Chile

For over twenty eight years, the Chilean government has put exceptional economic policies in place. This has continually had a positive impact on economic growth; on the other hand the poverty levels have been on the decline. This has been essential in improving the democratic status of the nation.

With a GDP per capita standing at $ 13,900 and its inflation rate averagely 4.4%, its population of slightly over 16 million is can provide the required labor supply to contribute to economic growth. The ease of doing business in the nation is approximately 33/178. Its global competitiveness remains to be 26 out of 131. Generally, this is a favorable business environment in which foreign investment can effectively utilize the dormant resources: adequate manpower, favorable political environment. Social environment is also motivating as the nation has a good reputation for tourism along with its neutral stand on religious activities. This creates an ideal environment for both foreign investors and external investors. This is an environment that encourages and stimulates investment in a foreign nation.

Ecuador

Ecuador experienced political instabilities between the periods of 1989 and 2004 and in these periods, three governments that were elected democratically have been overthrown and twenty constitutions have been drafted since independence. This shows how politically unstable the nation is. The nation has been through wars with its neighbors including Peru severally over its borders.  (Global EDGE™,  2008).

In 1995, there ensued a border disagreement with Peru resulting in a war that was later resolved in the mid 1999. Even though Ecuador marked two and half decades of civilian governance early 2004, this period has experienced major political instability. Three presidents who were democratically elected have been ousted from the time the country got independence. This nation uses the American dollar as national currency with its capital base at Quito. The country’s GDP per capita stands at $7200 and its population is approximately 14 million people. The nation’s inflation rate stands at a lower rate of 2.2 % and is much lower and stable compared to Chile yet the unstable political condition of the nation is a big discouragement on any useful foreign direct investment. Even the Equator citizens working outside the nation are likely not willing to invest their money in their mother country due to the political instability hence higher chances of losing their investments.

The political instability in this nation is a major factor as the government doesn’t play a leading role in motivating foreign investment neither does it create favorable environment for international trade nor investments. Regulations are hardly formed to promote healthy relationships with regional neighbors or with potential trading partners. One positive factor however is that the country has a stable economic stability with a low inflation rate. In Ecuador, the government has total control over operations of any firms in the nation whether they are foreign or local. In 2006 June for example, the government cancelled the contract of a USA oil firm merely because the firm had sold part of a block o f oil without a permission from the government. This is a major indicator of frustration for potential investors. The ease with which business can be done in this state however stands at a high scale of 128 out of 178 and its global competitiveness is 103 out of 131 (Global EDGE™, 2008).

Peru

Peru has experienced a relatively steady leadership and stability in economic growth, though swings have been common phenomena in the nation’s economy. Presidents have put all possible efforts to lift social, political and economic situations. The 1990s economic slump was the greatest threat to the economic growth of the nation. The country’s capital base is at Lima (Rappaport, 2004).

Peru has seen a favorable economic rise since the beginning of 1990s due to a market economy-sensitive government. The government has taken on implementing economic programs initiated since 1990s based on economic stability, structural reform program, programs aimed at reintegrating the country’s economy into world economic system. Due to these programs, the economy of Peru has progressed rapidly. There has occurred privatization in the economy as well as infrastructural development hence a steady capital inflow has been maintained. The inflation level of Peru has continued standing at international levels of about 6% and this has stabilized economic growth rate and the savings as well as the internal investment. Peru rejoined the international system for finance in 1991 and this has shifted the country’s international relations upwards greatly. The IMF for example, gave Peru a loan of $347 million and this helped the country to regulate its inflation rate. The social, economic and political environment is motivating for investment (CIA World Fact book, 2007).

Conclusion

Considering the three countries discussed above, I would advice that Peru be given more consideration for foreign direct investment and in international trade. The fact that Peru’s economic, social and political environment is so motivating sends an affirmative action towards both local investors as well as international investors that the country has a lot of potential for heavy returns on investments.

References

CIA World Fact book. (2007). U.S: State Dept Notes March 2008).

Global EDGE™. (2008). Business Resources. Retrieved January15, 2009 from,

http://www.globaledge.msu.edu/survey/

Rappaport, A. (2004). Sources of Growth: Study of Seven Latin American Economies

            Rich mund: ICS Press.