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Free Markets? Yes, Please

Despite populist leaders, Latin Americans favor free markets. Venezuelans are most enthusiastic.


While the U.S. Congress has been moving slowly on passing free trade agreements with Latin America, a majority of Latin Americans are expressing clear support for free trade.

Out of seven Latin American countries surveyed by Pew Research Center, six had more free-market support than opposition. The only country where free market opponents are greater than supporters is Argentina.

The survey comes as Charles Rangel, chairman of the U.S. House Ways and Means Committee, has signalled that he may support the FTA with Peru. During a visit to Lima on Monday, he said the Peru FTA would be a priority when Congress reconvenes after its August vacation.


"A debate on the ratification of the FTA by the U.S. Congress in September, when the summer recess ends, could mean a ratification in October 2007, though such a plan may be subject to delay," US-based consultancy Global Insight said today. "Whatever the timing, Rangel's commitment bodes well for the deal."

The Peru-U.S. FTA was signed in April 2006, but has been pending US congressional approval. U.S. officials have also signed FTA's with Colombia (November 2006) and Panama (June 2007), which have also been delayed in obtaining approval. Despite a widely-announced deal in May between the Bush Administration and leaders of the Democratic Party on a compromise that secured passage of the three FTA's, key Democrats delayed the Colombia FTA indefinitely while requiring Peru and Panama to first pass additional laws before they would approve the accord.  

Nearly half of all Peruvians - 47 percent - support for free trade, while 42 percent oppose it, the Pew survey shows.

Free markets receive even higher support in countries like Bolivia, Chile, Mexico and Venezuela. 
"There is broad support for free-market economic policies across Latin America, despite the election in the past decade of leftist leaders such as Venezuela's Hugo Chavez," Pew comments. "Latin American respondents generally believe that people are better off in a free market economy, even though some people are rich and some are poor."


Amazingly enough, Venezuela is the country with strongest support for free markets. A whopping 72 percent of Venezuelans favor free markets, while only 27 oppose it, according to the survey. That despite the daily attacks against free markets from Venezuelan President Hugo Chavez and his administration.

Brazil, Latin America's largest economy, followed - with 65 percent support for free markets versus 33 percent opposition. Brazil has since 2003 been led by a nominally leftist, Luiz Inacio "Lula" da Silva, who has generally followed market-friendly economic policies.

Another surprise: Chile came in third in terms of free-market support, with 60 percent support and 28 percent opposition. Chile is seen as the free-market bastion and model of Latin America (See Chile: A Role Model for Latin America?).

Bolivia also showed surprising results: 53 percent support free markets, while only 39 percent oppose it. That despite the anti-market policies of President Evo Morales, a close ally of Chavez.

Also Mexico showed a clear majority for free markets - 55 percent - versus 39 percent opposition. Mexico's economy, Latin America's second-largest, has long benefited from free trade agreements like NAFTA, which have helped it become the top exporter in the region (See Latin American Trade Sets New Record).


Meanwhile, in Argentina, a slim majority - 44 percent versus 43 percent - oppose free markets. Argentina's president Nestor Kirchner has followed anti-market policies and frequently attacks local and foreign investors.

Despite the results, a majority of the population in countries like Venezuela and Bolivia continue to support their governments, the survey showed. 68 percent of Bolivians expressed satisfaction with their government, while 61 percent of Venezuelans had the same opinion of Chavez.

The Pew survey also shows that Latin Americans have become happier with their personal income. A clear majority - 62 percent - are today happy with their family income, a 16 percentage point rise from 2002, when only 46 percent expressed the same sentiments. That also means Latin Americans are happier in this regards than the populations of Asia, Eastern Europe and Africa.


The results of the survey come as two Dallas Fed officials also argue that Latin America has not abandoned free markets despite the election of leftist populists.  "Is Latin America saying adios to market-friendly reforms? It doesn't look like it—left-leaning election results notwithstanding," William C. Gruben and Richard Alm at the Federal Reserve Bank of Dallas argue in a recent paper. "The retreats have been limited to a few countries and a small segment of the overall population. Elsewhere, the region largely retains market reforms, while some countries continue to move forward, albeit cautiously."

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