"Over the last 20 years we have learned from so many errors and so many crises," said Luis Alberto Moreno, president of the Inter-American Development Bank, referring to what he believes is the most important development in Latin America in recent history.
Learning those lessons was painful. They were paid for in blood. "In 25 years we have had 31 financial crises and in each one of them poverty in Latin America increased," he told Latin Trade in Bogota. But the price paid did bring about some good results at the end of the day. Poverty has since been reduced through enrichment of nations and their middle classes, and through the success of some social policies, especially subsidies, that proved very effective. Twenty-five years ago, 45 percent of the population was mired in poverty. Today that's been whittled down to 31 percent, he said.
Over the last 20 years the most important social indicators have improved, "not in all countries, but we have advanced," Moreno said. He mentioned those that cover basic health care and secondary education. "Now we have the enormous challenge of producing better professionals, better adapted to the needs of a changing labor market," he added.
However, in other areas time was squandered. Manufacturing productivity, for example, was stronger 20 years ago than it is now, he said. The problem has to do with inflexible labor markets that perpetuate informal labor, and a lack of efficient infrastructure. The region needs port services, airports, highways, and energy at competitive prices. "Energy rates are very high compared with those of India or China," he said.
The quality of education also must be improved. "It's hard to be more productive than China if barely 1 percent of 15-year-olds in Latin America understand mathematics as well as students in Shanghai," he said.
For Moreno, the next 20 years will be full of interesting transformations. For one, the commodities bonanza, which has created the curse of imbalances...