What is often taken for granted inside
the United States has long been the envy of the entrepreneurial classes
in the Latin American region: free markets, democracy, the absence of
war and a stable currency.
During the past 50 years or so, Miami has
been the only city in the Latin American region with a stable political
economy.
Miami’s rapid emergence as a world
city is explained by virtue of its location inside the political economy
of the United States, which provided for a sheltered and stable urban
environment in which foreign and domestic capital found optimal freedom.
The infusion of migrants and capital into
the city since the late 1950s was directly related to revolutions, wars
and political instability in the Caribbean and South America. Miami was,
just about, the only alternative.
From the middle of the 20th century until
the late 1980s, Latin America has been one of the most politically unstable
regions in the world.
Irregular transfers of power from one government
to the other were common in the region and many countries were at one
time or another ruled by military juntas.
Examples include Brazil, Argentina, Peru,
and Guatemala. According to most measures, liberal democracy has been
a rarity across the region, and free markets rarely functioned for prolonged
periods of time.
The fall of Havana in 1959 to Fidel Castro
was the decisive event that spurred Miami’s rise to world city status.
Among the first waves of Cuban refugees
were the business elite and capitalist class that felt threatened by the
new regime. They brought their connections, skills, and, in most cases,
their wealth, with them.
The Cuban exiles were followed by Nicaraguans,
Colombians, Panamanians, Peruvians and other Latin Americans who were
fleeing political persecution or economic insecurity.
Miami’s economic fortunes, hence, are
tied to changes in the political climate to the south. The question is
whether this climate is undergoing fundamental change or not, and what
the consequences would be for Miami.
The idea is that the diffusion of democracy
and free market styles of governance throughout Latin America would diminish
Miami’s exceptional political economy and hence erode its competitiveness
vis-à-vis other Latin American cities.
Miami would then lose its “natural”
advantages and it would have to compete on a more or less level playing
field.
To have an idea of what that means, just
think of the intense competition of cities in the European Union. The
EU represents in some ways the most level playing field imaginable, with
free movement of goods, people, and money and, soon, with one single fiscal
policy and one currency.
City rankings in the EU seem to have become
an obsession. Which one has the most universities, which has the best
airports, seaports, teleports?
Which has the most skilled labor force,
most company headquarters, the biggest stock exchange? And so on and so
forth.
Don’t be too impressed with the differences
among these cities. Really the main conclusion from this pre-occupation
with rankings is that these cities have become so much alike and that
they generally have to compete with the same sets of tools (which are
few).
To be sure, the Latin American region is
a long way from becoming a “Latin American Union” like the EU.
A few years ago, it seemed that military juntas, socialism, and autarkic
economic strategies, all belonged to a different era that expired in the
late 1980s.
Today, a number of countries, such as Peru,
Colombia, Ecuador, and Venezuela, are having the hardest times maintaining
stability.
But it would be prudent for Miami’s
leaders to consider the probability of a gradual closing of this city’s
exceptional window opportunity, the way it existed in the past.
Then, Miami would have to compete much the
same way European cities do nowadays, and all other Latin American cities
might in the future: with engineered comparative advantage.
This includes, most of all: effective and
efficient local governance, a good infrastructure, managerial competence,
educated workers and a friendly and service-oriented environment.
Jan Nijman, Ph.D., is a professor of Geography and Regional Studies at
the School of International Studies at the University of Miami.