LETTER FROM THE EDITOR
Past efforts at for-profit microfinance
have fallen victim to weak regulation, inflated
expectations and a lack of understanding
that these are not pure for-profit ventures.
Just as we were putting this issue to bed, we received news that the U.S. Congress had finally approved the Panama and Colombia U.S. free-trade agreements
(FTAs). While we applaud the final passage of these initiatives, the long, tangled debate that preceded these
FTAs demonstrated the difficulties of consistent, nonpartisan policymaking toward the region.
The U.S. trade agenda was set in 1994 at the Summit
of the Americas under President Bill Clinton. And while
the hemisphere has since fallen far short of the Free
Trade Area of the Americas (F TAA) originally envisioned,
each agreement that has come up since (Chile, CAFTA-DR, Peru, Colombia and Panama) has provoked agonizing discussions on everything from human rights and
the environment to the history of U.S. policy in the region. During that time, we have not only left our allies
hanging (often as U. S. constituencies continue to move
the goal posts) but have also lost market share in the region. Concluding these F TAs is a genuine achievement.
But the time and turmoil it has taken to get there is a
stark contrast to the ease with which other countries
(like Canada) tackle trade.
Today, dallying on trade is especially risky given the
rise of China in the region. Even if the Sino–U. S. rivalry
is primarily economic (and it is), this should be a wake-up call to trade opponents, or those who would make
trade contingent on a never-ending list of conditions—
institutional and political—even when they have little
to do with trade. Ultimately, the greatest tool the U.S.
has if it wants to maintain its influence in a changing,
more assertive region is its market.
We are delighted to mark the U. S.–Colombia F TA with
an interview with Colombian President Juan Manuel
Santos (p. 19). As he details, an FTA is part of a larger effort to bring economies closer together. The market
and poverty reduction are the central themes of this
We have dedicated our Fall issue to the emerging
field of impact investment—a concept based on the
idea that, by investing in the base of the pyramid, investors can both make a profit and promote social and
environmental good. Taking the concept one step further, proponents argue that by spurring investment in
the world’s poorest population—some 2. 7 billion people at the bottom of the ladder—impact investing can
unleash private capital as a tool for poverty reduction,
changing the way we promote development and understand philanthropy.
Nevertheless, as Jonathan Morduch writes on p. 78,
there is reason for caution. Past efforts at for-profit mi-
crofinance have fallen victim to weak regulation, in-
flated expectations and a lack of understanding that
these are not pure for-profit ventures. Often there is a
hidden philanthropic “subsidy.”
Impact investing has become the development trend
du jour, and I’m excited to devote this issue to it. But
having seen development trends come and crash dur-
ing my 16 years working in the field, is it churlish of me
to have doubts? Read the articles and decide for yourself.
On the note of China, I invite you to read the article
on Chinese mining in Peru (p. 48). It’s an early result of
a research project funded by the GE Foundation that
we have undertaken in partnership with the Peterson
Institute for International Economics. A second article
comparing intraregional infrastructure in Asia and Latin
America wil appear in our Winter issue. At the same time,
we are organizing a series of regional roundtables exploring these issues with stakeholders.
For news on these roundtables, or for regular news
and a calendar of events, check our website or follow
us on Twitter (@AmerQuarterly).
—Christopher Sabatini, Editor-in-Chief