The Andes

Group Nº 3

1. BRA Coronel Marcos dos Santos Silva

2. BRA Capitão de Mar e Guerra Marcos Aurelio de Arruda
3. BRA Coronel Fábio Serpa de Carvalho Lima
4. DOM Teniente Coronel Ángel Marín Cuevas Castillo
5. GUA Coronel de Infantería DEM Wiliam A. Lopez Chay
6. HAI Pierre Michel Bonnet
7. MEX Inspector General Lic. Víctor Hugo Torres Miranda
8. PAN Comisionado Heriberto Lorenzo Rodríguez
9. USA Commander Matthew T. Brown
10. USA CDR Jay D. Bijeau
11. USA LtCol Michael Ducar.
 Agenda

• Introduction
• Economic Description

• Budget Planning
• Clusters & Innovation
• Threats / Concerns / Challenges

• Recommendations
• Conclusions
The Andes - Introduction
 Economic Characteristics

BOLÍVIA

• GDP: US$ 33.9 billion

• Defense Budget: US$ 0.56
billion
• Main product: Natural Gas
• President Evo Morales
interferes in economic
issues and the fear of
expropriation remains high
and blocks the growth of
private sector
 Economic Characteristics

COLOMBIA

• GDP: US$ 253 billion

• Defense budget: US$ 4.9
billion
• Main products: Oil and
Coffee
• Public debt & inflation under
control
• Economic growth: ~5% per
year over the last 5 years
• Member of Pacific Alliance
 Economic Characteristics

ECUADOR

• GDP: US$ 94 billion

• Defense budget: US$ 2.5
billion
• Main product: Iron ore
• Government interferes in
economy
• Strengthened ties with
Venezuela and China
• Almost one third of
population is extremely
poor
 Economic Characteristics

PERU

• GDP: US$ 178 billion

• Defense budget: US$ 2.2
billion
• Main product: Copper ore
• Strong Macroeconomic
Environment
• Free trade treaty with U.S.
in 2007
• Economic growth is higher
than neighbors
 Economic Characteristics

VENEZUELA

• GDP: US$ 185 bilion

• Defense budget: US$ 8.5
billion
• Main product: Oil
• Vulnerable to fluid oil prices
• Economic indices
diminishing
• Government interference in
the economy
• Multinational companies
leaving the country
Economic Characteristics

GDP and Defense Expenditure

Challenges / Spending Factors

Major
Acquisitions

Force
Maintenance Transnational
and Crime (Drugs
Readiness and Arms)
Spending
Factors

Gangs
and Border
FARC Control
Challenges / Spending Factors

Inflation

Common
Personnel Area
Issues
Revenue

US Tighter
Aid Control
Unemployment Levels
 Clusters
Effectiveness of Defense Industry Clusters in the Sub-Region

...”concept developed by
Michael Porter (1990), as a
group of associated
businesses and organizations
that are located in a specific
geographic area and whose
characteristics and
complementarities make up
an industrial network...”

Source: Reyes, Mirlis. Los Clusters Industriales

de Defensa como Impulsores de la Innovación
Tecnológica en América Latina, 2014.
Regional Defense Industry

MISSION:
Developing the prodution
of military materials to
support Armed Forces
and Nacional Police in
their defence and
security tasks

Source: www. gsed.gov and

www.ciac.gov.br/product
Regional Defense Industry

Source:
www.institutoespacial.gob.ec.
Regional Defense Industry

Source:
www.sima.com.pe
 Regional Defense Industry

Source:www.cavim.com.ve.
OIL PRODUCTION
 Clusters
Effectiveness of Defense Industry Clusters in the Sub-Region

NOT EFFECTIVE IN THE SUBREGION

COLOMBIA AND PERU CAN BE PART

OF A DEFENSE CLUSTER IN SOUTH
AMERICA

COLOMBIA: RIVER PATROL SHIPS

AND AIRCRAFTS (A29 AND KC 390)

PERU: SMALL SHIPS (SIMA) AND

AIRCRAFT MAINTENANCE

VENEZUELA, ECUADOR AND BOLÍVIA

ARE PART OF A CLUSTER BASED ON
ITS OIL&GAS EXPERTISE
 Innovation

Source: Political Economy,

session 6, 7 Nov 2016.
 Regional Defense Budget

Source:
www.resdal.org.
 Regional Defense Budget

Source:
www.resdal.org.
 Innovation
Innovation and Creation in the Realm of Defense and Security

THE REDUCED DEFENSE BUDGET

IMPACTS SUBREGIONAL INSERTION
IN THE DEFENSE INDUSTRY AND
INNOVATION

SPILLOVER (EMBRAER-CIAC/S.
KOREA-SEMAN)

SUBREGIONAL CHOICE: INNOVATION

DEVELOPMENT BASED ON
INSERTION IN A DEFENSE CLUSTER
Threats / Concerns / Challenges

Organized Crime

Drug Trafficking
Level of Political
THREATS Influence

Populism

Overexploitation of Natural
Resources
Threats / Concerns / Challenges

Extreme Poverty

Distribution of Wealth

Gender Equality
CONCERNS
Social Justice

Territorial
Development
Threats / Concerns / Challenges

Annual Single Digit Inflation

Fiscal Deficit less than 3% of

GDP

Public Debt to 50% of DGP

CHALLENGES
Consolidate Economic Projects wit
other Regions

Regional Organizations
 Recommendations

• Mobilize public & private investments

• Establish economic policies that support investment

and public-private partnerships

• Strengthen institutional fiscal structures to reduce

evasion of taxes

• Create collaborative markets

 Conclusions

• Economic Description

• Budget Planning

• Clusters & Innovation

• Threats / Concerns / Challenges

• Recommendations

In order to face the economic challenges, the sub-region needs polices and
strategies as recommended to strengthen innovation and clustering within the
defense industry sector.
 Bibliography

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South
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 Bibliography

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2016, http://cavim.com.ve/index.php/produtos.
 Bibliography

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American Defense College, November 7, 2016).

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Comunidad Andina, “Portal de la Comunidad Andina,” accessed November 14, 2016,http

://www.comunidadandina.org/.
Thank You For You Time

Questions?