Europe and Latin America in the World Economy 9781685854935

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Europe and Latin America in the World Economy

A Publication of the Americas 3 Society

Europe and Latin America in the World Economy edited by

Susan Kaufman Purcell & Françoise Simon foreword by

Gonzalo de Las Heras

LYN NE RIENNER PUBLISHERS

B O U L D E R L O N D O N

Published in the United States of America in 1995 by Lynne Rienner Publishers, Inc. 1800 30th Street, Boulder, Colorado 80301 and in the United Kingdom by Lynne Rienner Publishers, Inc. 3 Henrietta Street, Covent Garden, London WC2E 8LU © 1995 by The Americas Society. All rights reserved Library of Congress Cataloging-in-Publication Data Europe and Latin America in the world economy / edited by Susan Kaufman Purcell, Françoise Simon : foreword by Gonzalo de Las Heras. f>. cm. "An Americas Society publication"—CIP data sheet. Includes bibliographical references and index. ISBN 1-55587-498-3 (pbk.) 1. Latin America—Foreign economic relations—Europe. 2. Europe— Foreign economic relations—Latin America. 3. Latin America— Foreign economic relations—United States. 4. United States— Foreign economic relations—Latin America. 5. Latin America— Economic integration. 6. Economic integration. I. Purcell, Susan Kaufman. II. Simon, Françoise. HF1480.55.E86E865 1994 337.408—dc20 94-14624 CIP British Cataloguing in Publication Data A Cataloguing in Publication record for this book is available from the British Library.

Printed and bound in the United States of America

@

The paper used in this publication meets the requirements of the American National Standard for Permanence of Paper for Printed Library Materials Z39.48-1984. 5 4 3 2 1

To our late friend and colleague, A. Blake Friscia

Contents List of Tables and Figures Foreword Gonzalo de Las Heras Preface Introduction Susan Kaufman Purcell and Françoise Simon 1

2

The Economic Relationship Between Europe and Latin America A. Blake Friscia and Françoise Simon The Impact of Regional Integration on European-Latin American Relations Françoise Simon and Susan Kaufman Purcell

3

Germany and Latin America Wolf Grabendorff

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Spain and Latin America: The Resurgence of a Special Relationship Edward Schumacher

IX XI Xlll 1

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Eastern Europe and Latin America Eusebio Mujal-Leôn

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The Trilateral Relationship: Latin America, Europe, and the United States Riordan Roett

173

List of Acronyms and Abbreviations Selected Bibliography Study Group Sessions and Participants The Contributors Index About the Book and the Editors

195 197 199 201 203 215

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Tables and Figures Tables 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8

1.9

1.10 1.11 1.12 1.13 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Latin A m e r i c a n - C a r i b b e a n T r a d e with Europe, 1 9 8 5 - 1 9 9 1 Latin A m e r i c a n - C a r i b b e a n Trade with M a j o r Areas, 1991 Relative Importance of the European C o m m u n i t y for Latin A m e r i c a n - C a r i b b e a n Exporting Countries, 1991 Relative Importance of the European C o m m u n i t y for Latin A m e r i c a n - C a r i b b e a n Importing Countries, 1991 P e r f o r m a n c e of European C o m m u n i t y Countries in Imports f r o m Latin America, 1 9 6 0 - 1 9 9 1 Relative Importance of Latin America to the European C o m m u n i t y Trade, 1 9 6 0 - 1 9 9 1 P e r f o r m a n c e of European C o m m u n i t y Countries in Exports to Latin America, 1 9 6 0 - 1 9 9 1 Net Foreign Direct Investment Flows f r o m M a j o r European Countries to the Six Major Latin American Countries, 1985-1990 Stock of Foreign Direct Investment in Latin American Regional Groups by Countries of Origin of Investments, 1988/89 Stock of Foreign Direct Investment in Six Major Countries in Latin A m e r i c a by Areas of Investor Origin, 1990 T h e Triad Investment Clusters, 1988/89 Commercial B a n k Claims on Latin A m e r i c a n - C a r i b b e a n Countries, 1 9 8 7 - 1 9 9 2 European Official D e v e l o p m e n t Assistance to Latin America and the Caribbean, 1980/81, 1990/91 E C - 1 2 Chronology C o m m o n Market Implementation by Sector and Area E C C o n s u m e r Prices Variance, 1992 Latin American Free Trade A g r e e m e n t s — C u r r e n t Status E c o n o m i c Variance—Latin A m e r i c a Foreign Trade A m o n g Spain, Portugal, and Latin A m e r i c a , 1 9 7 5 - 1 9 8 9 FDI Flows to Latin America and the Caribbean f r o m Europe, the United States, and Japan, 1 9 7 9 - 1 9 9 0 Argentina and Brazil: FDI Flows

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7 8 12 13 15 16 17

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22 24 25 28 29 42 43 45 52 67 68 68 70

Tables & Figures

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2.9

71

2.10 5.1

Mexico and Chile: FDI Flows Latin America's Top Thirty-five Exporting Firms, 1 9 9 2 Selected Eastern European Countries' Trade with the

5.2

World, European Community, and Western Hemisphere, 1985-1991 Brazil: Trade with Eastern European Countries, Spain, and the European Community, 1 9 8 1 - 1 9 9 1 Emerging Market Debt: Highlights of Total Rates

146

5.3

of Return, 1 9 9 1 - 1 9 9 3 Country Risk Rankings: Latin America and

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5.4 5.5

Eastern Europe, 1993 Country Economic Projections, 1 9 9 3 / 9 4

162 163

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Figures 1.1 1.2 1.3 1.4 1.5 1.6 2.1 2.2 2.3 5.1 5.2

World Trade Comparisons, 1991 Latin America's Export Portfolio to Europe, 1 9 8 0 - 1 9 9 0 Leading Latin American Countries in Trade with the European Community, 1991 Foreign Direct Investment Stock in S i x Major Latin American Economies, 1 9 9 0 Commercial Bank Lending to Latin America, 1 9 8 7 - 1 9 9 2 Official Development Assistance to Latin America by Europe, United States, and Japan, 1 9 8 0 / 8 1 , 1990/91 E C Labor Cost Variance, 1991 Guidelines for Economic and Monetary Union, 1 9 9 3 I n t r a - M E R C O S U R Exports as Percent of Total E C ' s External Trade by Selected Regions and Regional Growth Potential Eastern Europe's Economies, 1 9 9 0 - 1 9 9 7

9 10 14 23 27 33 44 46 78 151 161

Foreword Gonzalo de Las Heras

With the collapse of the Soviet Union, the ability of countries to compete economically has replaced the earlier Cold W a r f o c u s on military competitiveness. Instead of a world divided into two main blocs, each headed by a nuclear s u p e r p o w e r , the new s t r u c t u r e appears increasingly tripolar, d o m i n a t e d by regional e c o n o m i c g r o u p i n g s in Europe, A s i a , and the Americas. T h e e c o n o m i c integration of Europe, of course, began long b e f o r e the collapse of c o m m u n i s m . In f a c t , the process w a s partially an attempt to m a k e Western Europe less vulnerable to the Soviet threat by strengthening e c o n o m i c relations a m o n g the Europeans. Nevertheless, the past f e w years have seen the acceleration of European integration, paralleled by a growing debate over how wide and how d e e p such integration should go. Latin A m e r i c a n integration e f f o r t s also p r e c e d e d the c o l l a p s e of the Soviet Union, but the process that began in the early 1960s was aborted in the 1970s, a victim of intraregional s q u a b b l e s and national d e v e l o p m e n t strategies that p r o v e d too costly a n d inefficient to be sustained. T h e new push toward e c o n o m i c integration in Latin America, which began after the Soviet collapse, is more promising, since it is more attuned to the exigencies of the new global e c o n o m y . Given the very d i f f e r e n t histories of E u r o p e a n and Latin A m e r i c a n e c o n o m i c integration, as well as the d i f f e r e n c e s in the levels of development of both regions, it may seem fanciful to attempt a comparison of the two processes and the implications of both for E u r o p e a n - L a t i n American economic relations. T h e two regions, however, are facing some similar decisions. B o t h must decide how w i d e and how d e e p their respective integration processes should go. European integration is proceeding at multiple speeds, with the core countries moving f o r w a r d faster than the others. Latin America is also characterized by a multiple speed process, although in its case, there appear to be two core groups, N A F T A in North America and M E R C O S U R in South A m e r i c a . O n e is a f r e e - t r a d e area, w h i l e the other seems modeled on the early European C o m m o n Market. Yet the key issue for Latin A m e r i c a in the 1990s—the one that will ultimately determine the extent and success of integration—is no longer the c o n t i n u e d d i s m a n t l i n g of trade barriers or the adoption of c o m p a r a b l e m a c r o e c o n o m i c policies. Instead, it involves the political, social, and

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institutional development of the region. High on the list of what needs to be done is judicial reform and related c h a n g e s that, for e x a m p l e , will introduce more predictability regarding how property rights and corruption claims are treated. A l s o crucial is h u m a n - c a p i t a l d e v e l o p m e n t , since the region shows a w i d e n i n g income gap and lags behind c o m p e t i n g markets such as East Asia in social indicators such as primary education and health care. T h e European Union faces many similar p r o b l e m s in integrating the transition e c o n o m i e s of Eastern Europe and d e v e l o p i n g political institutions in these countries. An additional challenge of Eastern European transition economies is that, unlike Latin America, they also require major efforts in financial institution building. This b o o k e x a m i n e s these issues, as well as the w a y s in w h i c h integration is affecting economic relations between Europe and Latin America. It reminds us that the success of integration ultimately will depend on the e x i s t e n c e of individuals, f i r m s , and institutions in both regions with a stake in the survival of open markets and democracy.

Preface T h i s b o o k is the result of the c o m b i n e d e f f o r t s of many individuals. W e are especially g r a t e f u l to the m e m b e r s of the study g r o u p " E u r o p e and Latin A m e r i c a in the World E c o n o m y , " w h o s e information and ideas regarding E u r o p e a n - L a t i n A m e r i c a n - U . S . relations were useful and stimulating. T h e cooperation of the European C o m m i s s i o n in Brussels and New York is also greatly appreciated. W e thank Linda Pakula, assistant to the vice-president of the A m e r i cas Society until August 1993, for the f i n e w o r k she did in organizing and supervising the study group and for serving as its rapporteur. T h a n k s also to H e a t h e r H i g g i n b o t h a m , her successor, f o r her assistance in p r e p a r i n g the manuscript f o r publication and for supervising the publication process. S t e p h a n i e Crane, secretary to the vice-president of the A m e r i c a s Society, p r o v i d e d assistance in the final stages of the publication process. R o s s C u l v e r w e l l , intern and later assistant to the v i c e - p r e s i d e n t , also greatly contributed to the b o o k ' s publication. W e are especially grateful to A m b a s s a d o r A n g e l Vinas, head of the Delegation of the Commission of the European C o m m u n i t i e s to the United N a t i o n s , and Dr. Francisco Bataller M., principal a d m i n i s t r a t o r of the C o m m i s s i o n of the European Communities, for their constructive critiques of earlier versions of the manuscript. W e also a c k n o w l e d g e Linda Wrigley for her useful contributions to the editorial process and Lynne Rienner f o r her assistance as publisher. This book, and the study group on which it is based, were m a d e possible by a generous grant to the Department of Latin American A f f a i r s of the A m e r i c a s Society by the Andrew W . Mellon Foundation. Susan Kaufman Françoise

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Introduction Susan Kaufman Purcell & Françoise Simon A f t e r the "lost d e c a d e " of the 1980s, Latin A m e r i c a is today regarded as one of the w o r l d ' s m o r e exciting e m e r g i n g markets. In great part, this is the result of e c o n o m i c austerity and restructuring policies that transformed the r e g i o n ' s relatively statist, closed, and inward-looking e c o n o m i e s into m o r e open and c o m p e t i t i v e ones with increasingly d y n a m i c a n d m o d e r n private sectors. T h e s e structural c h a n g e s have been paralleled by an impressive transformation in the attitudes of both the g o v e r n m e n t s and people of Latin A m e r i c a regarding foreign investment. In contrast to the hostility that existed in the 1970s, the region now regards f o r e i g n capital as necessary for Latin A m e r i c a ' s further development and has been engaged in a variety of e f f o r t s to attract it. A l t h o u g h the United States remains Latin A m e r i c a ' s most important trading partner and source of foreign investment capital, W e s t e r n Europe has not neglected the e c o n o m i c transformation that has been occurring in the region. T h e E u r o p e a n s have been especially interested in Latin A m e r ica's impressive e f f o r t s at regional integration over the past f e w years, believing that their own experience with the creation of the Single European Market ( S E M ) allows them to make a unique contribution to Latin A m e r i c a ' s new d e v e l o p m e n t strategy. At the same time, however, the end of the Cold War, particularly the collapse of c o m m u n i s m in Eastern Europe, has understandably required Western Europe to devote more time, energy, and resources to the newly independent countries on its eastern b o r d e r . As a result, it remains unclear whether the E u r o p e a n - L a t i n A m e r i c a n e c o n o m i c relationship will experience continued growth and, if so, h o w much priority W e s t e r n E u r o p e will give to Latin A m e r i c a as an e m e r g i n g m a r k e t . Neither is it clear how continued e c o n o m i c integration within E u r o p e and within Latin A m e r i c a will affect E u r o p e a n - L a t i n American e c o n o m i c ties as well as U.S. relations with both regions. In order to explore these and related issues, the A m e r i c a s Society invited a n u m b e r of experts on U . S . - L a t i n A m e r i c a n , U . S . - E u r o p e a n , and E u r o p e a n - L a t i n A m e r i c a n relations to participate in a study g r o u p called " E u r o p e and Latin A m e r i c a in the World E c o n o m y . " T h e g r o u p included business executives, f o r m e r and current government officials, media representatives, and academics from the United States, Europe, and Latin A m e r ica. Papers c o m m i s s i o n e d for each of the four sessions of the study group were subsequently revised to take into account the ideas and observations

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of the study g r o u p m e m b e r s as well as those of discussion leaders. T h e final versions of the chapters included in this book nevertheless represent the personal views of each of the authors, not the conclusions of the study group as a whole. In the first chapter, " T h e E c o n o m i c Relationship Between Europe and Latin A m e r i c a , " the late A. Blake Friscia of N e w York University and Françoise Simon of C o l u m b i a University present an o v e r v i e w of Europ e a n - L a t i n A m e r i c a n trade relations, patterns of European direct investment in and lending to Latin America, and the varieties of European economic assistance to the region. They conclude that the consolidation of the Single European Market in Europe and competition f r o m Central Europe may negatively a f f e c t some Latin A m e r i c a n exports, although primary products may benefit. In the area of foreign direct investment, Europe will want to maintain its c o m p e t i t i v e position vis-à-vis the United States in Latin A m e r i c a . T h e outlook for E u r o p e a n b a n k i n g and f i n a n c e is also strong, but e c o n o m i c development assistance will probably not increase as rapidly as in the past and will b e c o m e m o r e technical. In " T h e Impact of Regional Integration on E u r o p e a n - L a t i n American Relations," Françoise Simon and Susan K a u f m a n Purcell of the Americas Society examine the possible implications for Latin America of E u r o p e ' s e v o l v i n g integration process. T h e y then discuss the current integration process in Latin A m e r i c a and the policies that the European Union ( E U ) has adopted to assist the process. Finally, they examine how integration is influencing E u r o p e ' s trade and investment strategy in Latin A m e r i c a and the w a y s in which regional r e s t r u c t u r i n g is impacting Latin A m e r i c a n companies in various industry sectors. T h e y conclude that on both sides of the Atlantic, an initial, centrally planned integration process is giving way to a fuzzier, multitiered, and multipolar set of hybrid groupings, but that, in general, the European model is largely not applicable to Latin America, which may see a " s h a k e o u t " of its subregional blocs. From a business standpoint, the e c o n o m i c links between the two regions reflect the worldwide shift f r o m interregional trade to investment. In " G e r m a n y and Latin A m e r i c a " Wolf G r a b e n d o r f f of the Institute for E u r o p e a n - L a t i n American Relations ( I R E L A ) points out that Germany is Latin A m e r i c a ' s most important e c o n o m i c partner a f t e r the United States. G e r m a n transnational actors such as parties and trade unions also play an important role in Latin A m e r i c a . Nevertheless, the G e r m a n c o m mitment to European integration and to the restructuring of a unified Germany imply that Latin America is of limited and declining importance for G e r m a n y . Despite this geopolitical reality, Latin A m e r i c a , particularly Brazil, Mexico, and Argentina, is of g r o w i n g importance for German investment, and G e r m a n y continues to be Latin A m e r i c a ' s most important EU aid donor.

Introduction

3

In the f o u r t h c h a p t e r , " S p a i n and Latin A m e r i c a : T h e R e s u r g e n c e of a Special R e l a t i o n s h i p , " E d w a r d S c h u m a c h e r of the Wall Street Journal e m p h a s i z e s the i m p o r t a n t role that S p a i n has p l a y e d s i n c e it j o i n e d the E u r o p e a n U n i o n in s h a p i n g the l a t t e r ' s p o l i c i e s t o w a r d Latin A m e r i c a . H e arg u e s that the historical a n d cultural links b e t w e e n Spain and Latin A m e r i c a h a v e also e n c o u r a g e d S p a n i s h e f f o r t s to f o r g e an I b e r o a m e r i c a n c o m m o n w e a l t h of S p a n i s h - and P o r t u g u e s e - s p e a k i n g c o u n t r i e s . F i n a l l y , S c h u m a c h e r e x a m i n e s S p a i n ' s g r o w i n g i n v o l v e m e n t in Latin A m e r i c a ' s p r i v a tization p r o j e c t s as well as its e v o l v i n g trade r e l a t i o n s w i t h the r e g i o n . H e c o n c l u d e s that a l t h o u g h S p a i n ' s trade with and i n v e s t m e n t in Latin A m e r ica are g r o w i n g as Latin A m e r i c a r e s t r u c t u r e s a n d o p e n s its e c o n o m i e s , they a r e p a r a l l e l e d by an e v e n m o r e r a p i d a n d i n t e n s e i n t e g r a t i o n w i t h Europe. In the f i f t h c h a p t e r , " E a s t e r n E u r o p e a n d Latin A m e r i c a , " E u s e b i o M u j a l - L e o n of G e o r g e t o w n University argues that there h a v e not been significant economic relations between Eastern Europe and Latin America d u r i n g the 1 9 8 0 s and early 1990s. In fact, the t w o r e g i o n s can b e r e g a r d e d as c o m p e t i n g f o r i n v e s t m e n t capital. S i n c e 1989, capital f l o w s to Eastern E u r o p e h a v e b e e n m o d e s t w h i l e t h o s e to L a t i n A m e r i c a , a l t h o u g h m o r e s u b s t a n t i a l , are still t o o short t e r m . M u j a l - L e o n p o i n t s out, h o w e v e r , that Eastern E u r o p e is the M e x i c o of the E u r o p e a n U n i o n . H e a r g u e s that, as a result, capital f l o w s to Eastern E u r o p e will increase, a l t h o u g h they will not n e c e s s a r i l y divert i n v e s t m e n t f r o m Latin A m e r i c a b e c a u s e the t w o r e g i o n s will c o n t i n u e to o f f e r d i f f e r e n t o p p o r t u n i t i e s to p o t e n t i a l i n v e s t o r s . In the f i n a l c h a p t e r , " T h e Trilateral R e l a t i o n s h i p : Latin A m e r i c a , Eur o p e , a n d t h e U n i t e d S t a t e s , " R i o r d a n R o e t t of the P a u l H . N i t z e S c h o o l of A d v a n c e d I n t e r n a t i o n a l S t u d i e s ( S A I S ) of J o h n s H o p k i n s U n i v e r s i t y outlines the historical ties b e t w e e n E u r o p e and Latin A m e r i c a , a r g u i n g that the c o n f l i c t u a l r e l a t i o n s h i p b e t w e e n E u r o p e a n d the U n i t e d S t a t e s o v e r Central A m e r i c a in the 1 9 8 0 s has b e e n r e p l a c e d b y a return to m o r e c o o p e r a t i v e r e l a t i o n s in the a f t e r m a t h of the Cold W a r . H e p o i n t s out that E u r o p e ' s e c o n o m i c relations with Latin A m e r i c a are s e c o n d only to those of the U n i t e d States. T h e f u t u r e will p r o b a b l y see a c o n t i n u a t i o n of U.S. leade r s h i p in M e x i c o a n d C e n t r a l A m e r i c a , w h i l e E u r o p e ' s e m p h a s i s on the s o u t h e r n part of S o u t h A m e r i c a will be m a i n t a i n e d . D e s p i t e a s l o w but s t e a d y i n c r e a s e in E u r o p e a n i n v e s t m e n t , f i n a n c i a l o p e r a t i o n s , a n d b a n k l e n d i n g in Latin A m e r i c a , R o e t t s e e s no E u r o p e a n plan to c h a l l e n g e U.S. h e g e m o n y in the A m e r i c a s .

1 The Economic Relationship Between Europe and Latin America

A. Blake Friscia & Françoise Simon

E c o n o m i c integration in Europe 1 presents both challenges and opportunities for Latin America. T h e implementation of the Single Market initiated in January 1 9 9 3 may have both a positive and a negative impact on Europ e a n - L a t i n American trade. Further, the November 1 9 9 3 approval o f the European Union is bound to influence not only investment, but also foreign assistance to nonmember states, including those in Latin America. Finally, trade, investment, and aid will all be further affected by the widening o f the E U ; this includes the a c c e s s i o n to the E C - 1 2 o f three E F T A countries (Austria, Sweden, and Finland) as well as the recent Association and Cooperation Agreements with major Eastern European countries and with Russia and the Ukraine. Europe is Latin A m e r i c a ' s second most important export market and source o f direct investment. European banking and finance are playing a key role in bringing external capital into the region. Although the Single Market will present growth possibilities for Latin American exports, questions remain about potential trade diversion against Latin American goods. Direct concessionary aid from Europe is o f minor importance to the region; nonconcessionary loans, investments, and credits are of greater significance. For Europe, market liberalization and economic growth in Latin America lead to a better export market, and Latin American privatizations present attractive investment opportunities. T h e r e is uncertainty, however, about whether Europe will turn inward with its deepening and widening process, and whether trade, aid, and investment will shift away from Latin America and move toward Eastern Europe and the Mediterranean Basin. A tentative conclusion is that, influenced by Sunbelt members such as Spain and Portugal, Europe will try to strengthen its links with Latin America, but not at the expense of its neighbors to the east and south.

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S C O P E OF F O R E I G N T R A D E

Current Situation Given the differences in development and income between Europe and Latin America, one may expect an imbalance in their trade patterns and in the nature of their trade portfolios. Indeed, while Latin America holds a less than 2 percent share of Europe's trade, Europe is Latin A m e r i c a ' s second largest trade partner (after the United States) and accounts for 2 3 percent of Latin A m e r i c a ' s trade. T h e s e asymmetries, however, mask the considerable absolute value of trade flows between the two regions and their special importance for some products and for some countries. Total Latin American-Caribbean exports amounted to over $ 1 4 0 billion in 1 9 9 1 , a 41 percent increase from 1 9 8 5 . Exports to Europe were $ 3 2 billion, and their growth rate—almost 6 9 percent—considerably surpassed that of Latin A m e r i c a ' s exports. ( S e e Table 1.1 for Latin American-Caribbean trade with Europe and Figure 1.1 for world trade comparisons) On the import side, there has also been a rise in Europe's share of Latin American purchases, from 2 0 percent in 1 9 8 5 to 23 to 2 5 percent in recent years. As with exports, Latin American buying from Europe has risen faster than the rate of Latin America's total imports, more than doubling since 1 9 8 5 . Even though Europe is b e c o m i n g more important to Latin A m e r i c a , the United States continues to be Latin A m e r i c a ' s major trade partner, accounting for 4 1 percent o f Latin A m e r i c a ' s exports and almost 4 5 percent o f its imports. ( S e e T a b l e 1 . 2 ) Latin America also has a much greater strength in the United States, accounting for 12.5 percent of U . S . imports, as against 2 percent of Europe's. This strength is due in part to geographic linkages (driven by M e x i c o ) but also suggests the difficulties Latin American producers have had in gaining market access in Europe because o f restrictive practices or insufficient product competitiveness. Latin A m e r i c a ' s concentration in exporting primary goods with slow demand growth has also contributed to its decline in European markets.

Recent Evolution During the debt crisis in Latin America in the 1 9 8 0 s , the region ran large ( $ 4 to 5 billion) annual trade surpluses with Europe. ( S e e Table 1 . 1 ) However, these were driven by the need to generate foreign exchange to pay interest on the large Latin American debt. Only in 1991 did these surpluses decline, from $ 2 7 billion in 1 9 9 0 to almost $ 1 0 billion in 1 9 9 1 , as imports from Europe began to grow more rapidly. This decline was in line with the improved 3.5 percent real gross domestic product ( G D P ) growth o f Latin America in 1991 as the region began to recover. 2 Finally, in 1 9 9 2 the trade balance shifted to a deficit o f almost $ 6 billion and the current account

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