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International -- Readers Report
Nestle Gets a Nudge (int'l edition)
Congratulations on "Danone hits its stride" (European Edition Cover Story, Feb. 1). It was published the same week that Nestle announced that it wouldn't reach its 4% objective of real internal growth. "Too ambitious," said Chief Executive Peter Brabeck-Letmathe, ending his first year of reign.
As a former Nestle employee, I can tell that this goal is too ambitious for the company's deeply rooted bureaucracy. The less bureaucratic of the two companies will survive. Or one will emerge from Asia with a potential market of more than 2 billion consumers.
Budos, FranceReturn to top
When Bad Photos Happen to Good Stories (int'l edition)
It is a pity that such a good article as "Brazil: Still on the edge of a cliff" (Latin America, Feb. 1) was shadowed by such a strange picture. To show a taxi driver holding U.S. dollars was a clear sign of the "mood" of the magazine toward Brazil (no confidence in our currency, "dollarization").
About the article, though, agreed. In the past 4 1/2 years, society has made all the necessary efforts to make the country more competitive. Government, in contrast, (mainly at the county and state levels) has done nothing to help Brazil change its economic fundamentals. After the "Citizen Constitution" of 1988, states and counties practically doubled their income and rapidly found a way to spend every extra penny, and more.
Wesley Montechiari Figueira
Curitiba, BrazilReturn to top
With Friends Like the IMF... (int'l edition)
"In Brazil, the IMF made things worse" (Editorial, Feb. 1), hits the nail on the head. International Monetary Fund medicine has been the same bland one, and it has invariably failed in both large and small economies. A case in point is Pakistan, where, in 1990, the IMF signed the first extended structural adjustment facility (EFSA) agreement. The conditions attached by the IMF to reduce the deficit from 6.5% to 4% in three years gave rise to a severe economic recession.
Although the recipe was not working, each subsequent package that the IMF signed was based on the same formula, thus fueling the fires of the worst economic recession Pakistan has ever seen. Today, 10 years later, Pakistan is in worse shape than at the start of IMF intervention. An expansionary policy based on larger government spending might have done the trick, as suggested in your editorial.
Royal Commission for Jubail & Yanbu
Yanbu-Al-Sinaiyah, Saudi ArabiaReturn to top
A Dangerous Buzz on the Lines (int'l edition)
I read with interest "Megamergers are a clear and present danger" (Economic Viewpoint, Jan. 25). Jeffrey Garten is right: Megamergers are a danger not for the U.S. but also for other countries. But there are some aspects that shouldn't be neglected. For instance, economies of scale. Look at the low rates that AT&T is charging for its mobile communications throughout the U.S. That's why Bell Atlantic Corp. offered $45 billion for AirTouch Communications Inc. in an attempt to create a nationwide mobile network able to compete with AT&T. Bell Atlantic failed, but Britain's Vodafone succeeded, and acquisition of Air Touch will create a worldwide, not merely nationwide, mobile network. The results could be lower tariffs--and increased pressure on fixed telecommunications operators, also in megamerger fever.
Telecommunications are facing a transition period after market liberalization. Liberalization has started a globalization race in which M&A is one path. A strong market consolidation, the result of a lot of M&A, could replace old state-owned (national) monopolies with a world monopoly. This could be a real danger!
BucharestReturn to top