Mexican police carry child out of the way during a gun battle with the drug cartels. Photo: Jorge Duenes (Flickr)

Not surprisingly, Mexico's economy shrank during the global recession. But, as the Economist pointed out recently, it's not rebounding as strongly as it should.

Violent crime is a likely culprit. Crime has become endemic in Mexico: the drug cartels murder, kidnap, and extort with impunity. They have killed over 23,000 people since President Calderon cracked down on their operations in 2006, reports the Washington Post. In one of the worst days, 85 people were killed.

Most disturbing is the unfeeling brutality with which traffickers eliminate enemies and innocents alike. The cartel's murderous exploits include 
"rolling [severed] heads onto crowded dance floors, strapping skinned faces
 onto soccer balls, and leaving clear signs of torture on corpses," describes Stanford University's online journal.

So far the ruthless reach of the cartels knows no boundaries. Drug lords have targeted federal troops — killing 12 in the state of Michoacán — and also assassinated U.S. diplomats. Even more unnerving is the cartels' ambivalence about killing innocent civilians. Just a few weeks ago they massacred innocent partygoers celebrating the birthday of a local teen.

Economists worry that this violence will scare away tourists and businesspeople. Tourism and foreign investment each bring in a substantial sum: approximately $12 billion and $20 billion a year, respectively. Losing this revenue, even in part, would be a blow to the still-fragile economy.

Violence is even making local businesspeople nervous, according to the Christian Science Monitor:

One restaurant owner, who wished not to be named out of fear, says that thugs called his local restaurant for months demanding monthly “protection” money. He ignored them, cutting off his phone line instead. But in December they came to the door of his locale with a gun and three options: pay, die, or the establishment will burn.

A survey of businesspeople conducted by the American Chamber of Commerce of Mexico — and cited in the Economist — shows that 16 percent had suffered extortion and 13 percent kidnappings.

So far, the damage has been minimal. The Economist reports that "visitors are staying away," but foreign investment has held steady. Foreign investment for all of Mexico hasn't fluctuated much in the last two years, according to the CIA Factbook.

Still, the prognosis doesn’t look rosy: The Economist's own forecasting group projects that the Mexican economy will grow by 4.3 percent this year but dip to 2.7 percent growth in 2011. Looks like recovery, like the war on drugs, might be a long haul.

Popular vacation destinations are ready to give tourists what they're looking for, all that's missing now are the tourists themselves. Photo: Marvin (PA) (flickr)

Ah, summer. A time of rest, relaxation, meticulously planned vacations ... and this year, less travel.

One June report by a UN body predicted tourism would decline by 4 to 6 percent this year — and that's before the H1N1 virus further dampened travel.

Tourism is down even in the U.S., where tourists spent more money than anywhere else in 2008. But the downturn is worse across the Atlantic, according to an August Reuters story.

On Spain's popular Costa del Sol, tourist traffic is "the worst I have ever seen it," drink seller Pedro Hervas tells The Telegraph. "There is no one on the beach. If you came here last year at this time you would not be able to get around, there would be so many cars and people."

Analysts cited in a Wall Street Journal story on the battered Mediterranean tourism industry conclude that nations have yet to see the real effects of the tourism slump on economic growth.

"We are seeing a multifaceted impact from the crisis on the tourism sector and there will be a variety of consequences," Marko Mrsnik told the Journal. "These include employment consequences, consequences on the creditworthiness of households and companies in the sector and their ability to pay their debts, and it will certainly have an impact on government revenues."

In Greece about 19,000 jobs have been lost, people in the industry told The Wall Street Journal, and economists predict the lack of tourism could cut more than a percentage point off economic growth this year. According to the same Journal article, in Italy private-sector estimates of tourism-related job losses are as high as 150,000.

Some sunlight, however, has seeped through the dreary forecasts. After Iceland's economic meltdown made their currency more affordable, tourism spiked, and has continued to grow through the summer. North African countries such as Morocco and Algeria have also welcomed more visitors. Some of them are undoubtedly vacationing on the other side of the Mediterranean Sea for a change — or rather, to save some change.

There are two salt deserts in Bolivia: the Salar de Coipasa and the Salar de Uyuni — both of which could be destroyed in the mining of lithium. Photo: Jessie Reeder (flickr)

Does Bolivia have a resource as valuable as Saudi Arabian oil?

The auto industry has historically relied on oil to power cars, but is now turning to new sources of energy. Consequently, raw materials like the lithium in electric car batteries are now in demand.

Ford and GM have invested in the research and production of electric cars, while Toyota has announced plans to build a hybrid electric and start selling an all-electric car by 2012.

So where does Bolivia come into the picture? The introduction of the lithium-ion battery allows cars to go farther on a single charge, making them more convenient and economically viable. But there is a catch: The lithium needed for these batteries is a limited resource, and according to this BBC video report, half of the world’s supply is under Bolivia’s salt flats.

Bolivia, the poorest country in South America, could benefit enormously from mining and processing lithium. But extraction industries have always been controversial. Political tensions over exporting natural gas have ended two presidencies and led to calls for regional autonomy. These tensions have damaged Bolivia's tourism industry, which makes up 6.1 percent of Bolivia's economy.

Mining lithium poses a potential economic Catch-22. Most tourists are drawn by Bolivia’s unspoiled landscape, with the salt flats being a particular point of interest. Mining for lithium could destroy the salt flats, while processing could lead to environmental degradation.

Although electric cars have often been hailed as the future of an environmentally conscious auto industry, lithium has the same Achilles heel as oil: it is a scarce resource. In addition, it is unclear whether the auto industry will even have access to the amount of lithium they would need to launch these ambitious plans. Bolivia’s president Evo Morales is famously cautious about allowing foreigners to mine, and he's considered a fierce environmental protectionist. The decision to mine the salt flats is Bolivia's. Ultimately, the country will have to weigh the benefits of economic development against environmental protection, tourism and foreign influence.