Latinometrics

📚✨ Did you know over 90% of LatAm can read? But is that enough to empower the next generation? Let’s explore ↓ Here’s a bit of excellent news for your Tuesday: over 90% of Latin America is literate. You might shrug, wonder if there aren’t more important things to focus on this week such as Veneuzela’s election crisis or the way in which immigration is once more shaping domestic politics within the United States. But you know the drill: we’re all about giving the region its flowers where deserved, and watering those flowers where needed. First the positive: Latin America is nearing full literacy, with almost 100% of the citizens of the region’s four largest countries – Brazil, Mexico, Colombia, and Argentina – able to read and write. Argentina leads the way, with the country having long ago emerged as an impressive outlier compared to its peers. Elsewhere, though, we should highlight that the situation is less rosy; if the Southern Cone is Latin America’s most literate region, then the Northern Triangle is perhaps its least. It may go without saying, but literacy is a critical component of human development—perhaps even the most critical. Half of the nearly 2B people worldwide living in poverty cannot read or write, though it’s worth noting that 200 years ago only about 12% of humans worldwide were literate. So there’s been lots of progress in these last few centuries. Within Latin America, there’s clearly been an impressive change since the early 20th century. However, education is far from a one-off battle, and today the region needs to reprioritize its students. Looking at Latin America’s reading scores in reading on the PISA global standardized test, the region’s countries tend to outperform many developing-country peers in areas like Southeast Asia, for example, but lag more developed countries. For example, students in local success stories like Chile and Uruguay tend to score roughly 50 points fewer on average than their European or OECD counterparts. That difference is not just seen in test scores, but can reflect the ability of these students to earn higher salaries globally or even just solve their home countries’ problems. The COVID-19 pandemic in particular has wreaked havoc on Latin American education systems, as students spent months to even years staying home, missing classes, or being unable to connect virtually. Not to mention, the rise in poverty seen as of late in countries like Argentina has damaged educational performance; after all, missing meals makes it harder to study, stay focused, or perform well in school. Latin America’s young people are its future, and every possible resource must be employed to helping them excel academically and eventually professionally. We know education is a key which opens many doors—now let’s help our students make it down the hallway.

📚🤓 Is literacy is the foundation of progress? With 90% of Latin America becoming literate, what comes next for education in the region? Let’s explore↓ Here’s a bit of excellent news for your Tuesday: over 90% of Latin America is literate. You might shrug, wonder if there aren’t more important things to focus on this week such as Veneuzela’s election crisis or the way in which immigration is once more shaping domestic politics within the United States. But you know the drill: we’re all about giving the region its flowers where deserved, and watering those flowers where needed. First the positive: Latin America is nearing full literacy, with almost 100% of the citizens of the region’s four largest countries – Brazil, Mexico, Colombia, and Argentina – able to read and write. Argentina leads the way, with the country having long ago emerged as an impressive outlier compared to its peers. Elsewhere, though, we should highlight that the situation is less rosy; if the Southern Cone is Latin America’s most literate region, then the Northern Triangle is perhaps its least. It may go without saying, but literacy is a critical component of human development—perhaps even the most critical. Half of the nearly 2B people worldwide living in poverty cannot read or write, though it’s worth noting that 200 years ago only about 12% of humans worldwide were literate. So there’s been lots of progress in these last few centuries. Within Latin America, there’s clearly been an impressive change since the early 20th century. However, education is far from a one-off battle, and today the region needs to reprioritize its students. Looking at Latin America’s reading scores in reading on the PISA global standardized test, the region’s countries tend to outperform many developing-country peers in areas like Southeast Asia, for example, but lag more developed countries. For example, students in local success stories like Chile and Uruguay tend to score roughly 50 points fewer on average than their European or OECD counterparts. That difference is not just seen in test scores, but can reflect the ability of these students to earn higher salaries globally or even just solve their home countries’ problems. The COVID-19 pandemic in particular has wreaked havoc on Latin American education systems, as students spent months to even years staying home, missing classes, or being unable to connect virtually. Not to mention, the rise in poverty seen as of late in countries like Argentina has damaged educational performance; after all, missing meals makes it harder to study, stay focused, or perform well in school. Latin America’s young people are its future, and every possible resource must be employed to helping them excel academically and eventually professionally. We know education is a key which opens many doors—now let’s help our students make it down the hallway.

🪖🇨🇷 Did you know that countries like Costa Rica have dismantled their armies? Find out how this radical approach is shaping a new narrative in defense ↓ Latin America is far from perfect. From inequality to crime to sluggish productivity, the region’s got its fair share of challenges. But in a time of wars in Ukraine and the Middle East, in a time of military tensions between China and Taiwan or Armenia and Azerbaijan, the lack of interstate conflict in Latin America is certainly commendable. Diplomatic spats, like Ecuador versus Mexico or Argentina versus Colombia or basically everybody versus Venezuela? Sure, that’s an ordinary Tuesday. But regional countries haven’t actually fought a war over, say, territorial sovereignty since the Cenepa War fought between Ecuador and Peru in early 1995. That’s nearly 30 years ago now. Which begs the question why some Latin American countries have got such bloated militaries. Sure, there are countries like Costa Rica, which abolished its standing army in 1948 and today just maintains a smaller military-like security force. But looking to countries in the rest of the region, we see some relatively large armed forces. Cuba, for example, has over a tenth of its population affiliated in some way with the military, despite not being at war. And if you think “Well, look at Cold War history to understand that” – what about Paraguay? Why is there a bigger share of Paraguayans, which haven’t fought a war since the 1930s, serving than Russians who are currently fighting their neighbor? Especially because military maintenance is no cheap affair. As our next chart shows, there’s a logic to who is spending the most on their armed forces. The countries with the highest defense spending relative to GDP are those with ongoing security concerns (with the exception of Haiti, which simply has no functioning government to speak of). Ecuador’s military, with a yearly budget of $2.4B, is currently waging war on the local gangs and international criminal outfits which have overrun the country. Meanwhile, neighboring Colombia has long spent high sums on its own $10B per year military, which has a legacy of over 60 years of conflict with local armed groups and drug cartels. To this effect, Colombia’s army has also long enjoyed substantial military aid from the US. There’s of course a lot of baggage associated with defense spending. The next three countries on our above chart – Uruguay ($1.4B), Chile ($5.7B), and Honduras ($480M) – all have bloody histories with their own armed forces. In fact, as Latin America has democratized and kicked the army out of politics and back into the barracks, defense spending has actually decreased relative to GDP in most countries in the region. All of this to say that the military is not a completely benign force. Local leaders have increasingly expanded the role of their countries’ militaries, ranging from airport management in Mexico to squashing dissent in Venezuela.

🌎⚔️ Latin America hasn’t seen a war in 30 years, yet military spending is skyrocketing! What’s going on? Let’s explore ↓ Latin America is far from perfect. From inequality to crime to sluggish productivity, the region’s got its fair share of challenges. But in a time of wars in Ukraine and the Middle East, in a time of military tensions between China and Taiwan or Armenia and Azerbaijan, the lack of interstate conflict in Latin America is certainly commendable. Diplomatic spats, like Ecuador versus Mexico or Argentina versus Colombia or basically everybody versus Venezuela? Sure, that’s an ordinary Tuesday. But regional countries haven’t actually fought a war over, say, territorial sovereignty since the Cenepa War fought between Ecuador and Peru in early 1995. That’s nearly 30 years ago now. Which begs the question why some Latin American countries have got such bloated militaries. Sure, there are countries like Costa Rica, which abolished its standing army in 1948 and today just maintains a smaller military-like security force. But looking to countries in the rest of the region, we see some relatively large armed forces. Cuba, for example, has over a tenth of its population affiliated in some way with the military, despite not being at war. And if you think “Well, look at Cold War history to understand that” – what about Paraguay? Why is there a bigger share of Paraguayans, which haven’t fought a war since the 1930s, serving than Russians who are currently fighting their neighbor? Especially because military maintenance is no cheap affair. As our next chart shows, there’s a logic to who is spending the most on their armed forces. The countries with the highest defense spending relative to GDP are those with ongoing security concerns (with the exception of Haiti, which simply has no functioning government to speak of). Ecuador’s military, with a yearly budget of $2.4B, is currently waging war on the local gangs and international criminal outfits which have overrun the country. Meanwhile, neighboring Colombia has long spent high sums on its own $10B per year military, which has a legacy of over 60 years of conflict with local armed groups and drug cartels. To this effect, Colombia’s army has also long enjoyed substantial military aid from the US. There’s of course a lot of baggage associated with defense spending. The next three countries on our above chart – Uruguay ($1.4B), Chile ($5.7B), and Honduras ($480M) – all have bloody histories with their own armed forces. In fact, as Latin America has democratized and kicked the army out of politics and back into the barracks, defense spending has actually decreased relative to GDP in most countries in the region. All of this to say that the military is not a completely benign force. Local leaders have increasingly expanded the role of their countries’ militaries, ranging from airport management in Mexico to squashing dissent in Venezuela.

🕊️🪖 Despite ongoing challenges, Latin America stands out for its absence of war. What’s behind the military might? Let’s explore ↓ Latin America is far from perfect. From inequality to crime to sluggish productivity, the region’s got its fair share of challenges. But in a time of wars in Ukraine and the Middle East, in a time of military tensions between China and Taiwan or Armenia and Azerbaijan, the lack of interstate conflict in Latin America is certainly commendable. Diplomatic spats, like Ecuador versus Mexico or Argentina versus Colombia or basically everybody versus Venezuela? Sure, that’s an ordinary Tuesday. But regional countries haven’t actually fought a war over, say, territorial sovereignty since the Cenepa War fought between Ecuador and Peru in early 1995. That’s nearly 30 years ago now. Which begs the question why some Latin American countries have got such bloated militaries. Sure, there are countries like Costa Rica, which abolished its standing army in 1948 and today just maintains a smaller military-like security force. But looking to countries in the rest of the region, we see some relatively large armed forces. Cuba, for example, has over a tenth of its population affiliated in some way with the military, despite not being at war. And if you think “Well, look at Cold War history to understand that” – what about Paraguay? Why is there a bigger share of Paraguayans, which haven’t fought a war since the 1930s, serving than Russians who are currently fighting their neighbor? Especially because military maintenance is no cheap affair. As our next chart shows, there’s a logic to who is spending the most on their armed forces. The countries with the highest defense spending relative to GDP are those with ongoing security concerns (with the exception of Haiti, which simply has no functioning government to speak of). Ecuador’s military, with a yearly budget of $2.4B, is currently waging war on the local gangs and international criminal outfits which have overrun the country. Meanwhile, neighboring Colombia has long spent high sums on its own $10B per year military, which has a legacy of over 60 years of conflict with local armed groups and drug cartels. To this effect, Colombia’s army has also long enjoyed substantial military aid from the US. There’s of course a lot of baggage associated with defense spending. The next three countries on our above chart – Uruguay ($1.4B), Chile ($5.7B), and Honduras ($480M) – all have bloody histories with their own armed forces. In fact, as Latin America has democratized and kicked the army out of politics and back into the barracks, defense spending has actually decreased relative to GDP in most countries in the region. All of this to say that the military is not a completely benign force. Local leaders have increasingly expanded the role of their countries’ militaries, ranging from airport management in Mexico to squashing dissent in Venezuela.

📈What if we told you that Mexico's bonds are outperforming even US treasuries? The numbers are in ↓ Latin America's history with inflation isn't a pretty one. Driven by boom-and-bust cycles, poor fiscal discipline, and at times, simply bonkers monetary policy, the region has been characterized by consistent struggles with keeping prices under control for decades. Much of the 1980s and 1990s were marked by staggering debt crises in Latin America's biggest economies, as currency values plummeted amidst triple-digit and even quadruple-digit hyperinflation levels. For example, in 1993, the Mexican government famously decided to cut three 0s from the peso — one "new peso" was thus worth one thousand old pesos. Since that era, increasingly independent central banks have – for the most part – tried to keep the economic woes to a minimum through strict monetary policy. In fact, recent years have even seen these central banks staying conservative while their European and US peers were slashing rates to stimulate demand during the pandemic. Clearly, history hasn't faded from anyone's mind. Curious about how we built this chart? We meticulously compiled official numbers from the central banks of all the countries shown. If you're an investor, this data might be valuable to you. You can purchase it here. Setting interest rates is by no means an exact science. Different countries have had different results in the post-pandemic era, with Brazil's central bank pursuing an especially aggressive monetary strategy to curb inflation. Negative real interest rates, meanwhile, reflect months and even years where inflation outpaced nominal interest rates. This brought down yields and weakened the value of government bonds across both US and Latin American government bonds. Since 2022, though, real interest rates are on the rise. So, let’s put everything together and pretend you invested $1K five years ago in different bonds. Where would you be at today? Well, this may not surprise some readers who recall our recent look at Mexican investment portfolios, but Mexican government bonds – or CETES – have returned the best results, with a 20% return. Owing to strong macroeconomic fundamentals and monetary discipline since even before the pandemic, Mexican government bonds remain highly attractive to investors all over. Consistently high real interest rates, minimal inflation, and a superpeso that has outperformed all other major currencies have all helped Mexican bonds leave the competition – yes, even the competition up north – in the dust. The overall yield would look to be about 20% today, compared to a loss of roughly 10% for US treasury bonds and double that in Brazil and Colombia.

🇲🇽📈 Think US bonds are unbeatable? Mexico’s 20% return says otherwise—let’s dive into the numbers ↓ Latin America's history with inflation isn't a pretty one. Driven by boom-and-bust cycles, poor fiscal discipline, and at times, simply bonkers monetary policy, the region has been characterized by consistent struggles with keeping prices under control for decades. Much of the 1980s and 1990s were marked by staggering debt crises in Latin America's biggest economies, as currency values plummeted amidst triple-digit and even quadruple-digit hyperinflation levels. For example, in 1993, the Mexican government famously decided to cut three 0s from the peso — one "new peso" was thus worth one thousand old pesos. Since that era, increasingly independent central banks have – for the most part – tried to keep the economic woes to a minimum through strict monetary policy. In fact, recent years have even seen these central banks staying conservative while their European and US peers were slashing rates to stimulate demand during the pandemic. Clearly, history hasn't faded from anyone's mind. Setting interest rates is by no means an exact science. Different countries have had different results in the post-pandemic era, with Brazil's central bank pursuing an especially aggressive monetary strategy to curb inflation. Negative real interest rates, meanwhile, reflect months and even years where inflation outpaced nominal interest rates. This brought down yields and weakened the value of government bonds across both US and Latin American government bonds. Since 2022, though, real interest rates are on the rise. So, let’s put everything together and pretend you invested $1K five years ago in different bonds. Where would you be at today? Well, this may not surprise some readers who recall our recent look at Mexican investment portfolios, but Mexican government bonds – or CETES – have returned the best results, with a 20% return. Owing to strong macroeconomic fundamentals and monetary discipline since even before the pandemic, Mexican government bonds remain highly attractive to investors all over. Consistently high real interest rates, minimal inflation, and a superpeso that has outperformed all other major currencies have all helped Mexican bonds leave the competition – yes, even the competition up north – in the dust. The overall yield would look to be about 20% today, compared to a loss of roughly 10% for US treasury bonds and double that in Brazil and Colombia.

💸🇺🇸→🇲🇽 The story of US remittances is more than just big states—small communities are making a big impact. See how ↓ The United States has always been a country of immigrants. From the Italians, Irish, and Jews of early 20th-century New York to the Caribbean Latinos who arrived to Miami in the 1980s en masse, the US has always been strengthened by the millions who have come from abroad to improve the lives of their families. Speaking of families, remittances – which are financial payments sent home by immigrants living in a different country – are a vital part of many migrants' stories, as we detailed in our look last month at these financial flows and Latin America's dependence on them with Inter&Co. But it's one thing to see the value of remittances in the countries they head to, from Nicaragua to Chile. How about where they mostly come from: the US? Looking at Mexicans in the US, we see some interesting trends when it comes to remittances being sent down south, which totaled $61B last year (roughly equal to the entire GDP of Myanmar). Banco de México divides this flow by state. If we divide it by each state's population, we see California comes out on top with $530 sent per person last year. This is doubly impressive given that California, at over 40M inhabitants, is the largest US state and has a population big enough to be its own country. Your eye might instinctively then look next to border states like Arizona and Texas, given their high Mexican populations. But we're more surprised by the degree to how their neighboring New Mexico is outshone by an Upper Midwestern state like Wyoming and especially the northernmost state of North Dakota, which is over 1K miles from the Mexican border and has a Hispanic population of less than 5%. North Dakota surely isn't what most people think of when they think of Latin American immigrants making their life in the States. And yet, since the mid-2010s there's been an interesting trend of Latinos diffusing out from the usual destinations and instead moving to cities across states like North Dakota, Georgia, and Alabama. With our chart this week, we hope you realize a bit of the bigger picture when it comes to Mexican remittances across the US. Big states, small ones, rural communities and big cities—Latinos make up an increasingly important part of the US economic landscape.

🇲🇽📈 Did you know that over 13% of Mexicans are now active investors? Here’s how they’re building long-term wealth ↓ What’s the secret to building long-term wealth? A pension? Climbing the corporate ladder? Scouring the globe for a rich bride or groom who will serve as your ticket into the rich life? Try investing. Like many of their peers in other emerging markets, Mexicans are becoming increasingly active investors. The citizens of Latin America’s second-largest economy have seen skyrocketing rates of investment activity in recent years. This has been particularly the case since the pandemic, as more and more economically active people – those who either currently contribute to the economy or are available to do so – try to grow their wealth through investing. In 2015, less than 1% of Mexicans held an investor account; fast forward less than a decade and you see over 13%, reflecting a massive shift in just a few short years. So what are Mexicans putting their hard-earned cash into? First off, the elephant in the room: CETES (Certificados de la Tesorería de la Federación), which are treasury bonds issued by the Mexican federal government. These government bonds represent a comfortable majority of total investments, and the total amount currently issued ($2.3T) is well above the total Mexican gross domestic product for last year. Now, why is everyone turning to CETES? Well, much like their US counterparts, Mexican treasury bonds are considered the safest investments in the country. The Mexican government has never defaulted on them in the country’s modern history, meaning they’re seen as a stable means of keeping ahead of inflation and make some gains over time. Not to mention, sky-high interest rates of up to 11% in Mexico means that CETES are currently providing a massive yield, higher than anything seen in the last decade and roughly double that of US treasuries (though not too far off from Brazil’s own government bond yield rate). So if passive income, insulation from inflation, or long-term wealth-building is the idea, then CETES seem to provide a relatively safe option.

🇲🇽🫰 Curious about the investment trends in Mexico? Here's why CETES are the talk of the town. ↓ What’s the secret to building long-term wealth? A pension? Climbing the corporate ladder? Scouring the globe for a rich bride or groom who will serve as your ticket into the rich life? Try investing. Like many of their peers in other emerging markets, Mexicans are becoming increasingly active investors. The citizens of Latin America’s second-largest economy have seen skyrocketing rates of investment activity in recent years. This has been particularly the case since the pandemic, as more and more economically active people – those who either currently contribute to the economy or are available to do so – try to grow their wealth through investing. In 2015, less than 1% of Mexicans held an investor account; fast forward less than a decade and you see over 13%, reflecting a massive shift in just a few short years. So what are Mexicans putting their hard-earned cash into? First off, the elephant in the room: CETES (Certificados de la Tesorería de la Federación), which are treasury bonds issued by the Mexican federal government. These government bonds represent a comfortable majority of total investments, and the total amount currently issued ($2.3T) is well above the total Mexican gross domestic product for last year. Now, why is everyone turning to CETES? Well, much like their US counterparts, Mexican treasury bonds are considered the safest investments in the country. The Mexican government has never defaulted on them in the country’s modern history, meaning they’re seen as a stable means of keeping ahead of inflation and make some gains over time.