Recharge Latin America.

Author:Bamrud, Joachim
Position:EDITOR'S NOTE
 
FREE EXCERPT

While Latin America has reason to be proud of its economic growth in recent years, the region needs to implement a series of reforms to make it much more competitive.

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Here are our 10 top recommendations:

  1. Improve Institutions. As the Swissbased World Economic Forum says: "Excessive bureaucracy and red tape, overregulation, corruption, dishonesty in dealing with public contracts, lack of transparency and trustworthiness, and the political dependence of the judicial system impose significant economic costs to businesses and slow the process of economic development." WEF is speaking in general terms, but these complaints dearly describe most of Latin America today.

  2. Lower Corruption. Despite the economic growth in recent years, corruption remains at dangerously high levels throughout Latin America. Part of the problem is the lack of a professional civil service, but the region also has weak law enforcement and judiciaries that enable corrupt officials to act with impunity.

  3. Better Education. Quality higher education and training are crucial for economies that want to move up the value chain beyond simple production processes and products, WEF rightly points out. Improving Latin America's wealth starts with decent education for the majority that today can't afford private schools.

  4. Improve Security. Crime and insecurity remain a major problem in most countries in Latin America. Part of the problem is corrupt law enforcement, but also the fact that even honest police officers are underpaid and under-trained. The insecurity is adding an unnecessary cost to the private sector in the form of private security, higher insurance premiums and losses from theft.

  5. Improve Infrastructure. The cost of exporting from Latin America is unnecessarily high because of inefficiencies in infrastructure. A study by the Inter-American Development Bank shows that the region's exports to the United States pay freight rates that are, on average, 70 percent higher than those from the Netherlands, in part because of inefficient ports. If those ports were to improve to U.S. levels, that would lower costs about 20 percent. But seaports aren't the only problem. Latin America also suffers from inadequate roads (especially in the case of Colombia) and airports (especially in the case of Brazil). Part of the problem is a lack of investment by the region's governments. Latin America currently invests only about 2 percent of its GDP on infrastructure...

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