For many years, the predominant outside view of Latin America was of “a man with a moustache, a guitar and a revolver,” as Nobel-prize-winning Colombian novelist Gabriel García Márquez once put it.
But the continent has changed. Despite the reality-distorting perception generated by headlines about drug-traffickers and emigration, there has been a quiet but profound transformation over the past two decades that some believe, may make the next decade its own.
The continent still has many poor people, but what is defining it now is its rising middle class.
In Brazil alone, over the past decade 30m people have joined the ranks of the middle class. This remarkable change has transformed the way consumer goods companies now treat the country. The story has been repeated throughout the region.
Since 2000, the region has been the one place in the world where inequality has fallen: both in relatively rich countries (such as Mexico) and in poor ones (such as Bolivia); in those with socialist style economies (Venezuela) and free marketeers (such as Colombia); in those with large Amerindian populations (Peru) or without (Argentina).
Nor has this trend jeopardised growth. Latin America, this year, will grow on average 4.5 per cent – twice the US level, and four times that of the eurozone.
By and large, the region has embraced high finance. Emblematic of that, the Brazilian oil company Petrobras is about to launch the world’s largest ever share offering. At as much as $84bn, it will be used to exploit Brazil’s deepwater oil reserves that are, by some counts, larger than Russia’s and Kuwait’s.
Petrobras, however, is only one of the continent’s new corporate leaders.
Vale, the world’s largest iron ore company with operations as far away as Guinea and Zambia, no longer considers itself a Brazilian company but a global one, as does JBS – the world’s largest meat and protein producer.
In the rest of Latin America, other companies, such as Colombia’s biggest lender, Bancolombia, are also increasingly looking abroad, although first to their immediate neighbourhoods. The same is true of its larger Brazilian peer, Itau Unibanco, Latin America’s biggest lender by market capitalisation.
The region has also embraced democracy – Cuba notwithstanding and with all the caveats that Venezuela requires. On October 2, for example, Brazil will probably elect a new president – and, for the first time since democracy, without an associated financial crisis. Furthermore, Brazil’s next president will most probably to be a woman, Dilma Rousseff.
In a continent usually thought to be characterised by social conservatism and “macho men”, this is another marker of change.
But then, Argentina already has a woman president (Cristina Kirchner); Chile just had one (Michelle Bachelet), and the leader in Peruvian polls ahead of elections next year is a woman (Keiko Fujimori).
The processes of the past 20 years that have wrought such changes have not been easy. Indeed, debt default, deflation, and how to grapple with gaping budget deficits, are problems the west now has to face. Latin America has largely already done so.
For the most part, the result of this role-reversal is leaner economies, often with constitutionally stipulated spending limits, low overall debt, independent central banks, and a hardy and battle-weathered corporate sector.
There are alternative visions – less pragmatic, more quixotic, and highly heterodox, as espoused by Hugo Chávez in Venezuela. Yet his ideas no longer command the same respect they did only a few years ago.
That is largely because the country’s prolonged recession patently shows that Mr Chávez’s model does not work. Rather than look to Venezuela’s president for anti-imperialist inspiration (or fun), most regional leaders are now embarrassed by his hyperbolic diatribes.
If there is a weak point in the story, it is the degree to which Latin America’s rising prosperity is due to the commodity price boom, which has had two effects.
It has bolstered government accounts, so allowing higher social spending. Foreign investment into local commodity-producing companies has meanwhile helped sustain capital flows into a region that still does not save enough to meet its needs – which also explains Latin America’s relative financial openness compared, say, with Asia.
As such, even if higher commodity prices represent a structural shift in world demand, it also means the continent cannot escape a global double-dip recession.
However, trade accounts for only 40 per cent of the combined output of the region’s seven largest economies – Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela.
Their fast-growing domestic economies, combined with low debt levels and high foreign reserves, means many are confident Latin America will be able to weather any coming storm better than most.