Latin America’s economic drama

(Photo: Alejandro Cegarra McClatchy)

Latin America’s exports fell for the third year in a row in 2015, drawing new attention to a problem that explains much of the region’s economic problems: lack of export diversification.

This year, exports from the region fell by 14 percent, mainly because of the steep decline in commodity prices, according to a new report by the Inter-American Development Bank (IDB). What’s worse, the region’s exports are likely to continue falling in 2016, the bank says.

One of the key problems is that many Latin American countries are exporting only a handful of products, in some cases the same raw materials that they have been shipping abroad for a century. And when international prices for these exports fall, the region goes bust.

Consider some of these chilling figures that were given to me by IDB principal trade economist Paolo Giordano last week: Venezuela relies on only one product — oil — for 96 percent of its export income, and Ecuador relies on just four products for 75 percent of its exports.

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