EDITORIAL PAGE — Telling it like it is

With investment opportunities opening up in almost every country in the world, analysts are taking a much broader look at what constitutes a “favorable” investment climate.

In recent months, several investment specialists have publicly stated that the cultural habits of a nation, particularly its work ethic, should be taken into account before making investment decisions.

Applying a yardstick to a society’s work ethic is no easy task, particularly in these politically correct times. It is not considered good manners to openly criticize the work habits of another nation, even though these habits form the cornerstone of that nation’s economy and even though productivity is a measurable factor which can affect the bottom line.

But setting aside politeness (and in spite of the danger of perpetuating stereotypes), some investment advisers have decided to “call it as they see it” when big dollars are at stake.

In one incident, a well known analyst questioned the soundness of investing in Latin America when he saw Asian opportunities as being a safer bet, because Asians save more than Latin Americans and have a better work ethic. In another incident, an analyst pointed out that many African nations, including South Africa, generally have a poor work ethic and that this does not bode well for the revitalization of those economies. And we are hearing more about the perils of taking on opportunities in the former Soviet Union, where Western work habits and business practices have been slow in taking hold.

But there is another side to all this. The economies of Latin America, the former Soviet Union and most African nations are still in transition. In the past, entrenched interests had the effect of monopolizing many sectors of these economies, thus stifling individual effort and free enterprise. Granted, the work ethic may not be as entrenched in some of these countries as it is in the West, but this is almost certainly related to a lack of incentive and opportunity.

Nor was Rome built in a day, which is the message South African President Nelson Mandela is attempting to deliver to millions of impoverished blacks who elected his African National Congress government into power in the hope that it would improve their standard of living. Mandela is now urging thousands of young former revolutionaries to go back to school to acquire the skills that will be necessary for rebuilding the nation. He is also taking a hard line on lawlessness, and on unrealistic expectations that the government has bags of money to throw at social problems.

Change is also slow in coming in the former Soviet Union. For generations, cradle-to-grave socialism has sheltered its population from economic realities that can no longer be held at bay. Unfortunately, political leaders take one step forward into free-market policies, and then, the next day, two steps backward. Small wonder foreign investment has slowed to a trickle. Latin America appears to be less hesitant about change, particularly those countries hoping to follow in the footsteps of Chile, which is something of an economic role model. Those who say the Latin American work ethic leaves something to be desired probably have not met the young and highly motivated autoworkers from Hermosillo, Mexico, or the women lining up for jobs in that country’s bordertown factories. Give free enterprise a chance.