Latin America and the Caribbean require ambitious public policies to overcome the profound crisis that they have experienced in the last ten years. The region is mired in a development crisis, in the midst of a lost decade, it cannot transform development models by doing the same thing or doing what works on a small scale. This is not a time for gradual and timid changes, but for bold and transformative policies that really move the needles of development. For this reason, ECLAC proposes 10 priority policy areas to transform the region’s development model, and identifies possible sectors that will promote sustainable and inclusive growth.
This is the proposal that the Economic Commission for Latin America and the Caribbean (ECLAC) will present to its 46 member states and 14 associated countries during its thirty-ninth sessionthe most important biennial meeting of this regional commission of the United Nations, which will take place from October 24 to 26 in Buenos Aires, Argentina.
At the event, which will bring together high-ranking authorities from the region, as well as world-renowned researchers, academics, representatives of civil society and international officials, the Executive Secretary of ECLAC, José Manuel Salazar-Xirinachs, will present the institutional document titled Towards the transformation of the development model in Latin America and the Caribbean: production, inclusion and sustainabilityin which the organization will deliver to the countries its proposal for recovery and sustainable development in the new global and regional context.
In its five chapters, the report analyzes, among other topics, the present and future of globalization, the region’s own productive heterogeneity, and discusses policies for sustainable productive development. Likewise, it addresses the dynamics between employment and social protection and the importance of sectoral impulses to reactivate economic growth. It also examines other topics, such as the circular economy, the care economy and digital transformation, and presents a set of policy recommendations for sustainable development in the new international and regional scenario.
According to the document, in 2022 the countries of the region face the effects of a series of cascading crises: climate, health, employment, social, education, food security, energy, and cost of living, all of which impact with different intensity and varied characteristics to many countries, including all of Latin America and the Caribbean.
In the region, the combination of external and internal factors has reduced the capacity for economic growth and the generation of quality jobs and has hindered its fight against poverty and extreme poverty. Their economic and social structures have weakened and they have entered into situations that reinforce the inertia of weak economic performance.
In this regard, the publication indicates that after the low economic growth rate of 0.6% annual average registered in the period between 2014-2019, a historical contraction of 6.9% in 2020 and a recovery of 6.5% in 2021, ECLAC estimates that the economies of Latin America and the Caribbean will grow by 3.2% in 2022 and a sharp slowdown is expected with projected growth of 1.4% in 2023.
In addition, recently the lower growth of economic activity has been accompanied by a significant increase in the inflation rate. In June 2022, the regional average was 8.4%, more than twice the value of the average observed between January 2005 and December 2019 (4.1%). On the other hand, the fiscal situation of the countries of the region has deteriorated as a result of the important fiscal efforts that were made to combat the worst moments of the COVID-19 crisis and its social consequences.
In accordance with the above, the social situation in the region has also deteriorated, with considerable increases in poverty levels reflecting the effects of the pandemic and the economic recession that accompanied it. For 2020, ECLAC calculated that poverty and extreme poverty reached, respectively, 33.0% and 13.1% of the population. By 2021, the incipient recovery of the economies translated into a very modest drop in poverty to 32.1% and a marginal but continuous increase in extreme poverty to 13.8%.
“It is in this context that the countries of the region must adopt policies that allow them to boost sustainable growth, mitigate inflationary pressures, generate quality employment, and mitigate social costs along with reducing poverty and inequality. All of this poses serious challenges for political and governance systems and for the technical, operational and political capacities of public institutions”, states the ECLAC document.
Throughout its history, the Commission has insisted that macroeconomic policies matter a great deal for the dynamics of structural change and productive development, but also that microeconomic and sectoral policies are key. In other words, both transversal and sectoral productive development policies are required.
In this line of thought, ECLAC has proposed to the region a series of driving sectors that can boost productive and structural transformation, as well as investment and job creation. These are: energy (energy transition), electromobility, circular economy, bioeconomy, health manufacturing industry, digital transformation, care economy, sustainable tourism, and micro, small and medium-sized enterprises (MSMEs) and social and solidarity economy.
In its statements, the regional organization of the United Nations emphasizes the urgency of acting to recover investment and growth, recognizes the central role of the State in the design and execution of policies for the transformation of the development model and argues the importance of advancing in the strengthening of public and private alliances.
To articulate such a wide universe of problems and policy alternatives, ECLAC underlines the need to advance in fiscal, productive, social and environmental agreements to overcome the problems of the current situation and move in the long term towards sustainable, cohesive and resilient societies , characteristics that imply advancing towards the realization of welfare states within the framework of a care society.
The document will be commented on this Monday, October 24, starting at 09:50 hours in Argentina (GMT -3) by a high-level panel within the framework of the thirty-ninth session of the Commission, moderated by the Minister of Foreign Affairs, International Trade and Worship of Argentina, Santiago Cafiero, with the participation of the Nobel Prize in Economics, Joseph Stiglitz, the Professor of Economics of Innovation and Public Value at University College London, Mariana Mazzucato, the Minister of Finance and Public Credit of Colombia, José Antonio Ocampo, and the Secretary General of the United Nations Conference on Trade and Development (UNCTAD), Rebeca Grynspan.
Both the panel and the ECLAC meeting will be broadcast entirely online via the internet through different platforms: the website https://live.cepal.org/ and their Twitter accounts https://twitter.com/cepal_onu) and Facebook (https://www.facebook.com/cepal.onu).
