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Richardson, YouTube, SMBs, Less Poor

Bill Richardson, Larry Summers, Xavier Becerra, YouTube, Latin SMBE's and fewer poor are the topics of this week's TradeTalk.


Obama's Choices
Free traders are generally happy with president-elect Barack Obama's choices. His selection of New Mexico Governor Bill Richardson as commerce secretary was especially well-received in Mexico due to Richardson's support for NAFTA and his Mexican heritage. Meanwhile, Larry Summers - who played a key role in the 1995 U.S. bailout package for Mexico - will lead Obama's National Economic Council. There's less enthusiasm about Obama's alleged choice for the U.S. Trade Representative, California Representative Xavier Becerra. He voted for the U.S.-Peru free trade agreement, but against CAFTA.

Nortel on YouTube
YouTube is increasingly becoming important for companies and organizations focused on Latin America. We have previously
reported how the American Task Force for Argentina (ATFA) started using YouTube to promote its message of Argentina's obligation to pay off its outstanding debt. Now, the Latin America division of Canada-based telecom equipment provider Nortel has started using YouTube to reach out to current and potential clients. The company's YouTube site features interviews with executives, commercials and demos on its products.

Informal Business
While a majority of small and medium-sized businesses in Latin America still are not formally registered as companies, there are big differences from country to country, according to a new survey from Nielsen commissioned by Visa. "Regionally, the majority of SMBs surveyed are registered as individuals and not as legal entities reflecting a key characteristic of this segment: the lack of separation between the owner as an individual and the company, and the tendency to take a personal approach to business matters," Visa said in a statement yesterday.  However, a closer look at individual countries shows that there are big differences. In Brazil, Latin America's largest economy, 73 percent of the SMB's surveyed were formally registered companies, while only 31 percent in neighboring Argentina were formal. The results are surprising in light of Brazil's image as a country with a far larger black market than Argentina. The survey also shows that 40 percent  of SMB owners continue to use their personal credit card for business purposes, while approximately 76 percent still pay for their expenses with inefficient payment methods such as cash or checks.

Poverty Declines
While there is growing concern about the effect of the global crisis on Latin America's poor, a new report shows that poverty has been declining in the region this year.  During 2008, the percentage of the population living in poverty in Latin America and the Caribbean dropped to 182 million people (or 33.2 percent ) from 184 million (34.1 percent) last year, according to the United Nations Economic Commission for Latin America and the Caribbean (ECLAC). But the bad news is that extreme poverty rose slightly -  from 68 million people (12.6 percent) last year to some 71 million (12.9 percent) this year. Experts define a poor person in Latin America as someone living on less than $2 a day, while an extremely poor person lives on less than $1 a day. The estimated figures for poverty reflect the impact of rising inflation since early 2007, and particularly escalating food prices, although food and fuel prices in the region have ceased climbing in recent months, ECLAC says. Looking ahead, it expects the global economic deceleration to impact the region through a weaker demand for commodity exports, declining investment in productive sectors, lower migrant remittances, and international financial market constraints for emerging countries.  

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