+ The Political Economy of Foreign Investment in Latin America: Dependency Revisited Andy Higginbottom (2013) Presenter: Mariana Echaniz Arciga

+ Neo l iberal phase of dependency in Latin American countries  flow of surplus value from Latin America to the industrialized world (U.S. & E.U) Quantitative analysis of FDI flows, stock and behavior from FDI stock (investment position) US. vs. EU, 1997–2010. Higginbottom, 2013,192).

+ Current situation Reappearance of dependent extractive economy Global capital inflows with ensuing exploitation of land, labor, and environmental degradation. Transferring surplus value abroad Growing presence of EU. However, USA still getting high returns. Two blocs of countries with diverging strategies since early 2000s: ALBANon-ALBA Venezuela, Bolivia & Ecuador Characteristics:  Dwindling FDI  Nationalizations  Conditionality on global capital Chile, Peru & Colombia Characteristics:  Increasing FDI & international liabilities (national accounts)  FTA & bilateral investment agreements

+ Dependency theory 1970 “Transfer of resources from the most backward and dependent sectors to the most advanced and dominant ones” (Santos, 1970). Systemic value extraction creates underdevelopment or conditions a dependent development.

+ Hub (center) manufactured Spoke (periphery) raw materials

+ Modernization theory Rostow Modernization advocates explain Latin American underdevelopment as a result of “poor policies and weak institutions”. Deny the exploitative character of FDI and say that dependency theorists have misunderstood FDI stocks and flows.

+ Neoliberal dependency in Latin America Author acknowledges possible caveats or shortcomings in the data… Yet: New fields for capital accumulation and transfers. FTA & bilateral agreements that give foreign investor privileged access and secure high profits. At a macro level it seems that Latin America has a solid economy, it grew around 4% from 2002 to Commodities and remittances Net transfers: net capital inflows minus net interest and other investment income payments abroad. 1980s 2000s 1990s

+ Investment profiles 1990: opening up for FDI Chile (Pinochet) & Bolivia (dictatorship) leading 2000: some grow some dwindle Bolivia, Ecuador and Venezuela reduced their FDI stock relative to annual GDP Colombia and Peru increased it from under 12% to 29% in 10 years. Case of Brazil: not only FDI but also promoting “national champions” and “trans-latins” to invest abroad. However, in overall terms FDI in Brazil was four times greater than outgoing investments from

+ NET repatriation of income Net outflow of investment income, “negative income balance” constitutes nearly 3% of the Latin American aggregate annual GDP. Evident privileges and beneficial terms for foreign investors : Aznar “agenda for freedom” (freedom of investors) High profitability of UK-held investments (in 2008, they averaged 20.8%). “The conversion of rent into corporate superprofits […] is a characteristic of imperialism”

+ Conclusions and further research questions FDI stocks and flows constitute, in most Latin American countries, the neoliberal face of dependency US & EU investments are preeminent. They have tripled their share over the last 15 years. FTA & bilateral investment agreements serve foreign interests Two investment regimes since early 2000s, ALBA & Non-ALBA Further questions: social & environmental effects of FDI, trans-Latins, Brazil & Mexico, influence of European civil society, Chinese FDI, offshore effects, military-strategy.

+ Higginbottom argues that Latin American economies are going through a “neoliberal” dependency moment; do you consider that his thesis adequately explains the economic future of the region? Or are the developmentalists right, failure to develop economically is a matter of “poor governance” and “backwards institutions”? Do you think that Higginbottom’s arguments are still valid in the current economic and political context of the Andean region? (Hugo Chavez death, Maduro’s poor economic performance, the deepening of the European crisis, etc)