Latin America’s GDP($1.9 Trillion or 6% of World GDP)

Brazil

Argentina

Mexico

Share of Region = 31%

Share of Region = 15%

Share of Region = 33%

Latin America’s Population(480 Million People or 8% of World Population)

Brazil

Argentina

Mexico

Share of Region = 36%

Share of Region = 8%

Share of Region = 20%

Latin America – GDP Growth

2001200019991998199719961995199419931992

6

5

4

3

2

1

0

Percent

Latin America Ranking Low onCapital Access Index

ZambiaTurkey

ColombiaBrazil

MexicoPeru

ArgentinaChile

CanadaU.S.

UKHong Kong

6.0

5.5

5.0

4.5

4.0

3.5

3.0

2.5

2.0

Score

Latin America - Budget Balance

2001200019991998199719961995199419931992

-1.0

-1.5

-2.0

-2.5

-3.0

-3.5

Percent

Financing In Latin America

IIIIVIIIIIIIVIIIIII200120001999

15

10

5

0

-5

-10

-15

US$ Billions

Bank BorrowingSecurities Issued minus Repayments

Financial Markets Promote Growth

High Income

Upper Middle Income

Lower Middle Income

Low Income

Latin America

Population 17.8 11.4 37.0 33.8 8.3

GDP 80.5 9.7 7.2 2.6 6.2

Bank Assets 93.2 4.5 1.3 1.0 2.2

Equity Market Capitalization 93.4 4.0 2.0 0.7 1.6

Bonds Market Capitalization 96.8 2.1 0.7 0.5 0.8

Total Financial Assets 94.3 3.6 1.4 0.7 1.1

Structure of Financial Markets

Bank Assets(% of GDP)

Equity Market Capitalization(% of GDP)

Bank Assets / Equity

(%)Argentina 40.4 20.4 198.3Brazil 54.7 6.6 835.4Chile 153.5 120.8 127.0Colombia 29.4 9.6 307.6Costa Rica 39.5 81.8 48.3Ecuador 42.1 38.0 110.7El Salvador 60.8 116.8 52.0Mexico 35.4 3.8 934.4Panama 240.9 284.4 84.7Peru 37.5 36.4 103.1Venezuela 19.1 5.6 341.1

Latin America’s Market Structure(Bank Assets / Equity Market Capitalization)

Costa RicaEl Salvador

PanamaPeru

EcuadorChile

ArgentinaColombia

VenezuelaBrazil

Mexico

1000

800

600

400

200

0

Percent

Latin America’s Bank Ownership(Percent of Total Bank Assets)

Government-Owned

Foreign-Owned

Argentina 27.4 71.3Belize 0.0 38.3Bolivia 0.0 7.4Brazil 43.2 23.8Chile 14.1 46.5El Salvador 9.7 2.9Guatemala 17.7 48.3Guyana 1.1 2.2Honduras 35.9 0.0Mexico 0.8 14.0Nicaragua 11.4 60.5Panama 12.7 78.2Paraguay 2.5 39.5Peru 22.3 20.7Suriname 31.4 55.8Uruguay 19.7 9.6Venezuela 7.7 30.8

Capital Flight From Argentina

20012000

6

4

2

0

-2

-4

Percent

Argentine Bank Deposits Rate of ChangeUruguayan Bank Deposits Rate of Change

Latin America’s Income Inequality

Gini Coef.

Between Country

Within Country

Latin America 0.56 0.04 0.51

Developed Countries 0.33 0.07 0.26

U.S. 0.39 N/A N/A

20001998199619941992199019881986

7

6

5

4

3

2

1

0

US$ Billions

Mexico

El Salvador

Dominican Republic

Remittances from the United States

0098969492908886848280

30

25

20

15

10

5

0

Percent

Remittances as Percent of GDP

Nicaragua

Dominican Republic

El Salvador

Latin American Human Capital Flight

$8.25 Trillion from 1985-2000

Brazil’s GDP

0098969492908886848280

800

600

400

200

0

US$ Billions

Argentina’s GDP

0098969492908886848280

300

250

200

150

100

50

0

US$ Billions

Mexico’s GDP

0098969492908886848280

600

500

400

300

200

100

0

US$ Billions

Trade with U.S. as Percent of Total

MexicoBrazilArgentina

100

80

60

40

20

0

Percent

ExportsImports

Latin America’s Top 10 Banks(US$ Billions)

CountryBank Assets(2000)

Market Capitalization

(2001)Banco do Brasil Brazil 70.8 8.1Banco Bradesco Brazil 48.5 8.2Banco Itaú Brazil 35.6 8.8Banamex Mexico 34.9 N/AUnibanco-União de Bancos Brasileiros Brazil 26.3 4.9Grupo Financiero Santander Mexicano Mexico 23.2 2.8BBVA Bancomer Mexico 22.5 N/ABanco de la Nación Argentina Argentina 19.1 N/ABanco de Galicia y Buenos Aires Argentina 16.1 1.2Banco de la Provincia de Buenos Aires Argentina 15.0 N/A

Latin America’s Bank Ownership(Percent of Total Bank Assets)

PanamaChile

VenzuelaArgentina

MexicoBrazil

80

60

40

20

0

Percent

Government-OwnedForeign-Owned

Latin America – Foreign Direct Investment

2001200019991998199719961995199419931992

80

60

40

20

0

US$ Billions

Latin A

merica’s Inform

al Econom

y

706050403020100 Percent of GDP

Bolivia

Panama

Peru

El Salvador

Guatemala

Paraguay

Uruguay

Honduras

Brazil

ColombiaEcuador

VenezuelaMexico

Costa Rica

Argentina

Chile

Average

US

Latin A

merica’s Inform

al Econom

y L

abor Force26242220181614 Percent of Population

Bolivia

Panama

Peru

El Salvador

Guatemala

Paraguay

Uruguay

Honduras

Brazil

Colombia

Ecuador

Venezuela

Mexico

Costa Rica

Argentina

Chile

Average

How Many Mexicans Own Assets That Are “Dead Capital”?

• That is, assets that cannot move freely in national and global markets, that cannot be leveraged to produce capital in the form of collateral to guarantee credits, shares to secure investment, or as accountable terminals for the easy collection of debts, rates or taxes.

Includes over 6 million unregistered micro, small and medium-sized businesses, which:•Produce approximately 35% of the GDP•Employ 47% of the economically active population

Business Assets

Urban: 11 million housesRural: 137 million hectares

Real estate assets

Dead capital includes:

80% of the population

78 Million

How Much Is the Poor and Middle Class’ Dead Capital Worth?

315 billion dollars which is:• 62 times greater than CEMEX annual sales• 31 times greater than foreign direct investment• 26 times greater than federal public investment• 10 times greater than the capital market’s annual operations• 7 times greater than the asset value of PEMEX

70Business assets

315Total

245Real estate assets

Billions of US$

Why Are the Majority of the Mexicans Unable to Transform Their Assets into Live Capital?

Many assets are untitled. Moreover, where title deeds, certificates or authorizations do exist, in the best of cases, these can only be used to identify the owner, but they cannot be used to transform their assets into live capital. The legal and administrative mechanisms for creating live capital either do not exist or their costs greatly exceed the monthly incomes of the average Mexican citizen.

Some examples of costly mechanisms for: Time(months) Steps Cost

(US$)Building under the condominium regime 10 105 12.280

Creating a mortgage 24 38 7.100

Foreclosing a mortgage 43 68 11.920

Subdividing a piece of land of 3.000 sq. m. 12 144 8.310

Selling a house which is worth US$ 11.000 24 38 2.580

Regularizing a construction 8 79 2.300

Obtaining legal access to business in society 17 126 12.700

Major Areas of Future Interdependence

• Democracy Getting Entrenched

• Coordination of Monetary Policies

• Increased Currency Stability

• Growing Dependence on Foreign Direct Investment

Foreign Investors Distinguish Among Countries

• Argentine Crisis Appears Isolated

• NAFTA Provides Benefits to Mexico

• Brazil, the Major FDI Recipient

• Venezuela: Localized Political Crisis

Argentina Did Not Hurt the Brazilian Real and the Mexican Peso

8.5

9.0

9.5

10.0

10.5

11.012

/31/

00

1/31

/01

2/28

/01

3/31

/01

4/30

/01

5/31

/01

6/30

/01

7/31

/01

8/31

/01

9/30

/01

10/3

1/01

11/3

0/01

12/3

1/01

1/31

/02

2/28

/02

3/31

/02

4/30

/02

1.75

2.00

2.25

2.50

2.75

3.00

Mexican Pesos per USD (lhs)Brazilian Reals per USD (rhs)

Even the Equity Markets Have Ignored It!

(MSCI EMF LA Index - U.S. Dollars)

0

200

400

600

800

1000

1200

1400

Jan-88

Jul-88

Feb-89

Sep-89

Apr-90

Nov-90

Jun-91

Jan-92

Jul-92

Feb-93

Sep-93

Apr-94

Nov-94

Jun-95

Jan-96

Jul-96

Feb-97

Sep-97

Apr-98

Nov-98

Jun-99

Jan-00

Jul-00

Feb-01

Sep-01

Foreign Direct Investment Flows toLatin America: 1987 – 2002F

(Billion U.S. Dollars)

3.77.4 7.2 7.2

11.6 13.5 12.0

26.2 27.4

41.0

60.565.3

81.5

69.7

62.6

50.0

0

10

20

30

40

50

60

70

80

90

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

E

2002

F

Latin A

merica O

penness Ratio:

1987 –2002F

(Exports+Im

ports/Nom

inal GD

P)

18.6%

18.6%

21.3%

19.6%

19.7%

19.5%

20.5%

19.5%

21.8%

23.4%

23.9%

27.6%

32.1%

29.6%

36.9%

44.5%

0% 5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001E

2002F

Latin America Total Exports:1987- 2002F

(Billion U.S. Dollars)

86101

112124 124

133143

166

203

229

255 249

267

325312

327

0

50

100

150

200

250

300

350

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

E

2002

F

Latin America - Capital Formation

2001200019991998199719961995199419931992

15

10

5

0

-5

-10

Percent