The very wealthy tend to be trans national and much more apt to leave the local market. Middle class investors tend to be more concerned about currency risk and keep their capital where they intend to spend the rest of their lives. A prosperous middle class is vital for a stable economy.
Agreed, however, as we have discussed before, corruption (á la third world) has become a great stumbling block for the success of said middle class. (and for the proper functioning of free markets).
I suspect that such middle class, slowly will begin to move their hard earned funds into US Dollar based assets, since many are convinced that saving in their corresponding local currencies is an exercise in futility given the constant devaluations.
For the above to take place openly, in many countries financial reforms, needs to happen. In spite of resistance by the most ardent nationalists, these reforms are beginning to take place. I am referring here to the regular 'middle class' since the more affluent ones do so anyway, (as you suggest), and obviously with discretion.
This is starting to become more relevant because the increasingly growing Hispanic population already living in the US will influence (and strengthen) the idea of saving in US Dollar denominated assets to their relatives living in LatAm.
The political benefits are also important.
Indeed, and the dinosaurs of power in the third world, (example The PRI in Mexico), are most interested that progress and "opening up" does not take place, to the point of the use of violence. (i.e. the Colosio murder, (1994) and subsequent other assassinations in Mexico).
Open violence like that has not been common for many years, at least in Mexico. This has changed dramatically for the worse.
Will free markets be victorious ? I do not know... I see a tremendous risk coming from the rampant growth in populations of most third world countries.... (pedestrian countries), because this continues to put a great deal of strain upon these countries infrastructures, (therefore efficiency of operations), and the potential desired growth of their middle classes will be greatly reduced.
This article, (containing an interview with Colosio's father), gives a glimpse of the power struggle and dramatic renewed violence in Mexico, not seen since the 1920's.
latinolink.com
Unless this corruption is solved.... the internal growth will be stunned and clouding the full potential of free markets, which to boot, will be blamed as the mothers of all disasters. |
