10 Jan 2014
George Gray Molina
Casimira Sanchez prepares pieces of gym equipment at a plant in Mexico City. A UNDP programme to strengthen small and medium-sized businesses increased their access to new market technology. Photo: Luis Acosta/AFP for UNDP
F. Scott Fitzgerald used to say about alcohol: “First, you take the drink, then the drink takes a drink, then the drink takes you.” The same thing could be said about consumerism as a way of achieving social status and recognition.
First, let’s look at a few facts. Consumerism is the engine driving growth in Latin American economies. It represents 59 percent of the GDP in Brazil, 66 percent in Mexico, 69 percent in Chile, 77 percent in Honduras and 88 percent in the Dominican Republic — so more than two thirds of the economic growth in Brazil, Mexico and Chile over the past twelve months.
Consumerism also led to a significant reduction in poverty and favored the emergence of the middle class in the region. Today, most of the population is no longer “poor” in the statistical sense of the term, but “vulnerable” as they work in precarious labour markets yet enjoy higher levels of income and purchasing power than before.
Secondly, let’s look at some areas of concern. Consumption is intrinsically linked to high levels of liquidity, easy access to credit, and household debt. Household debt has increased throughout the region: According to Morgan Stanley, the ratio of household debt to income is …