Things that come to mind when Latin America is mentioned: soccer, tropical fruits, big snakes. Romance Languages, and cocaine. Of course, there are plenty of other things, but one non-traditional one to add is billionaires.
That’s right, billionaires. Latin America is seeing an explosion of concentrated wealth, leading to the birth of a small but influential billionaire class. In fact, the number of billionaires being created through Central and South America has reached such a rate that it is outpacing every other region in the world.
According to an article from international news agency Agence France-Presse (AFP), and published on Business Insider, Latin America’s wealthiest class is growing by leaps and bounds, despite consistent criticism and worry that inequality is becoming an omnipresent problem among the region’s 600 million people. Of those 600 million, the AFP piece says that 15,000 have built fortunes of $30 million or more — with 151 of those being billionaires. As for the rate of growth, the ranks of those with $30 million or more increased by 5% over the past year, and the billionaire caste grew by an astounding 38%.
Though that incredible growth rate is being witnessed among a relatively small group of people, it’s a hard figure to ignore — and is, again, faster than anywhere else on Earth.
The individuals who make up Latin America’s richest segment are getting rich for a variety of reasons, from mining to telecommunications. As their ranks swell, so is the attention the region is getting from the world’s luxury industries. Car companies like Porsche have put considerable resources into bumping up their presence in Latin American countries, AFP says, and many other premium brands are following suit. The result is something of a gold rush for luxury brands, all hungry to cater to the tastes of the region’s wealthiest residents.
Since most of us aren’t willing to pack up and head for Bogota to try and reach billionaire status, what does this mean for the average American? Mostly, it goes to show that Latin America is ripe for investment. There is clearly a lot of room for growth, and a lot of room for businesses to peddle their wares to a growing consumer class.
The reason this is a relatively new area for foreign capital to flow into is because traditionally, it’s been fairly risky. There has been all kinds of political and social strife in many Central and South American countries over the past few decades, with a coup in Honduras and Venezuela’s flirtation with total economic collapse both happening relatively recently. With those kinds of things going on, a lot of businesses and individuals have been happy enough to put their money to work in other markets like Asia.
Even one of the ‘safer’ South American nations, Argentina, faced economic crisis just last year. As a result, there have been some pretty dramatic drops in foreign investment. But as we’re seeing, there’s clearly plenty of money to be made, and a handful of individuals are reaping some enormous benefits while also taking advantage of the region’s low taxation rates.
Governments and industry are hungry for capital infusions in these countries, as with anywhere else. There’s already a good deal of manufacturing activity in places like Mexico and Honduras from western countries, and that could increase as costs in Asian countries continue to go up. In fact, Mexico has become a major hub for auto manufacturers, and there’s been a real push by American car companies to increase sales throughout South America.
There’s definitely money to be made south of the American border, and the fact that the resident billionaire class is growing at unprecedented rates is proof. Of course, that’s not to say that there aren’t a lot of economic problems to solve as well. In fact the destitute economies, problematic living situations, and oftentimes violent cities in Latin America are to blame in large part for many immigration issues being seen in the U.S.
Billionaires may be sprouting up around Central and South America, and that’s a good sign for the world economy at large. But the inequality factor can’t be discounted, even if signs of growing wealth are inspiring confidence in the international business community.
Follow Sam on Twitter @SliceOfGinger