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International Business Conference Covers Caribbean And Latin American Economies


June 13, 2002
Copyright © 2002 CARIBBEAN BUSINESS. All Rights Reserved.

This year’s Academy of International Business (AIB) annual conference, to be held in Puerto Rico from June 28 to July 1 at the Caribe Hilton, will focus on trends dictating international business today, with a special emphasis on small, open economies; transition economies; Asia; the Caribbean, and Latin America.

AIB executive board members spoke to CARIBBEAN BUSINESS about the organization’s goals and their efforts to increase its Hispanic international business membership. The Business Association of Latin American Studies, a group with more than 700 members, will also be joining the conference.

The round table discussion included AIB immediate vice president and Florida International University Graduate School of Business Dean Jose de la Torre; President and University of Pennsylvania Wharton School Professor Stephen J. Kobrin; Vice President and Associate Professor at Lowry Mays College & Graduate School of Business’ Department of Management Lorraine Eden; Vice President for administration and University of Antwerp-Belgium Professor of International Management and Development Danny Van Den Bulcke, and Executive Secretary and University of Hawaii at Manoa College of Business Administration Associate Dean James R. Willis Jr. Joining them were UPR professors Paul LaTortue and Francisco Montalvo Fiol.

"Our plenary session will include local panelists, including representatives from our host, the University of Puerto Rico (UPR)," said Eden, 2002 Conference program chairman. "Our conference program includes seminars on Latin American business strategies and financial issues such as the Argentine peso crisis.

"We will also have several sessions about small islands’ issues such as regional integration, focusing on Cuba, Haiti, the Netherlands, and New Zealand. The sessions will explore the role of small states in a globalized economy which seems to be a critical function today and obviously very important for PR," said Eden.

UPR professors Montalvo Fiol and Arleen Hernandez are responsible for the event’s organization. Prof. LaTortue will chair a panel on Geography, Trading Blocs and Investment in the Caribbean Space during the conference’s opening plenary.

"The Free Trade Area of the Americas (FTAA) is coming up in 2005 and the Caribbean is right in the middle. After all, we control the sea lanes north and south," says LaTortue. "There is the potential to attract investment and we thought it was a good opportunity to attract people who are forward thinkers and see what they have to say."

According to LaTortue, the Caribbean is full of small, open economies dependent on foreign investment that provide a window of opportunities. The professor proposes involving other international organizations such as the World Bank and International Development Bank that can channel long term financial means to the area. Even though they are known for their expenditures in infrastructure, he feels that without it, there cannot be rapid development.

One recurrent theme throughout the conference will be location as a major decision factor for companies when establishing operations. Several economic geographers have been invited to speak about the major forces that affect corporate location decisions.

"Obviously, globalization is a key factor. Regional integration is another reason while taxes (such as Internal Revenue Section 936 in Puerto Rico) is a third," said Eden. "We also have to look at companies’ strategies and how they decide where to put their plants and what types of activities are moving, the FTAA process, the shift away from manufacturing goods into services and intangibles trades, and the effect of e-commerce. These are all things that influence the location decision of not just goods but services and intangibles."

While all concurred that clustering had emerged as a clear trend of businesses, factors such as who tended to agglomerate within a country, even within a city, and the perceived benefit to the host country were viewed differently.

Kobrin is unsure about the value of clustering within poor economies. "It isn’t clear what the benefit [of clusters is] for the countries. An example is Bangladore’s software industry in India, which virtually has very little impact in the Indian economy itself. There’s an island of high-tech software firms from the 21st century living in a sea of poverty in the 19th century."

On the other hand, de la Torre disagrees.

"I can imagine clusters that are tied to the global economy that have limited impact on the country, such as the case of Bangladore. But the question depends on the degree of linkage between the cluster and the domestic economy. It is always better to have [clusters] than not. You are employing a number of people and keeping people [from leaving] that would otherwise migrate to California or Boston, as in the case of the software industry," said de la Torre.

De la Torre believes that clustering is a natural phenomenon that occurs on its own.

"The question is whether you want to encourage or discourage it. All the historical studies state that clusters have arisen out of the need to reduce transaction costs, to create externalities with economy such as improvements in the operations of the firm by having their suppliers nearby. Also, for knowledge sectors, [clustering] is very critical, such as the biotechnology sector," de la Torre.

De la Torre said that the cluster effect has been described as a star. It begins as a bright spot that creates a sort of centrifugal force around it. The result is the creation of related clusters forming themselves around the star.

The AIB conference starts on June 28 and more than 80 workshops and events will take place. Conference topics extend from Caribbean investment and trading blocs, Latin American business strategies & financial issues to competitive advantages of small countries, clustering in high-tech sectors, globalization of multinationals, emerging market firms, and export performance.

AIB is an international organization with 3,000 active members from 65 different countries. Members include scholars as well as consultants and researchers involved in international business.

This Caribbean Business article appears courtesy of Casiano Communications.
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