Disclaimer: The views and opinions expressed by the creator(s) don’t represent the official position of Barbados TODAY.
By José Manuel Salazar-Xirinachs
In 2022, Latin American and Caribbean countries are facing the results of a series of shocks which have deteriorated their investment and production conditions, including the worldwide financial crisis, economic tensions between major poles of the worldwide economy, the COVID-19 pandemic, the war in Ukraine and the resurgence of inflation, in a context wherein the environmental emergency is worsening and the technological revolution is accelerating. Quite a few analysts and international organizations discuss a series of cascading crises, citing amongst them the crises related to the climate, health, employment, social matters, education, food security, energy and the fee of living – all of which have impacts of various intensity and characteristics on quite a few countries, including those in Latin America and the Caribbean.
The fight against inflation has toughened global financial conditions and increased volatility in financial markets and risk aversion. This has raised the fee of debt service, further reducing fiscal space and increasing the danger of a recession in the worldwide economy in 2023. The expansion rates estimated for the overwhelming majority of the world’s countries in 2023 have been revised downward recently by various organizations.
Within the region, the mix of external and domestic aspects stemming from the policy decisions made, or from the absence of such decisions, has reduced the capability for economic growth and quality job creation and hampered its fight against poverty and extreme poverty. Its economic and social structures have weakened and have fallen into situations that reinforce the inertia of a weak economic performance.
Faced with this reality, ECLAC advocates for Latin America and the Caribbean to redouble its efforts to each reactivate its economies in addition to to remodel countries’ development models, centering these efforts around policies for productive transformation and diversification together with an enormous, private and non-private investment push, which might allow for accelerating structural change and technological and digital transformation to realize high, sustained growth and sustainable and inclusive development.
In that strategy, the sectoral dimension is crucial, because that’s where company strategies, business models, and processes of capital formation and job creation are defined. Although the particular sectors ought to be defined in each national context, ECLAC proposes ten sectors or areas which are particularly promising: the energy transition, electromobility, the circular economy, the bioeconomy, the healthcare-manufacturing industry, and the digital transformation – that are at the middle of innovation processes – while the care economy, tourism, Micro, Small and Medium-sized Enterprises, and the social economy are great generators of employment, with the following effects on income and the inclusion of disadvantaged social sectors.
Harnessing the potential in these areas entails
transforming the region’s development model to create favorable conditions for investment, growth, inclusion and
Transformation of this model requires decisive motion in multiple areas: development planning as a way to coordinate policies; improvement in governance and the institutional quality of the institutions in control of the several areas; macroeconomic policies to speed up growth and tackle inflation; the development of welfare states; strengthening care systems as a pillar of a rights-based social state; guaranteeing the rights of especially vulnerable populations; mitigation and adaptation vis-à-vis the environmental emergency; new governance of natural resources; implementation of commercial and technological policies; and regional integration within the face of the new geopolitics of globalization.
That is an ambitious agenda, but the truth is that this will not be a time for gradual or tepid changes – ambitious and transformational changes are needed. Only by boosting the extent of ambition can we reply to this quantity of simultaneous challenges and shocks, and to the complexity of our region’s economies and societies. With a view to articulate the proposed strategies and policies, and to make sure their effective implementation and adjustments to new realities over time, new types of experimentalist governance are needed, based on iterative and participatory processes for policy formulation and implementation. In some cases, new fiscal, productive, social and environmental compacts might be mandatory to surmount the issues of this current juncture and move in the long run towards societies which are sustainable, cohesive and resilient – characteristics that entail advancing towards the conclusion of welfare states within the framework of more efficient and productive economies.
Right now of motion for overcoming limitations and harnessing opportunities, ECLAC will present the analyses and proposals summarized in these lines at its most vital biennial meeting: the thirty-ninth session, which can happen on October 24-26 in Buenos Aires, Argentina, with the participation of senior authorities from throughout our region. We invite all those that are committed to working for the progress of Latin America and the Caribbean to take part in the debates.
José Manuel Salazar-Xirinachs is executive secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), of the United Nations.