EDITORIAL PAGE (January 20, 1992)

Many countries in South America have opened their doors to foreign investment in recent years. The experiments with socialism and totally state-owned enterprises have been modified, if not discarded, for more market-driven economies.

The result has been a flood of money back into countries that were shunned before by investors for fear their capital could be expropriated at a moment’s notice.

Those fears have largely subsided. More pragmatic regimes, convinced that foreign investment is necessary for a thriving economy, have instituted policies to attract it.

A market-oriented economy, however, shouldn’t be confused with political stability. Political stability is still a key to attracting foreign investment. Canada, for example, is shifting toward a more socialistic society at a time when most of the world is moving the other way. Nevertheless, Canada’s reputation for political stability remains intact, despite our chronic constitutional “crisis,” and therefore offers a favorable investment climate.

But most South American countries simply have not demonstrated a sufficient track record to instill confidence. There hasn’t been enough time, and time is the commodity with which reputations are built. Chile and Mexico may well continue along their current economic course, but they could just as easily take another tack in a year or two. They have done so at least twice in the past three decades — once to nationalization, once to market driven. The state of emergency imposed in Guyana is a reminder that politics south of the Rio Grande river is not the same as that in the U.S. and Canada. The emergency was declared after a group of international observers was unsatisfied about the way a Dec. 16 election was being conducted. The result of the emergency has been minimal, we are told. It is very much business as usual in Guyana. For the Canadian mining companies that have invested there, and for the Canadian taxpayers who are underwriting insurance on those companies’ investments, we hope so.

Regardless of the outcome of the Guyanese elections, the situation there is worth keeping in mind when comparing a mining venture in Manitoba, for example, with one in Surinam.