Wednesday, June 10, 2015

Understanding Protests in Latin America

A Bloomberg story notes how protests are everywhere in Latin America, attributing it to the end of the commodity boom. However, I am left unconvinced about the causal link between economies and protests.

For example:

--Chile's student protests started in 2011 while copper was still high
--When Venezuelan protests broke out in March 2014, oil was still over $100 a barrel
--there are protests in Guatemala, yet the IMF predicts pretty strong economic growth there
--the article cites corruption in Panama, yet there is even stronger growth there

The problem lies in lumping all these things together:

From Mexico to Chile, Latin Americans frustrated with scandals, stagnant economies and government incompetence are taking to the streets. Often they are protesting the very populist leaders they rallied around over the past decade, when rising wealth from a commodities boom fueled a surge in government spending and helped mask corruption.
In some cases economies are not stagnant; in other cases governments are not incompetent. There are scandals all over, but they are also not all new--if anything scandals and corruption are a constant. So the causation is not so clear.

Take the case of Guatemala. The economy is not stagnant and corruption has been a long-standing problem, yet now is making huge waves. As Mike Allison has blogged about, the protests seem to stem from the creation of CICIG and the timing of elections. In other words, there are protests and they're a new thing, but they're not caused by economic factors.


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