The economic situation in Latin America is complex, as the COVID-19 pandemic and the war in Ukraine have caused various problems, and these problems have pushed many countries into recession, which means that the economies of Argentina, Mexico, and Venezuela are far from recovering, despite the region’s economies having significant development potential.
At the beginning of the year, the year-on-year inflation rate in Mexico reached almost 8%. One of the products that rose the most in price was eggs (more than 15% in February 2023).
The importance of this increase lies in the fact that per capita consumption is 345 eggs per year and that, in addition, its rise affected the prices of other usual products in the diet of Mexicans: flour tortillas, breads, and cakes, among others.
The reasons for this rise Among others, higher production costs (water, energy, and feed have become more expensive) and the threat of avian influenza forced the slaughter of many laying hens. Altos de Jalisco, the leader in egg production with about 25 billion eggs in 2022, has been one of the locations hit by this health disaster.
The business began more than 80 years ago as a backyard activity; some families had laying hens in their homes, and what began as a model of self-consumption and neighborhood sales gradually grew and professionalized. One of the keys to this success is that companies have acted with each other as allies and have taken advantage of synergies to strengthen their businesses against other competing regions.
As for the foreign sector, Mexico seeks to take advantage of the advantages offered by the trade agreement with the United States and Canada (T-MEC) and the global trend towards the close relocation of production (nearshoring).
Venezuela and South Korea began an industrialisation process centered on import substitution more than seven decades ago. While Venezuela had more physical capital (machines and infrastructure), South Korea had a more educated workforce.
The point is that at a higher level of education, labor and capital complement each other. Thus, South Korea is now among the world’s leading economies. The other side of the coin is that the lower training of the labor force encourages the replacement of labor by machinery, destroys jobs, and makes work precarious.
On February 18, 1983, Venezuelan President Luis Herrera Campns said that the country’s massive fiscal deficit necessitated the installation of exchange restrictions.
They started the perilous bolivar-dollar relationship. Dollarization became transactional 35 years later to safeguard income from hyperinflation and institutional instability.
The point is that dollarization is a difficult process to reverse, requiring economic and monetary authorities to control inflation and carry out deep structural reforms.
