The debate about the best growth model for Latin America doesn't end at "commodities vs. industrialization". It's much deeper and richer, and includes social factors. Two well known Latin American economists discuss the issue with Latin Trade, and in a separate interview, media businessman Gustavo Cisneros gives his opinion.
Gentler economic winds have been caressing Latin America and the Caribbean since the last months of 2017. Even so, analysts project that in the best of cases the region will grow at a relatively slow annual rate of 2.5% to 3%, at least in the medium term. The question then arises: how to boost growth?
For Jose Juan Ruiz, chief economist with the InterAmerican Development Bank (IDB), the answer is not simple. "There's no silver bullet," he told Latin Trade in an interview, but he did say a few basic principles are clear. "First, put the macroeconomy in order, and this we did even during the commodities crisis."
It is equally necessary "to go to the micro and revise regulations in order to generate formal companies and formal jobs" and to achieve a better redistribution of capital by encouraging trade, Ruiz added. "We need more integration within our own region," said the IDB executive.
Alberto Bernal, chief of emerging market strategy at XP Securities, one of Brazil's largest brokerage firms, emphasized the importance of improving institutions as a means of encouraging investment. "Otherwise, we're not going to get ahead," he said in an interview with LT.
The strategist made an appeal for keeping corporate taxes low (and, if necessary, raising them for high-income earners), as well as getting rid of procedures that, although rooted in good principles, have become obstacles.
The obligation to consult local communities before carrying out high-impact projects is an example of the latter, Bernal said. "Latin America has a problem of too much democracy," he noted, citing situations where large projects that would produce benefits on a national scale have been rejected by votes of very few citizens in a local community. A recent referendum in Colombia suspended a mega-project for mining gold in one of the world's largest mines. It was a $200 million investment, but the vote of fewer than 7,000 people paralyzed the project.
Bernal also believes that innovation in education is fundamental. "The educational model is wrong and must be changed," he said. The region must increase its command of English and...