrast to entrepreneurial superstars elsewhere," the report concludes.

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Latin America: Entrepreneurs' lack of innovation curbs creation of quality jobs

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Latin American firms develop new products less frequently than their counterparts in other developing regions. In fact, in Ecuador, Jamaica, Mexico and Venezuela this rate of product development is less than half than that of Thailand or Macedonia.

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While the smoke of protests continues in some parts of the country, there is no doubt, Luiz Inácio Lula da Silva - often referred to as just Lula - won the Brazilian presidency for a third time with 50.9 percent of the vote, narrowly beating the far-right leader Jair Bolsonaro, who obtained 49.1 percent of the votes.

Lula's victory in Brazil could mean many things: A mockery of justice, a story of redemption, hope for the people, a democratic setback, an opportunity for unity, or further division and class hatred. Any of the above may be possible. Despite this, I would like to focus on what the presidential change in Brazil means for Latin America.
A red momentum in the region
The leader of the Labor Party (PT) is closing the cycle of the left, becoming the missing piece in the geopolitical puzzle of Latin America and the Caribbean. For the first time in history, the left controls more than 85 percent of the governments of the hemisphere and holds five of the main economies of Latin America (Mexico, Argentina, Brazil, Chile and Colombia).
Lula the father of the Sao Paulo Forum
Lula, 77, is part of the old leftist school who grew up reading Eduardo Galeano and idealizing Fidel Castro's Cuba. In 1990, Fidel convinced Lula to create the Sao Paulo Forum, a political and ideological tool with a wide presence throughout the Americas, including the United States. One of the premises established by the forum is, "To move forward with proposals for unity of action agreed upon primarily in the anti-imperialist and the struggle of the people." That is why, although Lula came to power democratically, his loyalties and principles appear rooted in the Cuban dictatorship.

The arrival of a red tide throughout the Americas will also affect the election of the new president of the Inter-American Development Bank (IDB) and the almost imminent changes in the secretary general of the Organization of American States (OAS), which for years has been a target of Mexico and Argentina ideological agenda, but now they finally have the political steamroller to crystallize their darkest ambitions.

The reconfiguration of the political map of the left will impact macroeconomic issues, the fight against poverty, politics, democracy and human rights. All these sectors and perhaps others will be under the selective gaze of a left that favors and defends the dictatorships of Cuba, Venezuela and Nicaragua.
Brazil is a key player in the economy and beyond
Although it is true that Mexico and Argentina are large countries with a high political and economic weight, Brazil continues to be the Latin American giant. The country of 215 million people is one of the world's top 10 oil and gas producers and remains the third largest food producer globally. Brazil's exports and investments have significant weight in America and its alignment with other leftist countries could mark a change of direction in hemispheric priorities.
Dangerous liaisons
Latin America and the Caribbean are entering a stage in which the new leaders lack good political credentials and have an erratic record on macroeconomic issues. The new roster of heads of state of the Americas includes former guerrillas, ex-convicts and consummate dictators. With its differences and nuances, there is a clear strategy to strengthen integration regardless of integrity, particularly when it comes to the dictatorships of Cuba, Nicaragua and Venezuela.

In November 2021, Lula said, "Why can Angela Merkel be in power for 16 years and Ortega not?"

In August of this year, Lula referred to the Venezuelan opposition and Juan Guaidó saying, "Europe and the United States should not have recognized an impostor who proclaimed himself president... he should be in jail."

In July 2021, Lula praised the Cuban dictatorship and assured that "If Cuba would not have an embargo it would be like the Netherlands."

A possible watershed moment for valuing nature Young people believe in Democracy, and they're disrupting elections for the better

And in May 2022, Lula said, "This guy (Zelensky) is as responsible as Putin," referring to Russia invasion of Ukraine. This is optic of Lula when it comes to foreign policy.

Regardless of these sad and polemic statements, I want to believe that Lula has seen what a lack of democracy can cause in Latin America, especially in countries like Venezuela, Cuba and Nicaragua. I hope that at the end of this trilogy of mandates, Brazil and Latin America achieve more democracy, security, prosperity and unrestricted respect for human rights. Boa sorte, President Lula.
Arturo McFields Yescas was a member of the Peace Corps of Norway (FK) and former ambassador of Nicaragua to the Organization of American States. Follow him on Twitter: @ArturoMcfields

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What Lula's victory in Brazil means for Latin America

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While the smoke of protests continues in some parts of the country, there is no doubt, Luiz Inácio Lula da Silva - often referred to as just Lula - won the Brazilian presidency for a third time with 50.9 percent of the vote, narrowly beating the far-right leader Jair Bolsonaro, who obtained 49.1 percent of the votes.