An IMF report published this week lauds the Mexican economy’s health, and credits robust fundamentals and good policy choices for its success in weathering the storm of global economic crisis. With even more positive news, a recent study by the Mexican government shows that FDI is still pouring in despite violence, and is actually going to the most dangerous areas. But this doesn’t mean that violence is not having an effect on the economy. In this Americas Quarterly article, Dora Beszterczey and I argue that violence actually has the greatest economic impact on small and medium sized companies, not the multinationals and domestic conglomerates that receive FDI inflows. At this local level there are signs that heightened violence is taking its toll, increasingly forcing entrepreneurs to pack their bags in search of a safer business environment.
There are a number of interesting profiles of Peru’s new drug chief Ricardo Soberón in the news this week. As I talked about in the past, security issues related to drug trafficking and organized crime will be a huge challenge for Humala. While El Comercio harshly criticizes the choice, Soberón’s academic bonafides and more inclusive approach (he favors eradicating rural poverty before coca plantations, and wants to engage the coca growers movement in the national dialogue about drug policy) may enable the new Peruvian administration to balance their promises of social inclusion with a more comprehensive security policy. For those interested in a more sweeping view of drug policy in the history of U.S.-Peru relations, Paul Gootenberg’s book Andean Cocaine: the Making of a Global Drug is well worth a read.