A fresh chance to revamp the growth model.

Author:Dawkins, Tanya
Position:TRADING VIEWS
 
FREE EXCERPT

The world needs a more nuanced and sophisticated debate about human and physical infrastructure and the relationship between the two. As the world's fastest growing and most unequal region, Latin America arguably has the greatest incentive to tackle these issues.

Smarter economic governance and innovative finance policy are the keys to addressing the region's need for sustainable revenues and inclusive growth. Both must also be at the heart of addressing, finally, the region's most intractable human rights issues: poverty and inequality.

So far, Latin America has weathered the global crisis better than other regions. It is projected to have the fastest regional growth and continues to benefit from recent increases in foreign direct investment. Chinas insatiable appetite for raw materials and high prices for commodities are among the factors driving regional growth.

Despite sunny regional macroeconomic news, the global nature of the crisis puts in stark relief the region's vulnerabilities related to inadequate social protection policies, volatility in the commodity markets and the growth of exports as a percentage of overall economic activity in many countries.

A recent Inter-American Dialogue Policy Brief noted that reductions in poverty and extreme poverty are more closely linked to growth in the energy and mining sectors and remittance flows than to strategies that specifically target poverty and inequality.

In their new book, "The Spirit Level: Why More Equal Societies Almost Always Do Better," epidemiologists Richard Wilkinson and Kate Picket painstakingly set out the case that countries with high inequality experience much greater levels of societies' most insidious ills, from violence, teenage pregnancy and alcoholism to mental illness, drug abuse and incarceration.

The stakes dictate that the region's infrastructure investments can and must do double and triple duty. But first and most of all, they must do no harm.

The Inter-American Development Bank's Board of Governors recently approved a $70 billion capital increase. The extra capital can do a great deal of good in the region. It could also undermine the region's long-term interests if the investments further marginalize the intended beneficiaries by failing to advance the kind of growth that creates broad-based benefits.

The IDB funds present just one opportunity for the region's government, business, civil society and community leaders to address human and physical...

To continue reading

FREE SIGN UP