Research report South America as a future business environment

CoFi / bo Akademi 2007

Tiina Haanila Tarja Merist Sami Leppimki Jukka Laitinen Jyrki Kettunen

Table of Contents 1. Introduction..................................................................................................................................3 1.1 Background ............................................................................................................................3 1.2 Purpose of the study...............................................................................................................4 2 Phases and methodology used.......................................................................................................7 3 State of the Art ............................................................................................................................14 3.1 Argentina..............................................................................................................................15 3.2 Bolivia..................................................................................................................................16 3.3 Brazil....................................................................................................................................17 3.4 Chile .....................................................................................................................................18 3.5 Colombia..............................................................................................................................19 3.6 Ecuador ................................................................................................................................20 3.7 Guyana .................................................................................................................................21 3.8 Paraguay...............................................................................................................................22 3.9 Peru ......................................................................................................................................23 3.10 Suriname ............................................................................................................................24 3.11 Uruguay..............................................................................................................................25 3.12 Venezuela...........................................................................................................................26 4. Driving forces for the future ......................................................................................................28 4.1 PESTE change factors..........................................................................................................28 4.2 Market / Society / Technology drivers.................................................................................29 4.3 Other challenges...................................................................................................................31 4.4 From driving forces to building scenarios ...........................................................................31 5. Alternative future scenarios for South America in 2022 ..........................................................33 5.1 General description as a whole ............................................................................................33 5.2 Education based ...................................................................................................................33 5.3 Asian imperialism ................................................................................................................34 5.4 Country driven .....................................................................................................................36 5.5 Energy product technology ..................................................................................................37 5.6 Continental economy ...........................................................................................................38 5.7 Market challenges in each scenario .....................................................................................39 5.8 Innovation opportunities in each scenario ...........................................................................42 6. Conclusion .................................................................................................................................44 References......................................................................................................................................46 Appendix 1: Interviews..................................................................................................................47 List of interviews (time, person, post) .......................................................................................47 Interview form / Peru .................................................................................................................48 Interview form / Chile................................................................................................................49 Appendix 2: Workshop 23-24.4.2007............................................................................................51 Workshop program ....................................................................................................................51 List of invited participants to the workshop 23-24.4.2007 ........................................................52 Appendix 3 Excels ........................................................................................................................53 TABLE 1 Energy consumption & nature ......................................................................................53 TABLE 2 Infrastructure .................................................................................................................56 TABLE 3 International relationships.............................................................................................57 TABLE 4 Key economic ratios......................................................................................................62 TABLE 5 Labour force ..................................................................................................................63 TABLE 6 Population, poverty and social ......................................................................................64 Appendix 4: Individual countries in the filters ..............................................................................68

1. Introduction
The future is unpredictable; the future is uncertain; you can mould the future with your choices and actions. These are the underlying questions behind futurology. With futurology you dont aim to pure objectivity, instead the aim is to promote the desired future or to avoid the unwanted futures. Future studies are a field of inquiry involving systematic and exploit thinking about alternative futures. It aims to demystify the future, to make possibilities for the future more know to us, and to increase human control over the future. With futurology you can draft different futures and with that foresee and prepare yourself for the future ahead of you. A distinctive contribution of futurists to the society is prospective thinking. Through prospective thinking, futurists aim to contribute to the well-being both of the presently living people and of the as-yet-voiceless people of future generations. Futurists explore alternative futures the possible, the probable and the preferable. The process proceeds from data collection, analysis and rewriting to building alternative futures, evaluating them and choosing the desired ones. The goal of this study is to analyze the political, economical and social role South America has in the world. We are in particular interested in the angle what kind of product and service concepts and business models the continent both needs and enables, and what kind of risks and possibilities enter into them. This case study is a part of an INNORISKproject, which is a three-year long project in Finnish Funding Agency for Technology and Innovation (Tekes) LIITO-program. It is a joint project coordinated by Corporate Foresight group/bo Akademi and VTT/Tampere as a partner. The INNORISK model is a proactive process model including six modules that help companies to implement radical changes in their business models and to renew product portfolios. During the first year of the project in 2006, we implemented two business cases, one with Metso Automation and one with Kalmar Industries. The next aim of the INNORISK project is to test and develop the model in more business cases. In addition, the purposes for the INNORISK project are to evolve the section of market based innovation; to verify the theoretical framework in the international research community and to merge risk management with the methods of futures studies.

1.1 Background
The future is uncertain but it includes many opportunities for companies to exploit even today. If the strategic approach is focused towards renewal, changes do not come as surprises. The INNORISK model is an operational model that combines future research, technological forecasts, business concepts and risk managements into one package that supports flexible operational methods of companies in the changing world. The INNORISK model consists of following six modules: 1) CHAMA (Challenge management), 2) FUTU (Futures Studies), 3) FORE (Foresight), 4) MARE (Market Research), 5) CONCE (Concepts, R&D) and 6) STRAFO (Strategic focus). 3

Challenge Management Opportunities & Risks

Basic Research Trends Legislation, Norms Market Needs

Strategy Concept New Product Development Development R&D Resources

Customer Values

Ideas & Innovation Potentials

Foresight

Commercialization

Business Growth Competition Scenarios

New Technologies Road Maps

Weak Signals, Development Impulses

28.5.2007

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The aim of CHAMA is to rationalize the creation of innovations and to create systematic methods to innovation management. FUTU analyzes and represents long term alternative future scenarios. In FORE the actor view is added to the information received from FUTU. MARE focuses on the market perspective, both on the macro and micro level. CONCE interconnects the results of the earlier modules leading to successful conceptualization. STRAFO concentrates on strategic positioning. The objective of the INNORISK project is to improve the long-term abilities of companies to renew and to precise innovations by developing an operational model that will combine the future research, scenario working and risk management approaches with the innovation process. With the INNORISK operational model under development, companies will be provided with competition benefits with the directed quick launch, which will enable profitable growth in transition periods with no breaks in operational continuance. The INNORISK operational model will provide companies with a functional tool for controlled forecasting of radical future solutions, and research communities and other innovation system operators will receive new methods for unprejudiced development of business competence and a needs-based innovation process model. The result will be an innovation process model with which society will be able to fulfil its obligations since the INNORISK model will give birth to new business competence resulting in financial growth.

1.2 Purpose of the study

From the Finnish perspective, South America is an unknown continent. It is far away, people have little knowledge of English, and native Amerindian cultures and the Catholic Church dominate the chaotic economy these are things Finnish people without any ties to South America might come up with when asked about South America. On the other hand, South America is a continent with high potential both with the population size and the natural resources level the countries hold. 4

The purpose of this study is to analyse South America as an economic block, as a global actor and market, and to define its potential roles in the world. The study is carried out with using PESTE-analysis. The study begins with country analysis that covers the whole continent. As initial data we use material different organisations (national statistics centres, international organisations, research institutes and corporations etc.) provide. The data includes information on current economic and societal status of the South American countries. With the help of this material, we create a compact picture of the present status of South America.
NORTH AMERICA Population 495,4 million GDP 15.560 trillion USD GDP/capita 25 263 USD EUROPE Population 710 million GDP 12,82 trillion USD GDP/capita 29 300 USD ASIA Population 4,001 billion GDP 18,007 trillion USD GDP/capita 4 518 USD

LATIN AMERICA Population 548,5 million GDP 4,5 trillion USD GDP/capita (Note! South America) 7 264 USD

AFRICA Population 887 million GDP 1,635 trillion USD GDP/capita 1 968 USD

OCEANIA Population 35,8 million GDP 720 billion USD GDP/capita 22 647 USD

When looking at South America (in the picture Latin America, including Mexico and other Central American countries), its the smallest in population of the developing country groups, at the same time having the highest GDP/capita. We will also do on-site observations on the South American societies and people, how do businesses and people operate there. We interview local experts on their point of views. Based on all this material, we organize a workshop where we will search the driving forces and build alternative future scenarios for South America in 2022. The goal of the study is to further develop the INNORISK model from the market perspective. This is done with analyzing the role South America has in the world (as market competitor, skills source, political player, technology leader etc.). We want to recognize the change factors (PESTE) forming the future; and with the help of these change factors build future scenarios for South America in 2022 from market, technology

and society starting points. We will further estimate the potential needs these scenarios hold and create alternative visionary concepts for selected themes for South America.

2 Phases and methodology used

Scenario working is a method within the field of future studies. Scenario working includes mapping alternative futures, identifying factors and development paths leading to different future outcomes. The action scenario approach is a result of several decades of work with different companies strategic planning. The framework has been built by Tarja Merist based on experiences from numerous case studies during 1979-2007. The action scenario approach consists of six consecutive stages. I. II. III. IV. Who and where are we? What are the possible worlds? Where can we go and how? Where do we decide to go? a. Choice of strategy b. Action plan.
ACTION SCENARIOS
Navigation marks Risk profiles, Vision

MISSION SCENARIOS
Basic beliefs, Taboos

Who and where are we?

SWOT analysis

PESTE analysis

Where can we go and how?

Where do we decide to go?

Choice of strategy

Flexibility

What are the possible worlds?

Action plan

Barometers, follow up

ISSUE SCENARIOS

a
A method to create future product concepts can be divided into five steps: 1. to recognise the change factors

2. 3. 4. 5.

to build the scenarios to recognise the product needs to build the future product concepts to time well the R&D in the company.

Concept variation field

Changes in technology 1. Maintain product need and business model, 4. Basic technology, product need and business model may vary

The concepts can vary according to the basic technology may vary quartet in the picture beside. The business potential of concepts is linked with the 3. Maintain basic 2. Maintain product scenarios built from the companys point of technology, need, business model and basic product need and view and the strategic choices included into technology business model may vary them. Each scenario poses a different Changes in trade and markets challenge for the R&D of the company. The strategy the company chooses within each scenario depends on the risk profile the company has. If the company chooses an aggressive strategy and aims to develop new product or business concepts with great potential, it has to support this with R&D actions early during the process. It may be a question of allocation of resources, or even an input of new resources into some area. The company may have to think through its whole R&D portfolio. Outside consulting or corporate buyouts may also become current in order to acquire new know-how or technology. One of the most important tasks of scenario work is to present different alternatives for the future. Its important to bring out alternatives to the business as usual scenario, which is the straight continuum to the present state. You are also to consider the unwanted and improbably alternatives. NGOs, business administration and industrial designer have all different uses for scenarios, which mean future events can be described all from global level to a single products use. Scenarios are always a test bed for something. Its important to keep this in mind; because scenarios must always be focused on a strategically relevant area if they are to be productive. Scenarios are different from forecasts, as scenarios are usually not measured by their occurrence probability. Scenarios are neither exact descriptions of the future; they are rather verbal descriptions of both qualitative and quantitative nature. Our framework is based on a multiple scenario approach, which is that at least two alternative scenarios are constructed. Further, each scenario leads to various possible choices of strategies. Therefore, scenarios are a part of the strategic planning process that has to be an on-going activity. The scenario filter model is a formal method by which one can illustrate the scenarios comprehensively. The Old scenario filter model is based on the interaction of Market Society fashioned market, technology and society in order to create INNOINNO INNOinnovations. With this approach you can consider the VATION VATION different time frames in scenario building. Market Low Unworks in the shortest time frame, there can a few acceptance economical years be a long time period. Societys time frame is a bit longer, its often considered to last for an electoral period. Technology works in the longest time frame, Technology technological policy definitions can be made even for decades ahead. The scenario filter model combines underlying factors in a scenario and points out the driving forces and turning points in a scenario tube. Building scenarios with filter model is to ensure that the scenarios describe the world as diversified as possible, since all scenarios (can) consider market, technology and society points of views. 8

This case study of South America as a future business environment takes place the period of February to May 2007. The four months are divided into five phases, which are described next. 1. Current state analysis (February 2007) Facts and figures for the 12 independent South American countries are divided into following categories: energy consumption and nature infrastructure international relationships key economic ratios labour force population, poverty and social. With the help of this initial data, a short written description of each country is produced. Also the common challenges and the aspects where the countries differ from each other are described here. There are several supranational institutions that through their operation influence the individual South American countries. Next we will list the most important of these international actors. We will write a short description of the institutions, highlighting the special characteristics of them. 1. ALADI (Asociacin Latinoamerica de Integracin) is an intergovernmental organization that continues the process started by the Latin-American Free Trade Association (ALALC) in 1960, and promotes the integration expansion in the region, in order to guarantee its economic and social development. ALADI was created in 1908 with the signing of the Montevideo Treaty. ALADI promotes the creation of an area of economic preferences in the region, aiming at Latin American common market. 2. IADB (Inter-American Development Bank) was established in 1959 as a development institution. It is the oldest and largest regional development bank. Now the IADB is the main source of multilateral financing for economic, social and institutional development projects and trade and regional integration programs in Latin America and the Caribbean. The Banks two main goals are to promote poverty reduction and social equity as well as environmentally sustainable growth. Public entities eligible to borrow from the IADB include national, provincial, state and municipal governments, also autonomous public institutions. Civil society organizations and private companies are also eligible. 3. ECLAC (Economic Commission for Latin America and Caribbean) is one of the five regional commissions of the United Nations. It was founded for the purposes of contributing to the economic development of Latin America, coordinating actions directed towards this end, and reinforcing economic relationships among the countries and with other nations of the world. The promotion of the regions social development was later included among its primary objectives. 4. IMF (International Monetary Fond) is an international organization of 184 member countries. The IMF is responsible for ensuring the stability of the international payments and exchange rates among national currencies that enables trade to take place between countries. The IMF seeks to promote economic stability and prevent crises; to help resolve crises when they do occur; and to promote growth and 9

alleviate poverty. It employs three main functions surveillance, technical assistance, and lending to meet these objectives. The IMFs resources are provided by its member countries, primarily through payments of quotas, which broadly reflect each countrys economic size. The total amount of quotas is the most important factor determining the IMFs lending capacity. The annual expenses of running the fund are met mainly by the difference between interest receipts and interest payments. 5. UNCTAD (United Nations Conference on Trade and Development) was established in 1964, an UN-organization promoting the development-friendly integration of developing countries into the world economy. 6. UNDP (United Nations Development Program) is the UNs global development network, an organization advocating for change and connecting countries to knowledge, experience and resources to help people to build and share solutions to the challenges of: democratic governance, poverty reduction, crisis prevention and recovery, energy and environment, HIV/AIDS. 7. OPEC (Organization of the Petroleum Exporting Countries) is made of 12 developing nations (of which Venezuela is one) whose economies rely on oil export revenues. One of OPECs primary missions is to achieve stable oil prices, which are fair and reasonable for producers and consumers. The ministers of energy and hydrocarbon affairs meet twice a year to review the status of the international oil market and the forecasts for the future in order to agree upon appropriate actions which will promote stability in the oil market. The member countries also hold other meetings at various levels of interest, including meetings of petroleum and economic exports, country representatives and special purpose bodies such as committees to address environmental affairs. 8. ILO (International Labour Organization) formulates international labour standards in the form of conventions and recommendations, setting minimum standards of basic labour rights: freedom of association, the right to organize, collective bargaining, abolition of forced labour, equality of opportunity and treatment, and other standards regulating conditions across the entire spectrum of work related issues. 9. SELA (Latin American and Caribbean Economic System) is a regional intergovernmental organization found in 1975 that groups 26 Latin American and Caribbean countries. Its objectives are to provide the region with a system of consultation and coordination for the adoption of common positions and strategies on economic issues in international bodies and forums and before third countries and groups of countries, and to foster cooperation and integration among the countries in Latin America and Caribbean. Latin American Council is the principal decision-making body of SELA. Each member state has one representative to the council, which meets regularly once a year. Its responsibilities include determining the institutions general policies and formulating specific declarations in the form of decisions approved on a consensual basis. 10. MERCOSUR (el Mercado Comn del Sur) is founded in 1991 by Argentina, Brazil, Paraguay and Uruguay. It aims to promote the integration of these tour countries through free trade of products and services and by creating common external trade rules. 11. CAIRNS GROUP is a coalition of 19 agricultural exporting countries which account for over 25 % of the worlds agricultural export. Of the South American countries are Argentina, Bolivia, Brazil, Chile, Colombia, Paraguay, Peru, and Uruguay members. The Cairns Groups objectives include deep cuts to all tariffs and removal of tariff escalation, the elimination of all trade distorting domestic subsidies, the elimination of export subsidies and clear rules to prevent circumvention of export subsidy commitments. 10

12. OAS (Organization of American States) is the regions principal multilateral forum for strengthening democracy, promoting human rights, and confronting shared problems such as poverty, terrorism, illegal drugs and corruption. The OAS is made of 35 independent nations of North, Central and South America and the Caribbean. The member countries set major policies and goals through the General Assembly, which gathers the hemispheres ministers of foreign affairs once a year in regular session. Ongoing actions are guided by the permanent council made up of ambassadors appointed by the member states. 13. CAN (Andean Community) was established in 1979 in order to achieve more rapid, more balanced and autonomous development through Andean, South American and Latin American integration. Member countries are Bolivia, Colombia, Ecuador, and Peru. 14. APEC (Asian-Pacific Economic Cooperation), founded in 1989, is an economic forum for a group of Pacific countries to discuss matters on regional economy, cooperation, trade and investment. Of the South American countries are Chile and Peru partners. 15. CSN (South American Community of Nations) will be a continent-wide free trade area that will unite two existing free trade organizations (MERCOSUR and CAN) eliminating tariffs for non-sensitive products by 2014 and for sensitive products by 2019. 16. WB (World Bank) is made of two unique development institutions owned by 185 member countries the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The WB is a vital source of financial and technical assistance to developing countries around the world. The IBRD focuses on middle income and creditworthy poor countries, while IDA focuses on the poorest countries in the world. Together they provide lowinterest loans, interest-free credits and grants to developing countries for education, health, infrastructure, communications and many other purposes. These are organizations that all or some of the South American countries are partners of. The organizations guide the development of South America partly by trade regulations, partly by international investment flows (what kind of projects they support). They also conduct research, on the current status of the countries and of the challenges they face in their futures. 2. PESTE change factors (March 2007) The goal of recognising the change factors is to find the central driving forces that steer different future paths. Mapping the change factors consist of going through different data sources. Its important to divide the material to the different PESTE categories, assuring the diversity of the material. The meaning of this phase is not to list only the most-likely factors in the different dimensions, but also to find the change symbols and weak signals that are only visible, but dont yet affect the development. Recognising the change factors enables finding the starting points for different scenarios and thereafter building the scenarios.

In addition to change factors there are surprises in PESTE analysis that you dont know anything about. These surprises are called wild cards; you dont know their subject area, the variable or the values of the variable. Behind wild cards is often a taboo or taboos, 11

ST

which can prevent the actor from recognising the change factors. PESTE-analysis can be used to answer the questions who and where we are, and what the possible worlds are. The second phase of this study consists of scanning the external factors affecting the operations in South America. We analyze the political, economic, social, technological, and ecological change factors. This phase is conducted with on-site observations (media, social contacts etc.), structural expert interviews (companies, research institutions, universities, public sector) and informal discussions. We analyse the external futures information including weak signals, wild cards, trends, and mega trends through PESTE categories. This ensures a holistic approach of different aspects to be included in the investigation. 3. Future prospectives (April 2007) Scenario planning operates in the area where uncertainty is a major factor in comparison to the predetermined facts in the situation. Discovery of the predetermined elements in an uncertain situation creates the significant aha experience. The uncertainty related to futurology means that the analysis doesnt need to go into great detail; in strategic management you need to focus on what truly is important. There may be many sources of uncertainty but if these are considered orthogonally (independent from each other) then only the factors with the largest impact need to be considered. The larger the level of uncertainty, the smaller the number of factors to be included into the research becomes. Without this principle, scenario work in highly complex situations would be impossible. This phase of future prospective is carried out by organizing a workshop in Lima in April 2007. For the future scenarios we build in the workshop we will use scenario filter model as an instrument. As the groundwork for the scenarios are the basic facts and figures collected earlier during the study. 4. Market potential and visionary concepts for radical innovations (April 2007) Visionary concepts works usually produce first preliminary ideas, which then through many intermediate phases transform into concepts. The final concept has to be described precise enough, including the shape, structure, and preliminary description of the used technology and operational principles for the product. Its also important to specify how the product fills the customer needs. Often the goal of a new concept is publicity, observation value or market value. This means that the product also has to look new and unique, in order to awake interest. That makes visualising always balancing between essential and unessential information. One should neither forget that certain infrastructures (buildings, bridges, roads etc) will exist more or less in their current form, because of their long life spans. The second day of the workshop in Lima in April 2007 is focused on conceptualization, building visionary concepts and radical innovations for the South American actors to use in the future. We will base this work on the ideas arisen during the first workshop day. 5. Reporting (May 2007) Now we have built the guidelines for the case study of South America as a future business environment. During the May month this report will be constructed. Chapter three discusses the background for South America, presenting the central themes for all the 12 independent states in the continent. Thereafter we collect the driving forces and build the filters for the South American future scenarios. Chapter five presents the created five

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scenarios, and chapter six discusses the opportunities and new business ideas based on the scenarios presented in the previous chapter.

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3 State of the Art

South America is a continent with an area of 17 840 000 km2. It consists of 13 territories, 12 of which are sovereign states and French Guiana, which belongs to France. The independent states are in alphabetical order Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, Suriname, Uruguay, and Venezuela. In this study, we exclude French Guiana and only examine the independent states. Before the Europeans found South America in the 16th century, many developed Amerindian tribes ruled there. Maybe the most notable tribe was the Inca Empire that arose from the highlands of Peru in the early 13th century. Their best epoch was from 1438 to 1533, when their area reached half of the current independent states (see the picture). In 1533 Spanish Francisco Pizarro found this wealthy land, conquered it and started the era of Spanish viceroyalty. During this period, aboriginal 14

people and their traditions were brutally repressed and many aspects of the Amerindian cultures were systematically destroyed. The viceroyalty era lasted until the early 19th century, when the South American countries started to claim their independencies. Next we will describe the 12 South American countries individually, both historical aspects and the central points in todays world.

3.1 Argentina
Argentina declared its independence from Spain in 1816. The most known name in Argentine history is Juan Pern, who acted as the president 194655 and again in 1973. Pern created a welfare state system according to the European model, which the country at that time couldnt afford. This, however, built ground to attention of the wellbeing of the citizens and explains why Argentina nowadays ranks best in many social aspects in comparison with the other South American countries. After Perns time, the armed forces ruled until 1983, when democracy was restored. Since 2003 has Nestor Kirchner been the president of Argentina. In 2007 Argentina will have the next presidential election. The greatest challenges for the current government are lowering inflation and unemployment, fighting the growing income differences, and reorganising the international loans. Argentina is in area the second-largest (after Brazil) in South America and eight largest in the world. Argentine economy is third-largest in South America, after Brazil and Colombia. Argentine GDP is 210 billion USD, with annual growth rate of 8,5 %. The inflation rate in consumer prices is as high as 10 %, but this can be explained with the severe recession in the early 21st century and how Argentina still is recovering from it. GDP per capita is 15 000 USD; IMD 43,663 and corruption index 2,9. Argentina differs from the other South American countries with its high percentage (97 %) of inhabitants with European background, mostly Italian and Spanish, but Argentina also has significant German, Polish, French and Slavic populations. Buenos Aires is often said to be the most European city in South America. Argentina is the only South American country with a positive net migration rate (0,4). Its literacy rate of 97,2 % is one of the highest in the continent. Urban population is high, 90 %. The Argentine health expenditure per capita is the highest in South America, 1 067 PPP USD. Majority of the population (96 %) has access to improved water source. Poverty is 31,4 %, GINI index 52,8 and HDI 0,863, which also are one of the highest in the continent. There are 33 international schools in Argentina; it ranks second with Colombia after Brazil in this aspect. Unemployment benefit is paid for 12 months and the amount depends on the wage during work, gradually lowering during the 12 month period. Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Argentinas most important export goods are edible oils, fuels and energy, cereals, feed, and motor vehicles. In 2006 Argentine export reached 46 billion USD, and import was as high as 32 billion USD. The most important import goods are machinery and equipment, motor vehicles, chemicals, metal manufacturers, and plastics. Argentinas most important foreign trade partners are Brazil, Chile, China, Germany and US. To Finland Argentina 15

export ore and scrap metal, beverage, fruits and vegetables, and meat and meat products. Argentina imports from Finland mostly paper, cardboard, and electronical and telecommunications equipment. In 2006 the Argentine export to Finland was 50 million EUR, and import 86 million EUR. Of the South American countries, Argentina invests most to R&D. Per million people; 720 work in R&D. The country has also high density of mobile phones and internet connections. Argentina has the highest VAT in South America (21 %). Also corporate tax and tax on income are high, both reaching 35 %.

3.2 Bolivia
Bolivia and Paraguay are the only South American countries without direct access to the sea. Together with Peru, Bolivia shares control of Lake Titicaca, worlds highest navigable lake. The Bolivian republic was established in 1825. Since independence, Bolivia has lost over half of its territory to neighbouring countries due to wars, such as the access to the Pacific Ocean at the War of the Pacific (1879-83). The current president Evo Morales was elected in 2005 with the widest margin of any leader since the civilian rule in 1982. Morales controversial strategies have worsened the racial and economic tensions between the Amerindian population of the Andean west and the nonindigenous communities of the eastern lowlands. Bolivian GDP is 27 billion USD with annual growth rate of 3,3 %. GDP per capita is 3 000 USD, which is the lowest in South America. The inflation rate in consumer prices is 4,3 % and corruption index is 2,7. There is no information available on IMD. Bolivia has second-highest poverty rate in South America (after Suriname), 64 % of the population live under the national poverty line. 15 % of the population lack access to improved water source, and infant mortality rate is as high as 52 %. Level of education is at the same level with the other South American countries, and so is the literacy level. Urban unemployment is higher than rural unemployment. People with secondary or university degree have higher unemployment percentage than people with primary education. This reports the importance of primary production and agriculture, in those sectors high education is not needed. After dismissal no statutory unemployment benefits are provided, you get medical and maternity benefits for two months. Bolivia has also the largest shadow economy in South America; almost 70 % of the economy is informal. Bolivia has foreign trade mostly with Brazil, US, Argentina, Colombia, Peru, China, Japan, and Chile. Its total exports reach 3,7 billion USD and imports 2,9 billion USD. Most important export products are natural gas, soybeans and soy products, crude petroleum, zinc ore, and tin. Bolivia imports above all petroleum products, plastics, paper, aircraft and aircraft parts, prepared foods, automobiles, insecticides, and soybeans. There is no information available on trade with Finland. Bolivia has the second lowest (after Paraguay) percentage of telephones and internet users in South America, the figures are 69 and 39 per 1 000 people. Taxation is low in 16

Bolivia, both VAT and tax on income are 13 %, and the corporate tax level is 25 %, which also belongs to the lowest ones.

3.3 Brazil
Brazil declared its independence from Portugal in 1822. Since 1985, Brazil has been regarded as presidential democracy. Before that, Brazilian democracy has been replaced by dictatorship three times (1930-34, 1937-45 and 1964-85). The president since 2002 is Luiz Incio Lula da Silva. Although Brazils economy is progressive and regionally important; widespread state bureaucracy, corruption, poverty and illiteracy are still major barriers to furthering its development. Brazil is the largest and most populous country in South America, and fifth largest in both points in the world. Brazil shares common boundaries with all the South American countries except Chile and Ecuador. It has the largest Roman Catholic population in the world. Brazil is the only Portuguese speaking country in South America, and its core culture is rooted in the culture of Portugal unlike the other countries with Spanish background. Brazilian GDP is 620 billion USD with annual growth rate of 3,1 %. GDP per capita is 8 600 USD, inflation rate in consumer prices 4,2 % and IMD 46,416. Corruption index is 3,3. Brazilian poverty rate is 30 %, which belongs to good ones in South America. 90 % of population has access to improved water source, urban population percentage is 83,7. The Brazilian population grows steadily with annual growth rate of 1,04 %. With other social aspects, gets Brazil average figures compared to other South American countries. Brazilian export reaches 138 billion USD, and import figure is 96 billion USD. Its most important foreign trade partners are US, Argentina, Germany, China, Japan, and the Netherlands. EU as a whole stands approximately for 25 % of Brazilian foreign trade, Asia 17 % and NAFTA only 10 %. Most important export goods of Brazil are vehicles and their spare parts, metallurgy products, soy beans, grain and cooking oil, and chemicals. Brazil imports, above all, machines and electronic instruments, chemicals, oil, vehicles, pharmacy products, mine products, and food supplies. Export- and import figures with Finland in 2006 were 409 million EUR and 239 million EUR, respectively. Brazil exports to Finland airplanes; ore and scrap metal; minerals; and coffee, tee, cocoa, spice, and products of them. On the import side most important items are complete goods; electronical and telecommunications equipment; and paper and cardboard. Most South American countries have a surplus in the electricity production, but Brazil doesnt belong to these countries. Brazil produces 80 % of its energy need with water power, and approximately 90 % of electricity consumption is covered with it. Other energy sources are oil, nuclear power and sugar alcohol. With its large internal market and competitive production environment, Brazil attracts direct foreign investments most in South America, and in the world level the ranking is ninth. 17

The labour market is divided into legal and illegal markets; only 30 % of the new work places are in the legal markets. Almost half of the work force work in the shadow economy, and in agriculture the percentage is projected to be as high as 90 %. People with secondary education have higher unemployment than people with primary education; university and technical background graduates face lower unemployment than primary educated. Brazil poses the highest number (37) of international schools in South America. The minimum monthly unemployment benefit is the minimum monthly salary, and it is payable for 3-5 months.

3.4 Chile
Chile declared its independence from Spain in 1810. Prior to the Spanish rule, Chile was part of the Inca Empire. In the War of Pacific (in 1879-84) against Peru and Bolivia, Chile won significant northern lands. Dictator Augosto Pinochet ruled 1973-1990, when freely elected presidency was installed. At the moment Chiles president is Michelle Bachelet, first Chilean female president elected in 2006. The biggest challenges for her government are the poorly functioning new public transport in Santiago and the highly unequal education system. Chile has a market-oriented economy characterized by a high level of foreign trade. The role of the state is mostly limited to regulation, although the state continues to operate in a few important enterprises, such as the copper company Codelco. Chile is the most competitive country in South America. It aims to work as a bridge to the rest of South America and persuade international companies to start business there. Finland has long history with Chile, our technology and know-how is respected in Chile. Chilean GDP is 203 billion USD, with annual growth rate of 4,8 %. GDP per capita is 12 600 USD, which is the second highest in South America (after Argentina). Inflation rate in consumer prices is very low, only 2 %. IMD is 69,997 and corruption index the best in South America, 7,3 . Chilean population grows slowly (0,9 %). Poverty is only 18 %, which is the lowest in South America. In the 1980s nearly half of the population was poor. The development is partly explained with economic growth, partly with increased tax collecting and with that expanding financing social spending. Also infant mortality rate is the lowest, 8,58 %. HDI is 0,859, which is the second-highest after Argentina. Urban population is as high as 88 %, and literacy rate 96,2 %. Considering the literacy rate, its surprising that level of education isnt higher than 81 %. Chilean export consists of copper, fruit, fish products, paper and pulp, chemicals, and wine. Export reaches 58 billion USD and import 35 billion USD. Chile has the biggest copper deposits in the world. Chile exports more fruits than any other country in the world. Chile is the worlds fifth biggest wine exporter and tenth in preparing it. In fishing industry, Chile is the second in exporting salmon (after Norway). Most important import products are petroleum and petroleum products, chemicals, electrical and telecommunications equipment, industrial machinery, vehicles, and natural gas. Chile depends on the import of 18

petroleum and natural gas. Chiles most important foreign trade partners are US, Japan, China, the Netherlands, South Korea, Italy, Mexico, Argentina, Brazil, and Yemen. To Finland Chile exports ore, iron, steel, food supplies, and beverage. The Finnish import consists mainly of industrial machinery, and of paper and cardboard. In 2006, Chilean export to Finland was 183 million EUR and import 130 million EUR, respectively. In investing in R&D, reaches Chile second (after Argentina) with 444 researchers in R&D per million people. Corporate tax is low, 17 %, but tax on income can reach as high as 40 %. VAT is also high, 19 %. The official unemployment rate is 8,3. Only for people with technical education is rural unemployment percentage higher than urban unemployment. Chile has the smallest shadow economy; approximately 20 % of the economy is informal. Unemployment benefit is payable for one year, the monthly benefit varies from 17 338 CLP (33 USD) during the first three months to 8 669 CLP (17 USD) during the last months. Persons who are eligible for unemployment benefits may also continue to receive family allowances, maternity benefits, and medical benefits. With direct foreign investments, Chile is the third largest receiver in South America. Mining industry has the longest traditions in receiving direct foreign investments; investments in forest industry are growing. Other new sectors are transport infrastructure, services, telecommunications, and electricity. Finnish investors usually invest in mining, forests, telecommunications and environment. Chile is after Venezuela most export-oriented country in South America, when calculated with the export/import and export/GDP ratios.

3.5 Colombia
Colombia declared its independence from Spain in 1810. In 1830 Gran Colombia collapsed, and present-day Colombia is one of the countries that emerged from that (the two others being Ecuador and Venezuela). Colombia is the most north-western country of South America, and the only country that borders both the Atlantic and the Pacific Ocean. There has been conscious peace process since 2002, but neighbouring countries still worry about the violence spilling over their borders. Challenges for the current president lvaro Uribe Vlez (elected in 2002 and re-elected in 2006) are pension system problems, drug dealing, violent guerrilla movements and high unemployment (the highest in South America, 11,1%). The unemployment benefit is equal to one monthly wage for each year of employment. Colombia is in area the fourth-largest country in South America, and in population its second (after Brazil). Colombian GDP is 366,7 billion USD with annual growth rate of 5,4. GDP per capita is 8 400 USD. Inflation rate in consumer prices is 4,3 %. IMD is 57,351 and corruption index is 3,9. Colombian labour force is third-largest in South America. VAT is on the average level (16 %), but both the corporate tax and tax on income reach to the high category with percentages of 38,5 and 25, respectively. Almost half (49,2 %) of Colombias population live in poverty. Level of urban population and level of education are 73 %, both on an average level in comparison with the other South American countries. Compared to the 19

level of education, is the literacy percentage surprisingly high, reaching 92,5 %. Population growth rate is one of the fastest ones, 1,46 %. Colombia ranks second (with Argentina, after Brazil) in the number of international schools (33). Colombia exports mostly petroleum, coffee, coal, nickel, emeralds, apparel, bananas, and cut flowers (total exports are 25 billion USD). Total import figure is 24 billion USD. Imports consist of industrial equipment, transportation equipment, consumer goods, chemicals, paper products, fuels, and electricity. Colombias most important foreign trade partners are US, Venezuela, Ecuador, Mexico, China, and Brazil. It is the least export-oriented country measured with export/GDP ratio. The export/import ratio on just positive, 1,02. In 2006, was Colombian export to Finland worth 59 million EUR and import 57 million EUR. Export to Finland consists of iron and steel; and coffee, tea, cocoa, spices, and products of them. Import from Finland, on the other hand, consists of paper and cardboard; and electronical and telecommunications equipment. The Colombian economy opened up in the 1990s. At the moment the economy is surprisingly well-balanced, for being a South American economy. There are several free trade areas in Colombia, where companies get reductions in taxes and customs, and also other administration-related benefits. Colombias biggest problems are violent guerrilla movements and drug deal. These have kept the direct foreign investments flows low, even though there arent almost any restrictions for them. They are allowed in all sectors except in national defence, security and elimination of poisonous wastes. There are also some restrictions in hydrocarbon, mining, financing, and insurance sectors.

3.6 Ecuador
Ecuador declared its independence from Spain in 1820. In 1830 Gran Colombia collapsed, and present-day Ecuador is one of the countries that emerged from that (the two others being Colombia and Venezuela). In the first part of the 20th century, Ecuador lost territories in a series of conflicts with its neighbours. Although Ecuador marked 25 years of civilian governance in 2004, the period has been marked by political instability. Since 2006 Rafael Correa is the president. GDP of Ecuador is 60,48 billion USD with annual growth rate of 3,6 %. GDP per capita is 4 500 USD. Inflation rate in consumer prices is 3,4 % and corruption index 2,3. There is no information available on IMD. Ecuador has one of the highest population growth rates (1,5 %) in South America, also the life expectancy at birth is high (76,42 years). Poverty rate reaches 41 %. GINI-index is the lowest in South America, which means that Ecuador has the best income equality. This is though calculated with data for urban households only, so the figure is not totally truthful. Since 2000, after the worst economic crises in Ecuadors history when among others the national currency depreciated by about 70 %, has the currency of Ecuador been the US dollar. The most important foreign trade partners for Ecuador are US, Peru, Germany, Colombia, Venezuela, Brazil, and China. Colombian export consists of petroleum, bananas, cut 20

flowers, and shrimps. The size of export is 12,56 billion USD; the size of import, for one, is 10,81 billion USD. Colombia imports vehicles, medicinal products, telecommunications equipment, and electricity. There is no information available on trade with Finland. Ecuador invests least in R&D in South America, there are only 50 persons working in R&D per million people. Both corporate tax and tax on income are relatively low, both are 25 %. Also VAT is low, 12 %. The unemployment figure is the second-highest in South America, 10,6 % and underemployment percentage is as high as 47. The size of the informal economy is almost 40 %. The unemployment benefit is a lump sum equal to three times the insureds average wage during the last 12 months.

3.7 Guyana
Guyana was originally settled by the Dutch the 17th century, by 1815 it had become under British control. The abolition of slavery led to black settling to urban areas and import of workers from India to the sugar plantations. Guyana achieved independence from the UK in 1966 and became a republic in 1970. In 1992, Cheddi Jagan was elected president in what is considered the country's first free and fair election since independence. The current president, Bharrat Jagdeo, has ruled since 2006. Guyana is in area the third smallest country in South America, the only country with English as the official language, and one of the two remaining countries on mainland America whose traffic still drives on the left side. In population size, Guyana is the second smallest in South America (after Suriname). Though geographically part of South America, culturally Guyana is Caribbean rather than Latin American and its considered to be a part of the West Indies. It is also the only country on the mainland of South America that is a member of the Commonwealth of the Nations. GDP is 3,62 billion USD with annual growth rate of 3,2 %. GDP per capita is 4 700 USD. Inflation rate in consumer prices is 6 % and corruption index is 2,5. There is no information available on IMD. Level of education is fairly low, 76 %. The literacy rate is high (98,8 %), but this is explained that for Guyana the figure means that people over age 15 have ever attended school. Guyanese negative net migration rate is the second highest in South America, 7,49. According to the estimates, about 500 000 Guyanese live abroad (mostly in US). Urban population is by far the lowest, 28,3 %; and only 83 % of the population has access to improved water source, which also belongs to the lowest figures in South America. There is no information available for the population living under the national poverty line. The infant mortality rate is the second-highest (after Bolivia) in South America, 32,19 %. Guyana differs from the other countries also with its population. The three largest population groups are the Indians (43,5 %), the Africans (30,2 %) and those of mixed origin (16,7 %). The Amerindians make up only 9,2 % of the population. The trend over time is for the Amerindian and mixed-race proportion to grow, mainly at the expense of the

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Indian proportion, while the black percentage remains roughly stable. Religion in Guyana runs mainly along racial lines; Christian and Hindu are the major religions. Most important export goods for Guyana are sugar, gold, bauxite/alumina, rice, shrimp, molasses, rum, and timber. These reach 0,62 billion USD. Guyana imports manufactures, machinery, petroleum, and foodstuffs (summing up to 0,71 billion USD). Most important foreign trade partners are Canada, US, Portugal, Jamaica, Trinidad and Tobago, Cuba, and China. There is no information available on trade with Finland. Guyanas tax percentages are on high-average level; corporate tax is 35 %, VAT is 16 %, and tax on income is 33 %. The official unemployment rate is 9,1 %, which most likely is understated. There is no information available on the division of the labour force to agriculture, industry and services.

3.8 Paraguay
Landlocked Paraguay declared its independence from Spain in 1811. Paraguays history has been characterized by long periods of authoritarian governments, political instability and infighting, and devastating wars with its neighbours. The 35-year military dictatorship of Alfredo Stroessner was overthrown in 1989, and, relatively free and regular political elections have been held since then. The president since 2003 is Nicanor Duarte Frutos. Paraguay has a market economy marked by a large informal sector. Because of the significance of the informal sector, accurate economic measures are difficult to obtain. Paraguays largest economic activity is based on agriculture, agribusiness and cattle ranching. Paraguay has the largest hydroelectric power plant in the world, which generates nearly all of Paraguays demand for electricity. Currently Paraguay is the worlds largest exporter of hydroelectric power. Paraguay is also ranked as the worlds third largest exporter of soybeans, and its beef export are substantial for a country of its size. GDP is 30,64 billion USD with annual growth rate of 3,2 %. GDP per capita is 4 700 USD. Inflation rate in consumer prices is high, 9 %. Corruption index is 2,6; there is no information available on IMD. Paraguay has the highest birth rate (29,1) in South America; the population growth rate is also high, 2,45. Level of education is as low as 70 %, and only 86 % of the population has access to improved water source. GINI index is 56,8 and HDI 0,757. Paraguay has the second lowest urban population (after Bolivia), of 57,9 %. Paraguay has highly homogeneous population; 95 % are mestizo and 90 % belong to the Roman Catholic Church. Paraguays exports consist of soybeans, feed, cotton, meat, edible oils, electricity, wood, and leather. Paraguay imports road vehicles, consumer goods, tobacco, petroleum products, and electrical machinery. Total export reaches 1,69 billion USD and import 4,5 billion USD, respectively. That is, Paraguay has a deficit in its international trade. Most 22

important foreign trade partners are Uruguay, Brazil, Argentina, Russia, China, US, and Switzerland. Due to its landlocked geography, Paraguay is very dependent on its neighbouring Brazil and Argentina. Almost 60 % of the GDP derives from trade with these two countries. There is no information available on trade with Finland. Paraguayan tax level is low; corporate tax, VAT, and tax on income are all only 10 %. Agriculture employs 45 % of the labour force, which is a high percentage. There is no information available on percentages of people working in services or industry. Paraguay is the only country in South America, where people with secondary education have lower unemployment percentage than people with primary education a result people with Anglo-Saxon culture would expect from everywhere.

3.9 Peru
Ancient Peru was the seat of several significant Andean civilizations, most notably that of the Incas whose empire was captured by the Spanish conquistadors in 1533. Peru declared its independence from Spain in 1821. After a dozen years of military rule, Peru returned to democratic leadership in 1980, but experienced economic problems and the growth of a violent insurgency. The presidential election of 2006 saw the return of Alan Garcia who, after a disappointing presidential term from 1985 to 1990, returned to the presidency with promises to improve social conditions and maintain fiscal responsibility. GDP is 181,8 billion USD with annual growth rate of 6,5 %. GDP per capita is 6 400 USD. Inflation rate in consumer prices is 2,1 % and corruption index is 3,3. There is no information available on IMD. Over half of the Peruvian population (54 %) live in poverty, only 83 % has access to improved water source, also the infant mortality rate is fairly high (30,94). HDI is 0,767 and GINI index 49,8. Urban population percentage is moderate, 73 %. Adult literacy rate is one of the lowest ones in South America, 87,7 %. The official unemployment rate is 7,2 % for metropolitan Lima, apart from that there is widespread underemployment. Both secondary and university educated people have higher unemployment percentages than people with primary education. No statutory unemployment benefits are provided. Private-sector employees are though required to pay the employer a compensation at the end of the labour contract. Most important foreign trade partners are US, Chile, Canada, Switzerland, Brazil, Ecuador, Colombia, Argentina, and Venezuela. Peruvian export reaches 22,69 billion USD, and import 15,38 billion USD, respectively. Most important export goods are copper, gold, zinc, crude petroleum and petroleum products, coffee, potatoes, asparagus, textiles, and guinea pigs. Import consists of petroleum and petroleum products, plastics, machinery, vehicles, iron and steel, wheat, paper. In 2006, export to Finland was 93,4 million EUR, and import 23

49,6 million EUR, respectively. Peru exports to Finland mostly ore and scrap metal; and coffee, tea, cocoa, spices and products of them. Finnish import consists of paper and cardboard; industrial machinery; and electronical and telecommunications machinery. Of the Peruvian 9 million labour force works majority (73 %) in services, only 9 % work in agriculture and 18 % in industry. Corporate tax level and VAT are relatively high, 30 % and 19 %. Tax on income is lower, 27 %. Foreign investments are allowed in all the sectors of the economy; however, they do have to be registered in the national commission of foreign investments and technology. There is no legislation on repatriation of profits and capital. Private companies can also take care of the public infrastructure, with so called administration permissions.

3.10 Suriname
Suriname is the smallest independent state in South America, both in population and in area. From the 17th century on was Suriname a Dutch colony. It gained self-government in 1954 and independence in 1975. Rroughly a third of the population emigrated then to the Netherlands, fearing that the new country wouldnt be able to survive. In 2004 there were 321 000 Surinamese people living in the Netherlands (making about 2 percentages of the population in the Netherlands), which is an enormous figure compared to the total population in Suriname (449 000). In 1980 the civilian government was replaced by a military regime that soon declared a socialist republic. In 1987, international pressure forced a democratic election. In 1990, the military overthrow the civilian leadership for one year. From that on Suriname has had democratically elected government. Since 2000 (re-elected in 2005) the president of Suriname is Ronald Venetiaan. Surinamese area is mostly tropical rainforest with great diversity of flora and fauna. The economy is highly dominated by the mining industry, which accounts for more than a third of GDP. GDP is 3,098 billion USD with annual growth rate of 5 %. GDP per capita is 7 100 USD, belonging to highest ones in South America. Inflation rate in consumer prices is as high as 9,5 %. Corruption index is 3,0; there is no information available on IMD. Suriname has the highest net migration rate, -8,78. The official language of the country is Dutch; also English and several native languages are spoken. Suriname has the highest poverty rate in South America, 70 % of the population lives under the national poverty line. Child malnutrition rate of 13 reaches also among the highest in South America. HDI is 0,759. Since Suriname doesnt have the dominant Spanish background, its neither Roman Catholic dominant; both Hindu and Protestant Churches come before Roman Catholics in Suriname. Surinames most important export goods are alumina, crude oil, lumber, shrimp and fish, rice, and bananas. Most important import goods are capital equipment, petroleum, foodstuffs, cotton, and consumer goods. Exports reach 0,88 billion USD and import 0,75 billion USD, respectively. Most important foreign trade partners for Suriname are Norway,

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US, Canada, Belgium, France, UAE, the Netherlands, Trinidad and Tobago, China, Japan, and Brazil. There is no information available on trade with Finland. Suriname has high corporate tax and tax on income, 36 % and 38 %, respectively. VAT again is low, its only 10 %. In the number of cellular subscribers per 1000 people, reaches Suriname third (after Argentina and Chile) with 477 subscriptions.

3.11 Uruguay
After Suriname, Uruguay is the second-smallest in area of the South American countries. It declared its independence from Brazil in 1825. 1973-1985 the military forces ruled Uruguay, thereafter returning to democracy. The president since 2004 is Tabar Vzquez. of the low-lying landscape is grassland, ideal for cattle and sheep rising. Uruguays well-to-do economy is characterized by the services sector, an export-oriented agricultural sector and an industrial sector, a well-educated workforce, and high levels of social spending. It is the most politically and economically stable and the second least corrupted country in South America (after Chile). The well-educated workforce and lower-than-international wages have also put Uruguay on the IT map, now being an important exporter of software in Latin America. GDP is 36,56 billion USD with growth rate of 7 %. GDP per capita is 10 700 USD, which is the third highest in South America, after Argentina and Chile. Inflation rate in consumer prices is 6,5 % and corruption index is 6,4. There is no information available on IMD. Uruguay has the second lowest poverty rate (22 %) in South America, after Chile. HDI is 0,851 and GINI index 44,6. The whole population has access to improved water source, there ranks Uruguay highest in South America. 91,9 % of the population live in urban areas, and 98 % of adult population can read. The official unemployment percentage is 10,5. There is no information available on the division of unemployment between different educational levels. The informal economy is fairly wide, about 50 %. Uruguay has an international trade deficit: its exports reach 3,993 billion USD and imports 4,532 billion USD, respectively. Most important export goods are meat, leather products, rice, wool, fish, and dairy products. Uruguayan import consists of machinery, chemicals, road vehicles, and crude petroleum. Most important foreign trade partners are US, Brazil, Argentina, Germany, Mexico, China, Russia, Venezuela, and Nigeria. To Finland Uruguay exports mainly timber and cork. Import from Finland consists of industrial machinery, and paper and cardboard. In 2006, export to Finland was 10,9 million EUR and import 9,5 million EUR, respectively. Like Argentina, Uruguay is dominated with the white population descending from Europe. Over 80 % of school pupils start secondary education, which is one of the highest percentages in South America. There are very few restrictions on foreign trade; foreign investments get the same treatment as internal investments. Uruguay doesnt produce enough energy; over 50 % of total energy consumption comes from imported oil. The 25

internal market is also small, there are only approximately 3,4 million residents in Uruguay. The structure of the industry is one-sided: Uruguay is dependent on importing raw material and semi-finished products. Brazil, Argentina and US have a significant role on the Uruguayan economy. Weather events and foods world market price developments have a great impact on the Uruguayan trade, since foodstuffs and agricultural products make a big part of the countrys export.

3.12 Venezuela
Venezuela is one of the three countries that emerged from the collapse of Gran Colombia in 1830 (the others being Colombia and Ecuador). For most half of the 20th century, Venezuela was ruled by generally benevolent military monarchs, who promoted the oil industry and allowed for some social reforms. Democratically elected governments have ruled since 1959. Hugo Chavez, president since 1999, has promoted a controversial policy of democratic socialism, which claims to reduce social problems while at the same time attacking globalization and undermining regional stability. Venezuela remains highly dependent on oil revenues, which account for roughly 90% of export earnings, more than 50% of the federal budget revenues, and around 30% of GDP. The country is politically instable, many people are dissatisfied with the president and several general strikes have been organised. GDP is 176,4 billion USD with growth rate of 8,8 %. GDP per capita is 6 900 USD. Inflation rate in consumer prices is as high as 15,8 %. IMD is 32,662 and corruption index 2,3. Venezuela is a highly urbanized country, 93 % of the population live in urban areas. 37,9 % live under the national poverty line, and infant mortality rate is 21,54. HDI is 0,784 and GINI index 49,1. Only 83 % of the population has access to improved water source. Venezuela exports mainly petroleum, bauxite and aluminium, steel, chemicals, agricultural products, and basic manufactures. These sum up to 69,23 billion USD. Import sums up to 28,81 billion USD; consisting of raw materials, machinery and equipment, transport equipment, and construction materials. Venezuela is the most export-oriented country in South America (calculated with the export/GDP and export/import ratios). Most important foreign trade partners for Venezuela are US, Colombia, Brazil, Mexico, Netherlands Antilles, and Canada. Venezuela exports to Finland oil seeds, oily nuts and products of them; and also instruments. Import from Finland consists of paper and cardboard, and industrial machinery. In 2006, export to Finland reached 0,2 million EUR and import 24,1 million EUR, respectively. Both corporate tax and tax on income reach 34 % in Venezuela. VAT is lower, 15 %. Unemployment is 8,9 %, which actually is one of the lowest ones in South America. The fewer years one spends in education, the better the changes for employment that is, the unemployment percentages rise with the level of education. Unemployment benefit is paid for 18 weeks; its equal to 60 % of the weekly wage during the last 50 weeks. Unemployed

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persons are entitled to a transportation grant of 200 VEB (0,09 USD), employment training, and guidance services. In total has South America a population of approximately 370 million people. Brazil, Guyana and Suriname differ from the majority of the South American countries in the aspect that they havent been under the Spanish rule in their history. Until 1822, Brazil was a part of Portugal; Guyana declared its independence from the UK in 1960; and Suriname belonged to the Netherlands until 1975 being also the last country in South America to gain independence. Guyana and Suriname are the only countries that got independent in the 20th century, the other ones got sovereignty between 1810 (Colombia) and 1825 (Bolivia and Uruguay). Besides the similar Amerindian native populations, have the South American countries faced similar challenges also later in the history. The nation states have been more or less unstable, and dictatorship is common concept for all countries. At the moment they all are democracies, even though the presidents still hold a lot of power. Common political concerns are the attempt to fight corruption and to improve the low and unequal education system. South America is rich on natural resources, and the economies are dependent on primary products and raw material markets, especially on mining and agriculture. They export mostly primary products and import more developed products, this is partly a consequence of the richness of the natural resources, partly of the lack of know-how to develop the own export product portfolio. This makes the countries vulnerable on the world market price fluctuations, since these influence the South American economies directly. Now we have discussed the similarities and differences for the 12 South American countries. Next we will turn to the driving forces, trying to find the change factors that mould the future from market, society and technology perspectives. In chapter four, we will even present the filters for the South American 2022 scenarios.

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4. Driving forces for the future

State factor ++ In the scenario filter model you build a filter for market, society and technology perspectives. After evaluating the initial Characteristic Characteristic data you choose the driving forces for factor factor ++ each filter. Driving force is the core content of the scenario from the perspective in question. The filters form State factor - coordinates are based on two factors, desirable outcome one on the horizontal axis and one on the vertical axis. The factors within each filter have to be independent. One of the factors describes the state and the other the characteristic of the driving force. The desirable outcome of the filter is marked with a coloured spot. You can have one or several filters of each perspective in one scenario pipe.

The alternative future scenarios are constructed by using filters. One scenario consists of several filters. The first filter, which is the primary driving force, is called the driver filter. The scenarios are grouped according to different driver filters into scenario tubes. Within a scenario tube, there can be several scenario paths.

4.1 PESTE change factors

Putting together the PESTE table, lead these following aspects the development of South America. These are questions that all the South American countries face, for some the concern is higher and for some there efforts have already been made in order to change the future path. Political instability means the power all the South American presidents still hold. The latest cautionary example of this comes from Political Instability Venezuela, where Chavez closed down the Economical The dependence of mining and only TV-station that didnt support him. The raw material markets public reasoning behind this action was the Social Persistent inequality end of the broadcast licence, which wasnt Technological The low knowledge level granted to these actors but though to others Ecological Pollution from traffic that belong the presidents troops. All the countries have had dictator rulers in the history; consequences from those days are still found and fought in all the economies. For example in Chile was the last act of Pinochet governance in the 1970s the renewal of the education system, and not to a better direction. Trying to smooth the differences between public and private schools is the second highest concern for Chiles current president Bachelet (the highest being the fixing of the renewed public transport system in Santiago).

PESTE change factors for South America 2022

Because of the great volumes of natural resources in South America, describes the dependence on mining and raw material markets well the South American economies. This can partly be explained with production, partly with demand. The South American countries pose extensive amounts of natural resources, over the individual countries needs, so its logical that they aim to the international markets with these products that are easily accessible for them. Neither is the know-how so high that the South American 28

countries could compete internationally with more developed products. On the other hand, the industrialised countries are not interested in importing products that compete with their own export goods. It serves them better to import raw materials, which they anyway need in their economies. Socially the key question is the persistent inequality. The national poverty percentages vary between 18 in Chile and 70 in Suriname. Even though Chile has the lowest poverty, it ranks much worse with its income distribution measures that is illustrated with the GINI index. The poverty percentages have lowered modestly for most of the countries, not yet influencing other social aspects. Many of the social problems can only be overcome with improved education of the people an aspect not yet seized in South America. The level of knowledge considering technology is low in South America. Argentina invests most in R&D, having 720 researchers in R&D per million people. Yet their figure is only a tenth of the Finnish investment level, and Finland is neither highest on that list. With bad basic education, its impossible to achieve a high level of knowledge. Another connecting point is the orientation of the economies, which all focus on the primary products a field where not so much knowledge is either needed. Road transport is the most important way of transport in South American countries the exception being Chile that transports mostly via sea routes. At the most half of the roads in South America have asphalt, half dont. And the better, asphalted half is not in too good condition either, the roads are full of patching and holes. Its not only the roads that are in bad condition, also the vehicles that drives there are old. Pollution from traffic is an practical example of ecological problems that have the answer already in itself (with better cars would the pollution levels be lower).

4.2 Market / Society / Technology drivers

Another way to group the driving forces for the alternative futures is to divide them to market, society and technology driving forces. These also show what are the crucial questions in the short, medium and long term because of the different time frames the different perspectives contain. Liberalization of trade is one of the interesting questions concerning the future of South American markets. At the moment there operate two multinational communities, Mercosur and the Andean Community. On one hand the decision makers aim to join these two groups together, forming 29

Market driving forces Liberalization of trade International investors pressure -> ecological environment issues Price level differentiations Raw material market development (who controls state?) Society driving forces Corruption Informal economy Generally no political trust Education system Socialism Technology driving forces Substitute for metals Food industry technology (meat) Transportation / logistics technology Oil / gas reserves (energy issues) Health / welfare technology development

the South American Community of Nations. On the other hand the individual countries act alone, signing the free trade agreements with their international trade partners. The international partners can have great influence to the orientation of the economy. Especially the international investors can set specific conditions for the finances they grant. In general are the Anglo-Saxon actors more precise with these things, the Asians dont prioritise for example the right exploitation of natural resources as high as the AngloSaxon actors do. Central questions in the society perspective is first off all the already many times mentioned education system, without it the South American countries simply dont have the needed preconditions for a better future! Other important aspects are corruption, the low trust to politicians (which the previous problem partly creates), high power the presidents pose over their citizens, and the size of the shadow economy. The informal economy is a tricky question, because it keeps the people working there outside of many basic services the wage earners receive. Oil and gas reserves are crucial when considering the global energy issues. Venezuela is one of the founding countries of OPEC, still posing large oil deposits. Most of the South American countries have a deficit in their energy production, which means they are selfsufficient and thereby also have international power when lack of energy becomes an issue. A threat for the economies in the South American countries is the development in the substituting products. When the scientists develop substitutes for metals that are highly important for the South American export portfolio will this hit hard the countries. Areas that can help to lower the importance are for example the improvements in the food industry and in the transportation and logistics infrastructure, making the industries more competitive. After reaching a certain level of social security and knowledge, will also the health and welfare technology field start to develop. During the workshop in Lima in April 2007, we built following two filters from market perspective for South America in 2022. Market 1 has on the horizontal axis the international negotiation power and on the vertical axis the dependence on raw materials. Market 2 for its part studys the orientation of the economy (where the investments come from) and the orientation of the ideas and values.

Market 1

Less dependent

Market 2

Anglo-Saxon and values Orientation of ideas

Dependence on raw materials

No power (like Africa)

Negotiation power

Big player (like India)

Asia

Orientation of the economy (investors etc)

Europe

Asian

dependent

The first society filter examines the education system and the stability of the economy. The second society filter looks at the cultural aspects, the unitness of the economy and the polarisation.

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Society 1

strong state, stable, high trust on authorities Stability of economy

Society 2

economic polarisation

Education system Highly unequal

Equal multicultures opportunities

unitness

Common culture

weak state, instable, no trust on authorities

cultural

Technology

Oil, gas, paper Orientation

The technology filter we created in the workshop has the level of technology on the horizontal axis and the orientation of the technology on the vertical axis.

Level of technology Buying the machinery

Buying know-how

4.3 Other challenges

One global concern not to be excluded from this report either is global warming. It can already be seen in the South American Logistics infrastructure (railways, telecom etc.) countries that weather phenomena are becoming more severe, the deserts are growing and the icebergs are melting. Still, the South American countries dont have any direct policies to fight these problems. There are so many other, more crucial, battles to be fought before the people will see the need to focus on ecological concerns. Another interesting question is the relationships Chile has. It has more free trade agreements than any other country in the world, but the relationships to the other South American countries are not as flourishing as they could be. On the other hand it doesnt seem like the other South American are putting that much effort either trying to link Chile better to the continent. All countries are driving their own policies and also directly competing for the international investment flows. The so called win-win thinking doesnt exist in South America; there cannot be deals that would benefit several parties.

4.4 From driving forces to building scenarios

The scenario filter model takes market, society and technology filters into account simultaneously. Therefore, there may be a different number of market, technology, and society driven scenario tubes. Each scenario tube can have different filters and the filters can be in different orders. In the filter model different filters are passed through in any reciprocal order. The driver filter divides the generated scenario paths into scenario tubes. In e.g. a technology driven scenario, the technology filter must first be passed through, followed by the market and society filters in any reciprocal order. As a result of the variance between filters the future paths will be different.

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Success potential

I
Technology driven scenarios

II

III
Market driven scenarios

IV

V
Society driven scenarios

In scenario filter model you divide the scenario paths (individual scenario descriptions) into scenario pipes according to from hich filter the development starts, meaning what is the driver for the scenario. Inside one scenario pipe you can have one or several filters and scenario paths. Scenario paths differ from each other with the order or cutting spot of the filters. You can have at the most as many scenario pipes as you have scenarios, but you can have fewer too. One scenario pipe is built from the scenarios, where the filters are in the same order but the cutting spots can differ.

The scenario stories need to be provocative, memorable, and eliciting a Time rich image. There is no time constraint on where future scenarios are useful. The criterion whether scenarios can help in short-term decisions is related to the degree of uncertainty against predictability in the decision situation. Usually the probability for the different scenarios to take place is not presented, its only noted that the described scenario is desired, business as usual or a threat scenario. With scenarios you dont only describe the possible futures, but also prepare yourself for the different alternatives. That makes futurology a useful tool for companies strategic planning.

VI

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5. Alternative future scenarios for South America in 2022

5.1 General description as a whole
This chapter presents the five alternative scenarios for South America in 2022 we built during the workshop in Lima in April 23-24th 2007. Each scenario is described individually, also showing a figure with cutting spots for the scenario route. We managed to build scenarios starting with each of the five filters, creating quite different future paths for South America. The education based and continental economy scenarios can only happen in the long term, whereas scenarios of Asian imperialism and country driven can start much sooner. Asian imperialism is the most negative future path for South America seen from the South American perspective. Hopefully the countries will forcefully drive policies that prevent this future path from happening. The longest term and also most positive futures for South America are the education based and continental economy scenarios. Even though these scenarios are not likely to happen in the near future, we want to believe the needed steps to improve the education systems will soon be taken therefore starting the path for the fabulous future. Below is the figure with all the scenarios, showing the order of the filters and cutting spots within each scenario tube. This figure also illustrates the success potential the scenarios have, and the time frame during which the scenarios have the potential to take place.

M2 S uccess poten tia l S2 T M1 S1 M1 T S1 M2 M2 T S2 S1 M1 S1 S2 S2

1. Education based

2. Asian imperialism

3. Country driven

T M1

M1

M2

4. Energy product technology

S1

M2

S2 5. Continental economy

time

5.2 Education based

This society-driven scenario starts from the assumption that the South American countries join forces and develop their education system to a model that provides equal opportunities to all the children. In order for this to happen, the states have to be stable and the citizens have to trust the authorities. At the moment only Argentina and Uruguay have equal education systems, so in order for the education based scenario to begin, a lot of time is needed. There is already awareness of the need to reform the education system, so its not utopistic to expect this to happen. The driving force for this scenario is thus the improved and equal education system.

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With common improved education system, South America will have better international power; it will also move to production less dependent on raw materials. On the whole, South America will improve its standing point on the globe, being more powerful than it is at the moment.

Scenario route for the education based scenario

Strong & stable state Equal opportunities No power (like Africa) Weak & instable state Oil, gas, paper Less dependent

Highly inequal

S1

M1

Buying the Big player machinery (like India)

Buying knowhow

Dependent (present situation) Economic

Logistics infrastructure (railway, telecom etc)

Anglo-Saxon

With better educated people, the Common Multicultures S2 culture Europe M2 technology investments move from Asia Cultural primary product markets into Asian logistics infrastructure, and from buying machinery to buying knowhow. Still South America is not that powerful and developed that it could be buying know-where, which is the next step at the development of level of technology. South America wont try to force its inhabitants into one mould, but the countries will continue to have their own individual cultures. There wont be cultural discrimination; the differences come from economic causes as it is at the moment inside the single countries. The last step in this scenario is the orientation of the economy on east-west axis. The continent continues to operate according to the Anglo-Saxon business culture and practices. For South America it doesnt matter whether the international investments come from the Asian or the Anglo-Saxon countries the continent has the power to direct the investment money into sectors that they feel need the income. This scenario is very positive. It starts with a stable state where the citizens trust the political system, and with an equal education system. With the better educated population, South America has more knowledge and therefore more power internationally. It will be an active player, developing its portfolio from mining and other primary products into more developed products. The countries will be independent, they will just work closer together than what they do at the moment. Education influences somewhat directly many social aspects for a country: lowering the poverty, improving HDI and GINI. With graduated international investments, there will also be the needed input to invest in health and welfare of the citizens. Overall, the people will be in better health and have more choices to decide over their lives, as well as the continent as a whole will be in a more powerful international position. Thinking about the starting point for this scenario, the leading country could be Uruguay; because Uruguay is the only South American country that already has a stable state and an equal education system. Uruguay is in many other aspects also a developed country in South America, so it can easily act as a leading country for this path of development.

5.3 Asian imperialism

This future path is market-driven; it starts with foreign investments coming from Asia and the economy operating according to Asian business culture and practices. This doesnt 34

promise too much for ecological and social questions; since the eastern investors arent as interested in these aspects as the western world is. The driving force for Asian imperialism scenario is the investment money from Asia and the power the investors pose over South America. In order to attract the foreign investments, the state has to be stable. Otherwise the investors will find other targets than South America. The education system continues to be highly unequal, as well as the technology depending on raw material and agricultural markets. There will, however, be an improvement from the current situation with moving from buying the machinery to buying know-how.

Scenario route for the Asian imperialism scenario

Oil, gas, paper Anglo-Saxon Strong & stable state Buying the machinery Equal opportunities

Asia

M2

Europe

Highly inequal

S1

Buying knowhow

Asian

Weak & instable state Less dependent Economic No power (like Africa) Common culture Dependent Cultural (present situation)

Logistics infrastructure (railway, telecom etc)

M1

Multicultures

S2

Big player (like India)

Internationally South America will be a less-important player, not having too much power. It is the Asian investors that hold the power for the future of South America. There will be no improvements on moving towards less dependence on raw materials and finding new production possibilities; raw materials will be exploited to the maximum. In this scenario, the South American countries are competing against each other for the international investment money. There will be no improvement towards a common economic area; the cultural differences between the countries will just strengthen. Because of the strengthened competition between the South American countries, will polarisation also be cultural. It will not economic as it is at the moment and in most of the scenarios created. This is kind of a threat scenario, and at the same time not so far from the current situation that the South American countries have internationally. It will neither improve the future for South America in the longer run, because there are no investments into human capital. And without prioritising this sector there cannot be a fabulous future. At the moment all the South American countries act according to Anglo-Saxon business culture and practices, so directly no country is the leading country for this scenario which is totally logical, because the driver comes from outside South America, from Asia. Peru is the country closest to the situation in the aspect that it attracts more foreign investments from the Asian than from the Anglo-Saxon countries, but there is no interest for Peru to start driving towards this kind of development. The leading country has to be a country with a lot of national resources but not the finances to exploit them which in fact does apply to Peru. Another possibility is Paraguay, who is worlds largest hydroelectricity exporter and also important in soybeans and beef trade. Paraguay has high birth and population growth rates, low level of urbanisation, high corruption and low GDP per capita; all aspects making it a potential leading country for this Asian imperialism. Comparing these two countries, makes the geographical special characteristic (Paraguay is landlocked) and the smaller size of the economy Paraguay a more potential leading country for this scenario than Peru would be. 35

5.4 Country driven

The country driven scenario starts from the assumption that the South American countries will not succeed in creating more interaction and common policies outside the continent. All countries will continue driving their own policies. As a result of the intercontinental competition and with no common goals, will the polarisation be cultural. The driving force for this society-driven scenario is the differentiation in South Scenario route for America and the cultural differences between the the country driven scenario countries.
Economic Strong & stable state Less dependent

With each country driving its own interests, will the S1 M1 Common Equal Multicultures Highly inequal culture (like India) opportunities individual states be powerful. Cultural Since this scenario is very Weak & instable state Dependent (present situation) close to the current situation, Oil, gas, paper Anglo-Saxon there will not yet be T Buying know-how Buying the improvements in the education machinery Europe M2 Asia system, it continues to be Logistics infrastructure highly unequal. Internationally (railway, telecom etc.) Asian this means that South America will be a non-important player, not having too much saying on the future paths of the world. Inside each country, the development will go from dependence on raw materials to more developed and less raw material dependent products, which is a positive development. The countries see that they have to widen their production portfolio, the natural resource deposits will not last forever.
S2
No power (like Africa) Big player

When the dependence on raw materials diminishes, also the technology investments move from primary production to logistics infrastructure, improving the conditions for the economic actors. The level of technology will also move from buying machinery to buying know-how, a natural development when moving away from dependence on raw materials. If the individual countries didnt show improved conditions, would the international investors soon loose their interest in the South American countries and they would look for other investment objects. The last point in this scenario is the second market filter, where the countries act as currently according to Anglo-Saxon business culture and practices. The international investments can come both from Asian and from Anglo-Saxon countries; it doesnt have any significance for individual South American countries where the money comes from, because here the individual countries have the power to choose where the investment inflow is directed to. At the moment no South American country is in the starting point for this scenario. Brazil, Guyana and Suriname being the closest because they have multiple different cultures within the country, in other countries the culture are more or less common. Brazil could well be the leading country for this scenario, it being the South American giant its easy for Brazil to think it wont gain from joining forces with other South American countries. Of all the South American countries, Brazil poses most power within the continent and also

36

outside, in the international play fields. Brazil also differs from the mainstream with its language, because its the only Portuguese speaking country in the continent.

5.5 Energy product technology

This scenario is technology-driven, it starts from the technology filter where the South American countries are buying know-how and investing in raw materials. No single country is in that situation at the moment: Argentina, Chile, Brazil and Uruguay are buying knowhow but investing in logistics infrastructure. The rest of the countries, which are investing in primary markets, are buying the machinery. The driver for our energy product technology scenario is the Scenario route for amount of natural resources that South America poses. the energy product technology To be more specific, the scenario driver is the level of Oil, gas, paper technology in the raw Anglo-Saxon Less dependent material markets.
T
Buying the machinery (like India) Because South America is rich on natural resources, is Logistics infrastructure Dependent Asian (railway, telecom, etc.) (present situation) the continent powerful in the Strong & stable Economic state international play fields, S1 Highly Equal opportunities even though its highly inequal Multicultures Common culture S2 dependent on raw materials. Weak & instable state In this scenario, the foreign Cultural investments come from the Anglo-Saxon countries. South America is also acting according to Anglo-Saxon business culture and practices. This again induces improvement of the education system, because the Anglo-Saxon countries put a lot of emphasis on the social wellbeing of the citizens. Buing knowNo power how (like Africa)

M1

Asia Big player

M2

Europe

The states are strong; the continent is in a steady state and the people can trust the politicians. The states have to be strong; otherwise the countries wouldnt attract the foreign investments. Especially the Anglo-Saxon investors arent willing to invest if the country doesnt drive trustworthy politics. The final steps in this scenario are the cultural dimensions: there will be multiple cultures (no common South American culture), and the polarisation will be economic as it is at the moment also. The question mark in this scenario is the sufficiency of raw materials, how long can South America rely on them? Should the countries already be looking for alternative future paths for the time when raw material deposits run out? Ignoring this aspect, also the technologybased scenario gives a positive future for the South American countries. The level of technology will grow, the states will gain the trust of the citizens, the education system will improve etc. And most importantly, the power over the future is in South America. The leading country for this scenario can be any of the countries that are dependent on raw materials. Guyana and Suriname are so small countries, that it seems unlikely that they could drive any future path. For Ecuador significant factors are the USD as the official currency and the low tax levels. On the other hand, theres very little R&D and high poverty in Ecuador. Paraguay is also a possible leading country for this scenario, having the largest hydroelectric plant in the world. On the other hand, Paraguay suffers from very 37

large informal sector. When the Camisea natural gas project fully starts in Peru, could Peru be the leading country until that happens its not possible. The most likely two alternatives for the leading country for this scenario are the oil exporting Colombia and Venezuela. Oil has a lot of power in todays world, and therefore is every country with oil deposits an important player in the world. These two countries again suffer from high corruption and political instability, but given the path for this scenario this problem wouldnt occur as it does at the moment. The other countries in South America are less-likely leading countries for this scenario, for them it would mean a throwback considering the starting point for this technology-driven future.

5.6 Continental economy

The driver for this market-driven scenario is that the South American countries have managed to see the benefits of joining forces and they have built the Union of South American Nations, which is a continent-wide free trade area. At that point South America is a big player in the international markets, and its also less dependent on the raw materials both aspects differ from the current situation. The Union of South American Nations takes its model from the European Union, eventually including a common currency, parliament and passport. When the countries have agreed on the common market, it also means that the single states are strong with trustworthy politics. When agreeing in the economical things, its easy to assume that the countries will also join forces and work together to improve the education system. With that they will give all children same possibilities.

Scenario route for the continental economy scenario

Less dependent Strong & stable state Anglo-Saxon

M1
No power (like Africa) Dependent (present situation)

Big player (like India)

Highly inequal

S1

Asia Equal opportunities

M2

Europe

Weak & instable state Oil, gas, paper Economic

Asian

Multicultures

S2
Cultural

Buying the machinery Common culture

Buying know-how

Since the Union of South American Nations takes its model from the European Union, the business culture and practices are Anglo-Saxon. South America itself is an important international player; therefore it doesnt matter for them where the foreign investments come from whether from Asian or from Anglo-Saxon countries. Regardless of where the investments come from, they are going to be used in improving the logistics infrastructure, not the primary products market. With the improved education system and more international power, will South America be buying technological know-how and not machinery, as most of the individual South American countries do at the moment. The last steps in this continental economy model are the cultural aspects. The countries will have their own cultures, thereby making South America multicultural. The point here is to get the countries to work together: if you try to oblige people into one single mould, they are not willing to work for a common goal. Also in European Union the countries are allowed to keep their own cultural trends. No cultural groups in the future South America will be discriminated, polarisation will be economic. The only country in the starting point for this scenario is Brazil, the South American giant. Since Brazil has a lot of power already, its not going to be a good leading country for this 38

Logistics infrastructure (railway, telecom etc.)

scenario. If Brazil were to drive, it would drive only its own goals and not seeing things from the whole continents perspective. Therefore, the leading country has to be a smaller and not so powerful country. Looking at the second filter for this scenario, Uruguay is the only country in the right cutting spot. Uruguay is a small, relatively trustworthy and developed country in South America, which would gain from the common continental economy. This scenario can happen only in the very long run, the road ahead even to the starting point of the Union of South American Nations is still far ahead. At the moment the South American countries are competing against each other, and dont really see the benefits from working together for the better future. Especially the trust to politicians is very low, and this can be overcome only with time with stable and non corrupted politics.

5.7 Market challenges in each scenario

5.7.1 Education based
Strengths: - Better educated people - More international power - Trust to authorities Weaknesses: - How to find the new production areas that arent dependent on raw materials? - Will international investors accept lower power over decisions on how the investment flow is spent? - Education of teachers, how to provide (and control) equal education?

Opportunities: - Better educated people - More international power - Better infrastructure that also contrives to jobs when building the new roads etc. - Poverty will diminish, people will be better-off and with more decision power over their futures - Large internal markets in South America

Threats: - What if growth wont be equal? - What if highly educated people leave South America and only the worst-off stay here? - How to defeat corruption, since that cannot exist if want to have equal education?

The education based scenario gives definitely a positive future for South America. Its starting point is the improved, more equal education system, which creates premises to more knowledge inside the individual countries. This improves the social standard and the well-being of the citizens. It also raises South Americas position in the international play fields, because the people are better aware of their international value. More international trustworthy is also gained with the low level of corruption. A question mark is how the international actors will accept the new powerful South America. With more knowledge in the continent, the local actors want to decide where the international investment flows go to but do the investors accept this or do they search other, yet not developed targets to their investment money? Another open question is the orientation of the economy. The countries are supposed to be less dependent on the raw material market and producing more developed products what will these industries be and will these exports have demand in the global markets? On the other hand, its just up

39

to the South American countries to grow and join forces and take the internal place they have the potential for. 5.7.2 Asian imperialism
Strengths: - Stable states - Lot of international money in South America Weaknesses: - Dependence on raw materials - Asian investors dont care about social and ecological questions - Asian investors have the power of the future of South America - No improvement in social aspects, because of the unequal education system Threats: - Exploitation of natural resources - Competition between South American countries for the foreign investments - Continuous poverty and inequalities

Opportunities: - Better technology, new ways to exploit natural resource deposits

The Asian imperialism scenario is led from the outside; its the Asian investors that guide the future of South America. The two positive factors here are the amount of international investment money that flows to the countries and the better technology that the higher investment levels bring. On the other side, the Asian investors arent too concerned on the ecological and social issues, which means that the education system will not improve and also that the natural resources may be excessively exploited. The individual states will be stable; otherwise they wouldnt receive the international investors interests. The South American countries are strongly competing against each other in order to attract the foreign investments; there is no question about the better integration inside the continent. 5.7.3 Country driven
Strengths: - Strong states in each country - Better infrastructure (needed to attract foreign investments) - Each country has the power to decide for itself Opportunities: - With less dependence on raw materials -> new product markets - Improving the infrastructure - With higher level of technology more knowledge is attained, knowledge that is applicable to several sectors Weaknesses: - No common play rules - Unequal education system - No power in international markets - How will SA attract the needed foreign investments? Threats: - Intercontinental disputes - The future is given from outside (since South America doesnt have power in the international markets, the level of the economy depends on the attained foreign investments)

Positive aspects in the country driven scenario are the strong stable individual states, the improved infrastructure inside the states, and the power the countries pose over the future of themselves. The production will along with possibilities move from primary production to other sectors, depending on the chances the individual countries pose. With international investment money its possible to raise the technology level, which raises also the knowledge level and its possible that there will be developed products that are applicable into several sectors.

40

On the other hand, the international cooperation between the South American countries is weak and there is a possibility that the intercontinental disputes may grow. Internationally only Brazil is big enough actor to pose some power, other countries are not in a position they could lead the future of the world. There will be no common play rules; all the countries will just drive their own goals. The education system will not improve, which means that the social inequality will also remain if not even grow from the current levels. 5.7.4 Energy product technology
Strengths: - Strong states - Better educated people - A lot of international money - International power (as long as the world prices for raw materials are high) Weaknesses: - Dependence on raw materials - How will the countries develop if they drive the business as usual policies? - Raw material world price fluctuations influence the economies directly Threats: - What will happen if technology level isnt high enough for the Anglo-Saxon investors? - Recession if world market prices for raw materials sing low enough - What does development of substitutes for raw materials mean to South American countries that are dependent on raw materials?

Opportunities: - The countries will be buying technological know-how, which hopefully is applicable to several sectors - Acting according to Anglo-Saxon business culture and practises improves the education system. This raises the knowledge level and thereby also lowers social inequality

The technology-driven energy product technology scenario brings lots of international money to South America as long as the world market prices for raw materials are high. The South American countries will be in a powerful international position, because of the possibilities the raw material markets bring. On the other hand, fluctuations in the world market prices for raw materials influence the South American economies directly. Another open question is how the countries are going to develop, since they are so dependent on the primary production, which doesnt need too high knowledge levels? Technologically are the countries buying know-how (not machinery, as the situation is at the moment for the most South American countries), possibly creating possibilities for technological developments applicable to several industries. This scenario takes it play rules from the Anglo-Saxon countries, thereby also investing in social and ecological questions. That gives a positive future for the individuals; their possibilities to rule over their own lives improve. 5.7.5 Continental economy Strengths: - Big FTA, a common market - A lot of international power - Stable states - An improved education system

Weaknesses: - Takes a really long time to happen - Copying too much the model from the European Union?

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Opportunities: Threats: - Bigger internal markets - Can the South American countries - Less dependence on raw materials see the benefits of creating the - Improved infrastructure Union of South American Nations or - Better-off people, with more power will they drive their individual goals? over themselves - Is win-win thinking possible in SA? What if the countries cannot put the - International power old disputes behind? - How to overcome corruption? - Who is the trustworthy country that the other 11 countries would follow in the development needed for this scenario path? The continental economy scenario is the future path that takes the longest time to even start. It aims at the similar development as the European Union has taken, and the path wasnt taken over night either in Europe. This scenario holds many great strengths and opportunities. The most important ones are the big international markets, a continent-large free trade area, the high level of international power this causes, stable states with common play rules, and of course an improved education system. The open question for the continental economy scenario is the time frame it takes to take place. Another question mark is the model from the European Union that the development should follow. Is it possible to go through the same path Europe has taken or should South America try to find their best way to achieve the fabulous future? At the moment win-win thinking is not possible in South America; a big concern is how to convert people into seeing many actors can gain from one event. Questions to solve before the continental economy is possible to take place are corruption (it cannot exist in continental economy scenario) and how to make people overcome the old disputes and look ahead into the common future.

5.8 Innovation opportunities in each scenario

The research group also considered innovation opportunities in each scenario. The findings are shown in the table below. Innovation opportunities are expressed in very general level. A certain actor view should be chosen in order to create more detailed innovation opportunities.

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Scenario

Innovation opportunities

1. Education Based World - societal innovations - consultancy (to build up an educational system) - IT-applications and infrastructure (e-learning etc.) - teaching material and methods 2. Asian Imperialism - consultancy (cultural and language barriers) Dominates - innovations in global powerplay game 3. Country Driven - societal innovations Continent - country specific needs - cross-cultural innovations within SA 4. Energy Product - technological innovations in production (i.e. utilization of local Technology energy sources) - innovations in the field of financial intruments 5. Continental Economy - assimilation of business practices and practices to SAs internal market requirements - trade agreements and political cohesion - innovations in logistics and infrastructure

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6. Conclusion
The contribution of the scenario approach to the companys innovation activities is multisided. Scenarios form a general picture of the operational environment of the company in the future and highlight the key issues of the development. For example, South Americas scenarios illustrated the future development of the continent in a very general level and identified the foremost drivers of South Americas development. According to the scenario analysis, the future of South America is not so much technology driven as market and society dimension are more important. Furthermore, the societal and market drivers are endogenous. In technology, South America is more in the role of an adaptor not a creator. These findings are binding the scenario analysis to the innovation activity of a company. When the broad lines of future development are deepened into a more specific industry level and accompanied with competition analysis their usefulness to an individual company increases. This is achieved by taking the companys actor perspective when analyzing the main components of the development in greater detail. In this stage the futures research turns in to an objective-oriented foresight activity and the results of the scenario work start to offer more profound input in to the innovation front end. The industry and the company level examination of the scenarios illustrate not just the opportunities, but also the risks involved. It is up to the companys abilities how it can manage these challenges. The scenario analysis of South America clearly showed that the deeper understanding of societal developments and history is needed especially when entering into new markets or market areas. The understanding of the technological capabilities and market oriented view alone are not sufficient. All of the aspects have to be considered in a balanced way. These findings suggest that issues like localization and piloting should be considered more closely when developing the new operational model. There are three ways to link the South American scenarios to innovations. The first is to think of the innovations and new product ideas that arise from different scenarios. The second is to think of innovations that contribute to the development of a desirable future. Thirdly, scenario work may raise ideas for innovations which are needed in every case, regardless of the scenario. These innovations may be technological innovations but a country needs also social innovations in order to succeed and prosper. By social innovations we mean improvements that aim at common wellbeing, the economic profit being only indirect. These improvements may be small scale or breakthrough ideas taking place in governmental as well as organizational levels. For example, the scenario with the highest potential, the education based scenario, requires major improvements in the education system. Structural competitiveness, economic globalization and the competitive societal institutions and the public sector have become central change factors in explaining economic growth since the late 1990s. Social innovations can be seen as a new motor for economic development. The importance of public policies in innovation has been acknowledged. However, as multinational enterprises, international organizations and financial markets gain more and more power, national governments in developing countries have less means by which to catch up the leading economies. A high level of education is crucial in succeeding in the information intensive economy. Our case study offered several contributions to the INNORISK model. The study confirmed the essential role of challenge management, especially risk management It is insufficient to observe only commercial risks: political and country-specific risks also need to be considered thoroughly. Additionally, the study strengthened our pre-assumption that there needs to be an actor view when applying the model. Each actor has its own strategy and resources and those characteristics have to be taken into consideration in the innovation process. The study also showed that when finding social innovation it is important to take 44

into consideration the features which are related to ideological background and economic system.

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References
Statistical data is collected from the following references: FinPro Country-specific reports: http://www.finpro.fi/fiFI/Market+Information/Country+Information/North+and+South+America/default.htm Peru: http://www.finpro.fi/fiFI/Market+Information/Country+Information/North+and+South+America/Peru/ Brazil: http://www.finpro.fi/fiFI/Market+Information/Country+Information/North+and+South+America/Brazil/ Venezuela: http://www.finpro.fi/fiFI/Market+Information/Country+Information/North+and+South+America/Venezuela/ Uruguay: http://www.finpro.fi/fiFI/Market+Information/Country+Information/North+and+South+America/Uruguay/ Worldbank reports (e.g. Brazil: www.worldbank.org/br) United Nations (http://www.un.org/): GINI-index, HDI-index UNDP, Human Development Report (http://hdr.undp.org/) CIA, World Factbook (https://www.cia.gov/cia/publications/factbook/index.html) McKinsey Global Institute (http://mckinsey.com/ideas/mgi/?cm_re=Dotcom-_-MGI-_Top%20Nav)

See also: Laitinen, Jukka; Leppimki, Sami; Merist, Tarja; Tuohimaa, Hanna (2008). Future Driven Innovation Process Model: Case South America as a Future Business Environment. The 2008 ISPIM Conference - Open Innovation: Creating Products and Services through Collaboration. Tours, France on 15-18 June 2008.

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Appendix 1: Interviews
List of interviews (time, person, post)
12.3.2007 Teivo Teivainen (Research Director, Professor in Political Sciences) Program on Democracy and Global Transformation at the San Marcos University in Lima / the Academy of Finland / the Reinvall Institute at the University of Helsinki

13.3.2007 Fernando Henriquez (General Manager) & Jos Chunga Roa (Project Manager South America) Larox Sucursal Peru 20.3.2007 Jos Osctequi (Professor in Economics) Pontificia Universidad Catlica del Per, Instituto de Ciencias sociales & Centro de Investigaciones Sociolgicas, Econmicas, Polticas y Antropolgicas 21.3.2007 Kristo Kentala (Secciones Visa Schengen y Comercial) & Tiia Haapaniemi (CIMO trainee) Finnish Embassy of Peru 26.3.2007 Felipe Viguera (Gerente General) Outokumpu Technology Chile Ltda. 27.3.2007 Iivo Salmi (Embajador) & Pirjo Suomela-Chowdhury (Consejera) Finnish Embassy of Chile 27.3.2007 Marcela Angulo (Gerente de Medio Ambiente y Metrologa Qumica) Fundacin Chile 28.3.2007 Franco Yanine (General Manager) & Danilo Bassi (President & CEO) Robotic Mining Consortium, Informatics Engineering Department at the University of Santiago de Chile USACH

47

Interview form / Peru

Political Attitude to neighbouring countries / global actors? Long-term problems with Chile, starting from the War of Pacific how long will this continue? The relationships with the other countries in South America? Fujimore Garcia (uudelleenvalittu, onko kansa tyytyvinen?, pivittin TV:ss), Traffic, public transport, lack of infrastructure will the public transport get better here? Most of the roads in Peru are in very bad condition, still road transport is the most important way of transport paradox? Julkinen liikenne Limassa, parannusta tulossa milloin? Economical What is the general way of doing business / making contracts? Are personal relationships more important than the reputation of the business partner more important? Corruption, how much is there and how does it show? Compared to the other SA countries, more or less here? Focus of the economic growth, which industries manage best? Yrityslainsdnt? pankkilainsdnt? kuluttajansuoja? The countrys dependence on copper and other minerals how does that effect the economy? Especially the importance of the Camisea project, what all effects does/will that have? Only positive or are the also negative aspects with Camisea? Machu Picchu ja muut kulttuurikohteet? panostetaanko turismiin tarpeeksi? Whats current in the global markets? Whats Perus position in the global markets? Direct foreign investments allowed without regulations, free market reforms starting 1990, how much remains still to be done? Social What is important to Peruvians? What do Peruvians value? Do they trust in the economy, the politicians, and the better future? Does the public see the benefits of the economic growth? Are the new jobs that arrive, legal or in the informal sector? Poverty, criminality, entrepreneurship, un(der)employment - Are there any programs trying to fix the situation? What is the labour legislation like? Is it easy to hire and fire people? Do people belong to labour unions, what goals do labour unions drive? Inequality in the school sector, how does that affect the future of Peru? Whats the percentage of university education? Is it possible to enter university after public school primary and secondary education? Technological R&D? What kind of and where? Innovative research? Who finances the research? Environmental How are environmental issues seen in Peru? You face the similar environmental problems as all the South American countries (deforestation, soil erosion, desertification, air pollution in Lima, pollution of rivers and coastal waters because

48

of waste water), what are you doing to the situation? Do politicians have fine ideas? How does the industry act? How does waste disposal work here? What happens to the garbage after its collected from the streets? Does for example paper get used again?

In summary What does the future of Peru look like? Where will Peru be in 15-20 years? What are the factors that take Peru there / keep Peru from developing? How does the future of Peru look like in comparison with the other South American countries?

Interview form / Chile

Political How are Chiles relationships with its neighbouring countries? There are ongoing disputes with Peru (starting from the war of pacific, pisco), how do Chileans see this? How long will this continue? What about the relationships with the other South American countries, how are they? Miten tn pivn nhdn Pinochet ja the Chicago boys? Tlt ajanjaksoltahan kuitenkin alkoi Chilen valtion avautuminen ja kehittyminen? Whats essential in politics in todays Chile? One of the new presidents points was to improve the equality between men and women? What else is going on? Dependence on import of petroleum and natural gas might cause problems for the economy? Possible to exploit more hydropower? Economical What sectors are most important for Chilean economy? What is the dominant form of business in Chile (in Finland (stock) company)? Are big or small companies more common? What is the corporate legislation like; is it easy/hard to start a business in Chile? What about labour legislation? What are the business hours (Do people work their hours or more, do you pay extra for extra hours)? And the taxation system, how developed is that tax on income can go as high as 40 %, right? In South American scale Chile attracts lots of foreign investments, what is the trend with them at the moment (Still growing? Which sectors drives best?)? How is the international money flows exploited? Is Chiles export portfolio diverse enough, that the country wont get into trouble if word prices of mining products get down? What are the news jobs like in Chile (workers, consults, experts,..)? Are these in the legal markets or in the grey sector? Dependence on import of petroleum and natural gas might cause problems for the economy? Possible to exploit more hydropower? Which sectors were the first ones (mining?) to open up to international business? How did the development move from there to other sectors? Asia is the most important export block (before Europe and North and South America), how does this influence the economy? Social Kyhyytt onnistuttu laskemaan huomattavasti lhiaikoina, varallisuuserot ovat silti suuret? Nhdnk tm ihmisten eriarvoisuus ongelmana, jolle pitisi tehd jotain? Monilla sosiaalisilla mittareilla (HDI, lapsikuolleisuus, puhtaan veden saanti, 49

jne) Chile parhaiden joukossa Etel-Amerikassa, mik oli ensimminen poliittinen askel, mist kehitys alkoi? Whats the level of education? Are all children given same opportunities or are there differences between different schools? Rikollisuus, taskuvarkaat? Turvattomuuden mr muuten?

Technological Does Chile invest enough in R&D (second highest number of researchers in SA)? Where is it conducted? Who finances the research? On South American scale Chile is (technologically) a highly developed country, what about on global scale? Where is Chile doing best, and what are the sectors that still need improvement? The forest sector is dependent on import of technology, whats the situation with other sectors? How does this affect Chile? Whats the situation with the other sectors? Most internet users in South America, how did Chile achieve that? There are lots of mobile phones, but using them is still expensive any interests to improve this? What are the connections like, how many competing operators are there? Environmental Whats the attitude towards environmental problems? How are environmental aspects considered in the industry? Are they seen in practise also? Marine transport the most important way of transport (80%, differs from other South American countries where road transport is the most important form). How is the infrastructure, in what condition are railways and roads? In summary Where is Chile in 15-20 years? On South American scale and globally? What are the factors that drive Chiles development / what are the factors that may prevent Chile from developing?

50

Appendix 2: Workshop 23-24.4.2007

Workshop program
(Market oriented innovations in eme rging economies, Case South-America) Place: Best Western Embajadores Hotel (Juan Fanning 320, Miraflores, Lima, Peru) Monday 23.4.2007 PART I ORIENTATION 9.30-10 Opening 10-10.45 INNORISK model as a context for the work (Jukka Laitinen) 10.45-11.30 Future research perspectives to the world (Tarja Merist) - Global challenges - Methodological answers 11.30-11.45 Break 11.45-12.45 PESTE challenges worldwide (Tiina Haanila) - South America as a part of the world 12.45-14 Lunch PART II SCENARIO BUILDING 14-14.15 Scenario methodology action scenario framework (Sami Leppimki, Tarja Merist) 14.15-14.30 Scenario filter model theory and practise (Jukka Laitinen) 14.30-17 Workshop facilitation: Building scenarios for South America from market, technology and society perspectives (+individual countries as a leader) Tuesday 24.4.2007 PART III MARKET ORIENTATION 10-10.30 Conclusions from the first day and opening of the second day 10.30-11.30 Innovation paradigm tool for renewal (Jyrki Kettunen) 11.30-11.45 Break 11.45-12.45 Workshop facilitation: Recognizing business opportunities in alternative scenarios (-> themes for conceptualization) 12.45-14 Lunch PART IV CONSEPTUALIZATION 14-15 Conceptualization phases and tools (Sami Leppimki) 15-17 Workshop facilitation: Creating product/service/business concepts in alternative scenarios for selected themes 17-17.30 Conclusions

51

List of invited participants to the workshop 23-24.4.2007

PERU Larox - Fernando Henriquez - Jose Chunga - Guadalupe Rivas - Ronald Gaspar - Jimmy Ramirez Suurlhetyst - Tiia Haapaniemi San Marcos University - Teivo Teivainen University of Lima - Eduardo Morales Pontificia Universidad Catlica del Per - Jose Oscatequi CHILE Universidad de Santiago de Chile - Edgardo Santibez - Danilo Bassi CoFi - Tarja Merist - Jyrki Kettunen - Sami Leppimki - Jukka Laitinen - Tiina Haanila

52

Appendix 3 Excels TABLE 1 Energy consumption & nature

GDP per unit of energy Electricit Electricit use y y (2000PPP producti consum USD per on ption kg of oil (billions (billions equivalent Natural resources kWh) kWh) )

BASICS/ ENERGY CONSUMPTION, NATURE

Argentina

93,94

90,93

Environment - international agreements Antarctic-Environmental Protocol, Antarctic-Marine fertile plains of the Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change Kyoto pampas, lead, zinc, tin, copper, Protocol, Desertification, Endangered Species, iron ore, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Ozone Layer manganese, petroleum, Protection, Ship Pollution, Wetlands, Whaling. 7,2 uranium Signed, but not ratified: Marine Life Conservation

Environment - current issues

Bolivia

4,472

4,168

Brazil

546

415,9

tin, natural gas, petroleum, zinc, tungsten, antimony, silver, iron, lead, gold, timber, 4,9 hydropower bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, uranium, petroleum, 6,9 hydropower,

environmental problems (ural and rural) typical of an industrializing economy such as deforestation, soil degradation, desertification, air pollution, and water pollution the clearing of the land for agricultural purposes and the international demand for tropical timber are contributing to Biodiversity, Climate Change, Climate Change-Kyoto deforestation; soil erosion from Protocol, Desertification, Endangered Species, overgrazing and poor cultivation Hazardous Wastes, Law of the Sea, Marine methods (including slash-andburn agriculture); desertification; Dumbing, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands. loss of biodiversity; industrial Signed, but not ratified: Environmental Modification, pollution of water supplies used for drinking and irrigation Marine Life Conservation, Ozone Layer Protection signed, but not ratified; Antarctid-Environmental deforestation in Amazon Basin; Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, air and water pollution in large cities; land degradation and Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental water pollution caused by Modification, Hazardous Wastes, Law of the Sea, improper mining activities; wetland degradation; severe oil Marine Dumping, Ozone Layer Protection, Ship spills Pollution, Tropical Timber 83, Tropical Timber 94,

53

timber

Wetlands, Whaling

Chile

47,6

48,52

Colombia

46,93

42,01

signed, but not ratified: Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, copper, timber, Climate Change, Climate Change-Kyoto Protocol, iron ore, nitrates, Desertification, Endangered Species, Environmental precious metals, Modification, Hazardous Wastes, Law of the Sea, molybdenum, Marine Dumbing, Ozone Layer Protection, Ship 5,9 hydropower Pollution, Wetlands, Whaling Antarctic Treaty, Biodiversity, Climate Change, petroleum, natural Climate Change-Kyoto Protocol, Desertification, gas, coal, iron ore, Endangered Species, Hazardous Wastes, Marine nickel, gold, Life Conservation, Ozone Layer Protection, Shihp copper, emeralds, Pollution, Trobical Timber 83, Tropical Timber 94, 10,1 hydropower Wetlands. Signed, but not ratified: Law of the Sea signed, but not ratified: Antarctic-Environmental Protocol, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Ozone Layer Protection, Ship Pollution, Tropical Timber 83, Tropical Timber 94, Wetlands

widespread deforestration and mining threaten natural resources; air polltuion from industrial and vehicle emissions; water pollution from raw sewage deforestation; soil and water damage from overuse of pesticides; air pollution, especially in Bogota, from vehicle emissions deforestration; soil erosion; desertification; water pollution; pollution from oil production wastes in ecologically sensitive areas of the Amazon Basin and Galapagos Islands

Ecuador

12,2

12,95

petroleum, fish, timber, 4,9 hydropower bauxite, gold, diamonds, hardwood timber, shrimp, fish hydropower, timber, iron ore, manganese, 6,4 limestone

Guyana

0,82

0,76 NA

signed, but not ratified: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the water pollution from sewage and agricultural and industrial Sea, Ozone Layer Protection, Ship Pollution, chemicals; deforestation Tropical Timber 83, Tropical Timber 94 signed, but not ratified: Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Law of the Sea, Ozone Layer Protection, Wetlands deforestation; inadequate means for waste disposal pose health risks for many urban residents; loss of wetlands

Paraguay

51,77

3,133

54

Peru

23,99

22,31

copper, silver, gold, petroleum, timber, fish, iron ore, coal, phospate, potash, hydropower, 11,3 natural gas timber, hydropower, fish, kaolin, shrimp, bauxite, gold, and small amounts of nickel, copper, platinum, iron ore

signed, but not ratified: Antarctic-Environmental Protocol, Antarctic-Maritime Living Resources, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Marine Dumbing, Ozone Layer Protection, Ship Pollution, Trobical Timber 83, Trobical Timber 94, Wetlands, Whaling

deforestation; overgrazing of the slopes of the costa and sierra leading to soil erosion; desertification; air pollution in Lima; pollution of rivers and coastal waters from municiapl and mining wastes

Suriname

1,509

1,403 NA

signed, but not ratified: Biodiversity, Climate Change, Desertification, Endangered Species, Law of the Sea, Marine Dumbing, Ozone Layer Protection, Ship Pollution, Tropical Timber 94, Wetlands

deforestation as timber is cut for export; pollution of inland waterways by small-scale mining activities

Uruguay

8,183

9,939

Antarctic-Environmental Protocol, Antarctic-Marine Living Resources, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, arable land, Ozone Layer Protection, Ship Pollution, Trobical hydropower, minor Timber 94, Wetlands. Signed, but not ratified: Marine 10,5 minerals, fisheries Dumbing, Marine Life Conservation

Venezuela

93,03

86,52

water pollution from meat packing/tannery industry; inadequate solid/hazardous waste disposal sewage pollution of Lago de Valencia; oil and urban pollution of Lago de Maracaibo; petroleum, natural signed, but not ratified: Antarctic Treaty, Biodiversity, deforestation, soil degradation; gas, iron ore, gold, Climate Change, Climate Change-Kyoto Protocol, urban and industrial pollution, bauxite, other Desertification, Endangered Species, Hazardous especially along the Caribean minerals, Wastes, Marine Life Conservation, Ozone Layer coast; threat to the rainforest hydropower, Protection, Ship Pollution, Tropical Timber 83, ecosystem from irresponsible Tropical Timber 94, Wetlands mining operations 2,3 diamonds

All South American countries meet the same natural challenges: deforestation, urban and industrial pollution, desertification, water pollution. There are lots of natural resources in South America; Venezuela has significant oil reserves and Chile has the worlds biggest copper deposits. Also, worlds highest waterfalls, highest navigable lake and evidence from many ancient cultures, such as the Incas and Machu Picchu are found in South America. In energy production, have only Brazil, Ecuador and Uruguay a deficit; all the other countries are self-supporting. 55

TABLE 2 Infrastructure
Telephone mainlines/1000 people Televisions (millions) Receipts of royalties and licence fees (USD/person) 1,5 0,2 0,6 3 0,2 0 44,9 32,3 0,1 NA 1 0 0 Internet users/1000 people Patents granted to residents/million people NA NA 71 NA 5,18 NA 21 NA 5 NA 0,42 NA 0,925 NA 6,65 NA 0,3 NA 1,97 10,75 NA Cellular subscribers/1000 people Radios (millions) NA NA 36,5 3,15 4,59 2,5 0,046 0,99 3,06 0,068 0,78 4,1

BASICS/ INFRASTRUCTURE Argentina Bolivia Brazil Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela

1 381 1 084 4 276 363 984 359 90 881 268

31 902 3 519 29 252 6 585 3 304 966 187 36 3 462

Roadways (km) 229 144 62 479 1 724 929 79 605 112 998 43 197 7 970 29 500 78 829 4 304 2 073 682 77 732 96 155

Railways (km)

Airports

227 69 230 206 195 124 137 50 74 182 291 128

352 200 357 593 232 348 192 294 148 477 174 322

133 NA 39 NA 120 267 80 48 193 25 117 67 198 89

47 NA 64 375

Roadways is the most important transport channel, even though the roads are for the most part unpaved and in bad condition. Argentina has most railway kilometres, and in airports it ranks second after Brazil. In half of the countries, there are less than 100 internet users per 1000 people. On internet users and also on cellular subscribers ranks Chile first, on telephone mainlines has Uruguay highest figure. 56

Receipts of royalties and licence fees give an interesting result: far ahead are Guyana and Paraguay, while the rest of the countries have quite similar, low figures.

TABLE 3 International relationships

Net foreign direct investment flows (% of GDP) Relationship export/import Most important foreign trade partners Import from Finland (million EUR) 86,0

Number of international schools

BASICS/ INTERNATIONAL RELATIONSHIPS

Argentina

ABEDA, AfDB, Australia Group, BCIE, BIS, CAN (associate), CSN, FAO, G-6, G-15, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIA, Mercosur, MIGA, MINURSO, MINUSTAH, NSG, OAS, OPANAL, OPCW, PCA, RG, UN, UN Security Council (temporary), UNCTAD, UNESCO, UNFICYP, UNHCR, UNIDO, UNMOVIC, UNTSO, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO, ZC

33

46,0 31,7

8,1

mashinery and equipment, motor edible oils, fuels vehicles, and energy, chemicals, metal cereals, feed, manufactures, 2,7 1,45 0,22 motor vehicles plastics

Brazil, USA, Chile, China, Germany

Export to Finland (million EUR) 50,0

Total debt service (% of GDP)

Most important export goods

Most important import goods

Participation in international agreements

Total import (billion USD)

Total export (billion USD)

Relationship export/GDP

57

Bolivia

Brazil

Chile

CAN, CSN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO (correspondent), ITU, LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, MONUC, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNIDO, UNMIL, UNMIS, UNMISET, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO AfDB, BIS, CAN (associate), CSN, FAO, G-15, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIA, Mercosur, MIGA, MINUSTAH, NAM (observer), NSG, OAS, OPANAL, OPCW, PCA, RG, UN, UN Security Council (temporary), UNCTAD, UNESCO, UNHCR, UNIDO, UNITAR, UNMIL, UNMIS, UNMOVIC, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO APEC, BIS, CAN (associate), CSN, FAO, G-15, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt (signatory), ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIL, Mercosur (associate), MIGA, MINUSTAH, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMOGIP, UNTSO, UNWTO, UPU, WCL,WCO, WFTU, WHO, WIPO, WMO, WTO

3,7

2,9

5,9

natural gas, soybeans and soy products, crude petroleum, zinc 1,3 1,25 0,14 ore, tin

petroleum products, plastics, paper, aircraft and aircraft parts, prepared foods, automobiles, insecticides, soybeans

Brazil, USA, Argentina, Colombia, Peru, Chile, Japan, China NA

NA

37 138,0 95,8

8,9

vehicles and their spare parts, metallurgy products, soy beans, grain and cooking oil, 3,0 1,44 0,22 chemicals

mashines and electronic instruments, chemicals, oil, vehicles, pharmasy products, mine products, food supplies

USA, Argentina, Germany, Kina, Japan, the Netherlands

409,0 239,0

29

58,2 35,4 10,2

petroleum and petroleum products, chemicals, electrical and telecommunications equipment, copper, fruit, industrial fish products, machinery, paper and pulp, vehicles, natural 8,1 1,65 0,29 chemicals, wine gas

USA, Japan, China, the Netherlands, South Korea, Italy, Mexico, Argentina, Brazil, 183,0 130,0 Yemen

58

Colombia

Ecuador

Guyana

BCIE, CAN, CDB, CSN, FAO, G-3, G-15, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIA, Mercosur (associate), MIGA, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNWTO, UPU, WCL, WCO, 33 WFTU, WHO, WIPO, WMO, WTO CAN, CSN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNMIL, UNMIS, UNOCI, UNWTO, UPU, WCL, WCO, 17 WFTU, WHO, WIPO, WMO, WTO ACP, C, Caricom, CDB, CSN, FAO, G-77, IADB, IBRD, ICAO, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, Interpol, IOC, IOM (observer), ISO (subscriber), ITU, ITUC, LAES, MIGA, NAM, OAS, OIC, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNIDO, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WTO 1

24,9 24,3

7,9

petroleum, coffee, coal, nickel, emeralds, apparel, bananas, cut 3,1 1,02 0,07 flowers

industrial equipment, transportation equipment, consumer goods, chemicals, paper products, fuels, electricity

USA, Venezuela, Ecuador, Mexico, China, Brazil

59,0

57,0

12,6 10,8 12,3

petroleum, bananas, cut 3,8 1,16 0,21 flowers, shrimp

vehicles, medicinal products, telecommunications equipment, electricity

USA, Peru, Germany, Colombia, Venezuela, Brazil, China NA

NA

0,6

0,7

6,2

sugar, gold, bauxite/alumina, manufactures, rice, shrimp, molasses, rum, mashinery, 3,8 0,87 0,17 timber petroleum, food

Canada, USA, UK, Portugal, Jamaica, Trinidad and Tobago, Cuba, China

NA

NA

59

Paraguay

Peru

CAN (associate), CSN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICCt, ICRM, IDA, IFAD, IRC, IFRCS, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO (correspondent), ITU, TUC, LAES, LAIA, Mercosur, MIGA, MINUSTAH, MONUC, NAM (observer), OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNIDO, UNMEE, UNMIL, UNMIS, UNOCI, UNWTO, UPU, WCL, WCO, 8 WHO, WIPO, WMO, WTO ALADI, APEC, CAN, CSN, FAO, G15, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO (correspondent), ITU, ITUC, LAES, LAIA, Mercosur (associate), MIGA, MINUSTAH, MONUC, NAM, OAS, OPANAL, OPCW, PCA, RG, UN, UN Security Council (temporary), UNCTAD, UNESCO, UNIDO, UNMEE, UNMIL, UNMIS, UNOCI, UNWTO, UPU, WCL, WCO, WFTU, WHO, WMO, WTO 23

1,7

4,5

6,8

soybeans, feed, cotton, meat, edible oils, electricity, 1,3 0,38 0,06 wood, leather

road vehicles, consumer goods, tobacco, petroleum products, electrical machinery

Uruguay, Brazil, Argentina, Russia, China, US, Switzerland

NA

NA

22,7 15,4

4,0

copper, gold, zinc, crude petroleum and petroleum products, coffee, potatoes, asparagus, textiles, guinea 2,6 1,48 0,12 pigs

Suriname

ACP, Caricom, CSN, FAO, G-77, IADB, IBRD, ICAO, ICRM, IBD, IFAD, IFRCS, IHO (suspended), ILO, IMF, IMO, Interpol, IOC, IPU, ITU, ITUC, LAES, MIGA, NAM, OAS, OIC, OPANAL, OPCW, PCA, UN, UNCTAD, UNESCO, UNIDO, UPU, WCL, WHO, WIPO, WMO, WTO

0,9

0,8 NA

NA

USA, China, Chile, Canada, Switzerland, petroleum and Brazil, petroleum products, Ecuador, plastics, machinery, Colombia, vehicles, iron and Argentina, steel, wheat, paper Venezuela 93,4 49,6 Norway, USA, Canada, Belgium, France, UAE, Netherlands, alumina, crude capital equipment, Trinidad and Tobago, oil, lumber, petroleum, China, shrimp and fish, foodstuffs, cotton, 1,17 0,29 rice, bananas NA consumer goods Japan, Brazil NA

60

Uruguay

Venezuela

CAN (associate), CSN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, LAES, LAIA, Mercosur, MIGA, MINURSO, MINUSTAH, MONUC, NAM (observer), OAS, OPANAL, OPCW, PCA, RG, UN, UNCTAD, UNESCO, UNFICYP, UNIDO, UNMEE, UNMOGIP, UNOCI, UNOMIG, UNWTO, UPU, WCL, WCO, WFTU, WHO, WIPO, 9 WMO, WTO CAN, CBD, CSN, FAO, G-3, G-15, G-24, G-77, IADB, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, Interpol, IOC, IOM, IPU, ISO, ITU, ITUC, LAES, LAIA, Mercosur, MIGA, NAM, OAS, OPANAL, OPCW, OPEC, PCA, RG, UN, UNCTAD, UNESCO, UNHCR, UNIDO, UNWTO, UPU, WCL, WCO, WFTU, 18 WHO, WIPO, WMO, WTO

4,0

4,5 11,7

meat, leather products, rice, wool, fish, dairy 2,4 0,88 0,11 products

machinery, chemicals, road vehicles, crude petroleum

USA, Brazil, Argentina, Germany, Mexiko, China, Russia, Venezuela, Nigeria

10,9

9,5

69,2 28,8

6,0

petroleum, bauxite and aluminium, steel, chemicals, agricultural products, basic 1,4 2,40 0,39 manufactures

raw materials, machinery and equipment, transport equipment, construction materials

USA, Colombia, Brazil, Mexico, Netherlands Antilles, Canada

0,2

24,1

Guyana, Paraguay and Uruguay are countries with deficit on international trade, all other countries export more than they import. In total are most important foreign trade partners USA, Canada, China and Japan, and other South American countries. For trade with EU countries are Germany and the Netherlands the most important partners. Suriname trades also with Norway, the only reference for significant trade with a Nordic country. On trade with Finland, have Brazil, Chile, Colombia, Peru and Uruguay surplus; Venezuela and Argentina have a deficit. South American countries export above all petroleum, mine and agriculture products. Imports consist of petroleum, machinery and equipment, consumer goods and chemicals. Total debt services are between 4 and 12 % of GDP. Net foreign direct investments flows vary between 1 and 8 % of GDP, Chile with the highest figure and Bolivia and Paraguay with the lowest.

61

TABLE 4 Key economic ratios

BASICS/ KEY ECONOMIC RATIOS Argentina Bolivia Brazil Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela Inflation rate (consumer Monetary unit prices) 10 Argentine peso (ARS) 4,3 Boliviano (BOB) 4,2 Real (BRL) 2,1 Chilean peso (CLP) 4,3 Colombian peso (COP) 3,4 US dollar 6 Guyanese dollar (GYD) 9 Guarani (PYG) 2,1 Nuevo sol (PEN) 9,5 Surinam dollar (SRG) 6,5 Uruguayan peso (UYU) 15,8 Bolivar (VEB) GDP (USD billions) 210 27,21 620,7 203 366,7 60,48 3,62 30,64 181,8 3,098 36,56 176,4 Growth of GDP (%) 8,5 3,3 3,1 4,8 5,4 3,6 3,2 3,2 6,5 5 7 8,8 GDP per capita (USD) 15000 Corruption index 2,9 2,7 3,3 7,3 3,9 2,3 2,5 2,6 3,3 3 6,4 2,3

Exchange rate 1 USD=3,06 ARS 1 USD=8,01BOB 1 USD=2,44BRL 1 USD=532,11CLP 1 USD=2382,9COP 1 USD=200,28GYD 1 USD=5680,71PYG 1 USD=3,23PEN 1USD=2,73SRG 1 USD=23,99UYU 1 USD=2147VEB

IMD 43,663

3000 NA 8600 12600 46,416 69,997

8400 57,351 4500 NA 4700 NA 4700 NA 6400 NA 7100 NA 10700 NA 6900 32,662

Venezuela, Suriname, Paraguay and Argentina have high inflation rates, reaching between 9 and 15 %. Brail has, naturally, the highest GDP; GDP per capita it reaches fourth after Argentina, Chile and Uruguay. Argentine and Venezuelan GDP also grows fastest; Bolivia, Brazil, Guyana and Paraguay have the most modest growth rates. IMD is only available for five countries, Chile with the highest figure and Venezuela with the lowest. Chile and Uruguay are the least corrupted South American countries, all the other countries scale around three. The most corrupted countries are Venezuela and Ecuador, both have corruption index of 2,3.

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TABLE 5 Labour force

Shadow economy (in % of GDP) using the dymimic and currency demand method, 2002/03 Unemployment% (19951999) PRIMARY EDUCATION Urban Labour force - by occupation (agriculture industry - services, %) Labour force (millions) Researchers in R&D/million people Value added tax %

Unemployment%

Corporate tax %

Tax on income, highest %

SECONDARY EDUCATION Urban

UNIVERSITY EDUCATION Urban

Rural

Rural

Rural

Argentina

15,35 NA

10,2

720

35

21

35

28,90

17,08

NA

16,03

NA

9,84

NA

10,51

Bolivia Brazil Chile Colombia

4,30 NA 96,34 20 - 14 - 66 13,6 - 23,4 6,94 63 22,7 - 18,7 20,81 52,7 6,3 - 33,5 4,57 60,2 0,42 NA 2,74 45 - NA - NA

7,8 9,8 8,3 11,1

120 344 444

25

13

13 27,5 40 35

68,30 42,30 20,90 43,40

4,38 8,89 12,39 13,91

0,57 NA 8,53 5,26

8,27 11,12 10,47

0,52 NA 9,02

5,04 1,00 4,27 NA

NA 6,66

34 7-25 17 19 16

6,18 5,73 11,04 6,46

8,93 10,00 NA NA

109 38,5

17,54 13,09

Ecuador Guyana Paraguay

10,6

50

25 35 10

12 16 10

25 33 NA 10

36,70

NA NA

NA NA 2,02

NA NA 7,19

NA NA 3,33

NA NA

NA NA

NA NA NA

9,1 NA 9,4 79

31,40

8,48

5,71 0,00

Peru Suriname

9,21 9 - 18 - 73 0,16 8 - 14 - 78

7,2

226

30 36

19 10

27 38 NA

60,90

5,12 NA

1,58 NA

9,95 NA

3,15 NA

8,42 1,57 NA NA

NA NA

9,5 NA

Rural NA NA NA NA NA NA NA NA

BASICS/ LABOUR FORCE

TECHNICAL EDUCATION Urban

63

Uruguay

1,27 14 - 16 - 70

10,5 8,9

366 236

30 0-23 34 15

0 34

51,90 36,70

NA

NA

NA

NA

NA NA

NA NA

NA

NA

Venezuela 12,50 13 - 23 - 64

12,70 10,96

13,08 15,87

14,73 10,47

In all the South American countries (where theres information available) the majority of the labour force works in services. Between the two other sectors, have only Brazil and Colombia more workforces in agriculture than in industry. Unemployment rates vary between 7 and 11 percentages, with Peru stating the lowest figure and Colombia the highest. In Bolivia, Ecuador and Peru there are high underemployment, Guyanas unemployment rate is understated and the figure for Bolivia and Peru describes only the urban areas. Argentina invests by far the most on research and development (having 720 researchers per million people), next come Chile, Uruguay and Brazil. Corporate tax is highest in Colombia (38,5 %) and lowest in Paraguay (10 %), where also tax on income and VAT are 10 %. Bolivia has also quite low tax percentages, 25-13-25. VAT varies between 10 and 25 %, and tax on income can reach as high as 40 % (in Chile)

TABLE 6 Population, poverty and social

Structure of the GDP (agriculture - industry - services, %) Level of education (Combined gross enrolment ratio for primary secondary and tertiary schools %) Literacy (% of population age 15+)

BASICS POPULATION, POVERTY AND SOCIAL

Poverty (% of population below national poverty line)

Access to improved water source (% of population)

Child malnutrition (% of children under age 5)

Health expenditure per capita (PPP USD)

Urban population (% of total population)

Age structure (%), 0-14 - 15-64 - 65+

Infant mortality (per 1000 live births)

Net migration / 1000 population

Life expectancy at birth (years)

Population growth rate %

Population (millions)

Area (million km2)

Official languages

Ethnic groups (%)

Death rate / 1000

Birth rate / 1000

Religions (%)

GINI-index

HDI-index

64

Argentina

39,9

2,8 16,73

7,55 76,12

26,7 63,2 0,96 10,1

89

white 97; mestizo, Amerindian, or other nonwhite groups 97,2 3 Quechua 30; mestizo 30; Aymara 25; 87,2 white 15 white 53,7; mulatto 38,5; black 6,2; other (includes Japanese, Arab, Amerindians) 0,9; unspecified 86,4 0,7 white and whiteAmerindian 95; Amerindian 96,2 3; other 2

Bolivia

1,1

23,3

7,53 65,84

35 60,4 1,45 - 4,6

87

nominally Roman Catholic 92; Protestant 2; Jewish 2; other 4 Roman Catholic 95; Protestant (Evangelical Methodist) 5 Roman Catholic 73,6; Protestant 15,4; Spiritualist 1,3; Bantu/voodoo 0,3; other 1,8; unspecified 0,2; none 7,4

0,4 Spanish

Spanish, - Quechua, 1,22 Aymara

9,5 35,8 54,7 12,8 36,1 51,2

90 1067 14,73

96

52,8 0,863

31,4

41,3

176 51,77

85

60,6 0,692

64

Brazil

188

8,5 16,56

6,17 71,97

25,8 68,1 1,04 - 6,1

86

0,03 Portuguese

<10 - 40 - 50

83,7

597

28,6

90

56,7 0,792

31

Chile

16,1

0,76 15,23

5,81 76,77

24,7 67,1 0,9 - 8,2

81

Roman Catholic 89; Protestant 11

0 Spanish

5,9 49,3 44,7

88

707

8,58

95

57,1 0,859

18,2

Colombia

42,9

1,14 20,48

5,58 71,99

30,3 64,5 1,46 - 5,2

73

mestizo 58; white 20; mulatto 14; black 4; mixed blackAmerindian Roman 3; Catholic 90; 92,5 Amerindian 1 Other 10 mestizo 65; Amerindian 25; Spanish and others 7; 92,5 black 3 East Indian 50; black 36; Amerindian 7; white, Chinese and 98,8 mixed 7

Spanish, also local indian -0,3 languages

12 35,2 52,7

73

522 20,35

93

53,8

0,79

49,2

Ecuador

13,5

0,28 22,29

4,29 76,42

33 61,9 1,5 - 5

NA

Roman Catholic 95; Other 5

Spanish, also - Amerindian 3,11 languages

6,3 33,5 60,2 35,5 19,3 45,2

63

220 22,87

12

94

42 0,765

41

Guyana

0,77

0,21 18,28

8,28 65,86

26,2 68,6 0,25 - 5,2

76

Christian 50; Hindu 35; Muslim 10; other 5

English, Amerindian - dialects, Creole, 7,49 Hindi, Urdu

28,3

283 32,19

14

83 NA

0,725 NA

65

Paraguay

6,51

0,41

29,1

4,49

75,1

37,7 57,5 2,45 - 4,8

70

mestizo 95; 94 other 5

Peru

28,3

1,29 20,48

6,23 69,84

30,9 63,7 1,32 - 5,3

86

Suriname

0,44

0,16 18,02

7,27 69,01

Uruguay

3,42

0,18 13,91

9,05 76,33

29 64,7 0,2 - 6,3 22,9 63,9 0,46 13,3

72

Amerindian 45; mestizo 37; white 15; black, Japanese, Chinese and 87,7 other 3 Hindustani 37; Creole 31; Javanese 15; "Maroons" 10; Amerindian 2; Chinese 2,;white 1; 88 other 2

Roman Catholic 90; Mennonite and other Protestant 10 Roman Catholic 81; Seventh Day Adventist 1,4; other Christian 0,7; other 0,6; unspecified or none 16,3

0,08 Spanish, Guarani

22,4 18,4 59,2

57,9

301 24,78

86

56,8 0,757

32

- Spanish, 1,01 Quechua, Aimara

8,5 26,4 53,1

73

233 30,94

83

49,8 0,767

54

89

Venezuela

25,7

0,91 18,71

4,92 74,54

29,1 65,7 1,38 - 5,2

74

white 88; mestizo 8; 98 black 4 Spanish; Italian; Portuguese; Arab; German; African, indigineous 93,4 people

Hindu 27,4; Protestant 25,2; Roman Catholic 22,8; Muslim 19,6; indigenous beliefs 5 Roman Catholic 66; Protestant 2; Jewish 1; other 31

Dutch, also English, Sranang Tongo, - Hindustani, 8,78 Javanese

13 22 65

73,5

309 23,02

13

94 NA

0,759

70

9,3 33,7 - Spanish, 0,25 Portunol/Brazilero - 57

91,9

824 11,61

100

44,6 0,851

22

Roman Catholic 96; Protestant 2; other 2

Spanish, also many indigenous 0 dialects

3,7 41 55,3

93

231 21,54

83

49,1 0,784

37,9

The biggest countries in population in South America are Brazil, Colombia and Argentina. The smallest are Suriname and Guyana. In area Brazil is unquestionable the biggest, followed by Argentina, Peru, Colombia and Bolivia. Bolivia has the highest birth-rate, and also the second-highest population growth rate. Most moderate population growth rates have Suriname (0,2 %) and Guyana (0,25 %). Argentina, Chile, Ecuador and Uruguay reach 76 years life expectancy at birth. The shortest life expectancy has Guyana and Bolivia, reaching only 65 years. Level of education varies between 70 and 89 %, lowest being Paraguay and highest Argentina and Uruguay. Only Bolivia, Brazil, Peru and Suriname have adult literacy rate under 90 %. 66

Argentina is the only country with positive net migration rate. Suriname again is the country where people are most willing to move away from. Suriname and Guyana are the only countries without dominant Roman Catholic population. With official languages are Brazil, Suriname and Guyana exceptions in South America. Their official languages are Portuguese, Dutch and English respectively in all the other countries dominate Spanish and different Amerindian languages. Infant mortality rate is absolutely the highest in Bolivia, there over 50 % of newborns risk dying under a year of age. Lowest percentages have Chile, Uruguay and Argentina. These are the countries that also invest most on health expenditure. Uruguay is the only country with full access to improved water source. For the other South American countries, the percentages vary between 83 (Venezuela and Guyana) and 96 (Argentina). Ecuador, Uruguay, Venezuela and Peru have GINI-index less 50, which mean that they have the most equal income distributions. Lowest poverty rates have Chile (18,2 %) and Uruguay (22 %); highest ones are found in Bolivia and Suriname, where 64 and 70 percent of the population live under the national poverty line. High development according to the HDI-index have Uruguay, Chile and Argentina; they have HDI higher than 0,8. Lowest is development in Bolivia, where HDI is 0,692.

67

Appendix 4: Individual countries in the filters

Market 1

Less dependent

Market 2
BR Dependence on raw materials
PE

western and values Orientation of ideas

No power (like Africa)

Negotiation power inside SA CH, EC, GU, PAR, PE, SR, UY

Big player (like India) AR, COL, VE

AR, BR, CH, COL, EC, GU, PAR, SR, UY, VE Europe

Asia

Orientation of the economy (investors etc)

dependent

eastern

Society 1
CH

strong state, stable, high trust on authorities Stability of economy

Society 2

economic polarisation

UY

BR, GU, SR

AR, CH, COL, EC, PAR, PE, UY, VE

unitness
Equal opportunities

Education system Highly unequal BR, COL, EC, GU, PAR, PE, SR, VE AR

multicultures

Common culture

cultural
weak state, instable, no trust on authorities

Technology

Oil, gas, paper Orientation Buying know-how AR, CH, BR, UY

COL, EC, GU, PAR, PE, SR, VE

Level of technology Buying the machinery

Logistics infrastructure (railways, telecom etc.)

68