When looking for the next Egypt, investors should look for countries with high youth unemployment and low political freedom. Barclays, in a note titled Pax Latinamericano, says the market-relevant countries of Latin America look pretty good.
Latin America’s youth unemployment is 17.1 per cent, compared to 27.3 per cent in MENA.
Latin America scores nearly twice MENA on a World Bank measure of political freedom.
But there are exceptions:
There are, of course, exceptions. Cuba, for example, ranks in the fourth percentile of the World Bank’s Voice and Accountability indicator. Also on the fence, Haiti, Nicaragua, Honduras, and Guatemala rank below the 40th percentile. But none of these economies has the gravitas to be destabilizing or elicit more than a shrug from market participants, as the Honduras 2009 coup demonstrates.It is then no coincidence that whatever investor concerns we have perceived since the outburst of revolutionary flares in the Middle East have concentrated on Venezuela in particular – an obviously relevant economy and which is also largely perceived as authoritarian.