Latin American Capital Markets

416 OSVALDO R. AGATIELLOrupt their best intentions of nurturing built-in stabilizers of intertemporal trust, as theattention of policymakers becomes dominated by crisis management. Impaired personalsecurity, for instance, which currently affects many urban centers across the region,is an urgent priority. Whether resulting from protracted civil wars or commoncrime, assassinations, kidnappings, destruction and unlawful occupation of private property,and similar violations of the public order are commanding signals in the wrong direction.Closely related to the performance of the banking, insurance, and foreign tradesectors, capital markets in Latin America and the Caribbean vie for a clientele that istoo frequently pushed away by macroeconomic instability and permanently pulled awayby the lure of international private bankers and other investment managers.Is the underdevelopment of the capital markets of Latin America and theCaribbean the result of lack of appropriate rules, standards, and levels of professionalism?Would the solution lie in the introduction of corrective mechanisms—a set ofpractices, institutions, and structures—that have proved to work in more mature capitalmarkets? Or is underdevelopment the result of macroeconomic distortions, sothat taking care of fundamentals should suffice to foster growth? Or do cultural impediments—ethical,religious, or psychosocial—stand in the way? Looking forward, isit a question of years, decades, or generations before a substantial change for the bettercan realistically be expected?This chapter suggests that the introduction of more ambitious ethical methodsof analysis and reasoning can offer some practical solutions and ways forward tothese conundrums. It discusses the role of ethics in the marketplace, analyzes the needto have a suitable moral framework as an underpinning to the workings of open markets,and recommends an ethical agenda for policymakers and development expertsin Latin America and the Caribbean. For all their importance, the chapter does notaddress the gross legal violations of criminal law and judicial and administrative enforcement,like administrative and political corruption, false accounting, insider trading,or fraudulent collusions. Instead, it discusses the moral dilemmas, the gray areas of impropriety,free riding, and devious manipulation that so perniciously affect confidenceand efficiency in the open markets and in civilized society.Ethics in the MarketplaceAs they do for all markets, the goods in trade (their price and quality), the sellers(their information), the buyers (their money), and the professionals (their professionalismand trustworthiness) shape capital markets. With so many actors and interestsCopyright © by the Inter-American Development Bank. All rights reserved.For more information visit our website: www.iadb.org/pub