Issue Overview

Latin America’s solid economic performance for the past decade has created the opportunity for countries in the region to lead structural transformation and respond to long-term sustainable, inclusive and qualitative growth. Nevertheless, Latin America still faces significant challenges. The global context has become increasingly complex and the centre of gravity in the global economy is shifting from developed countries hurt by the crisis to China, India and other fast-growing economies. Thus, Latin America must pursue and intensify its efforts in several areas, including strengthening the rule of law, improving access to and quality of education and healthcare, addressing the infrastructure deficit and narrowing income gaps. While Latin America is still growing, mainly through commodity exports, the region must transform itself and move beyond this dependence to spread prosperity throughout its population. Government policies on infrastructure, education and urban development can stimulate business and civil society to collaborate in increasing living standards, reducing inequality and stimulating sustainable development.

Mexico’s presidency of the G20 in 2012 has highlighted Latin America’s capacity for effective global leadership. And Brazil, as part of the BRICS (Brazil, Russia, India, China and South Africa) group of emerging markets and host of the Rio+20 United Nations Conference on Sustainable Development, is widely recognized as an increasingly important player on the international stage, capable of leading the world towards a balanced and sustainable global economy. 

Did You Know?

• About 80% of Latin Americans live in cities, making it the most urbanized region in the world. In five decades, the number of cities has increased sixfold. 

  Latin American countries invest 1-2% of its gross domestic product (GDP) in infrastructure; Chile is the only outlier, investing 3-5%. Investment levels should be in the 5-7% range.

  In transport infrastructure, the entire region presents significant deficits, which could affect economic growth by hindering development and preventing access to the benefits of economies of scale and specialization at the national and sub-national level. In telecommunications, countries like Brazil, Costa Rica, Jamaica, Panama and Uruguay have reasonable levels of infrastructure considering their income levels, but have serious problems in terms of equality of access.

Quotes

“We need to look at how Latin America can get faster, higher equity, sustainable growth.”
Enrique García Rodríguez, President and Chief Executive Officer, CAF Development Bank of Latin America, Venezuela 

“Structural change means conducting qualitative transformations in the productive structure of the countries in the region, in order to strengthen knowledge-intensive sectors and the rapidly growing domestic and foreign demand, resulting in more and better jobs, and driven by new technological paradigms.”
Alicia Barcena Ibarra, Executive Secretary, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Santiago, Chile

Further resources

From Borges to Paz
"Shaping the Future of the Asia-Latin America and the Caribbean Relationship", Moreno L. A.
"The Decade of Latin America and the Caribbean: A Real Opportunity"
"Latin American Economic Outlook 2012: Transforming the State for Development," Organisation for Economic Co-operation and Development (OECD) and ECLAC, 2012.
"Cambio estructural para la igualdad. Una visión integrada del desarrollo, 2012, and Eslabones de la desigualdad. Heterogeneidad estructural, empleo y protección social", Comisión Económica para América Latina (CEPAL), 2012.

Calendar

22nd Ibero-American Summit 2012
16 November 2012
Cadiz, Spain

BRICS Meeting
25-27 March 2013
Durban, South Africa 

World Economic Forum on Latin America
23-25 April 2013
Lima, Peru

Council Insights

During the 2011-12 term, the Council focused on the economic and political fronts of Latin America’s interregional relationship with Asia. The group concluded that the region must develop a strategic relationship with its trading partners, particularly China and India, which require separate approaches. Exports need to be diversified, extending beyond raw materials, through the production chain to add value and create employment at home.

In the next term the Council will work on growth strategies for Latin American countries, highlighting the role of innovative public-private partnerships in the region. Specifically, the Council will determine how these partnerships can have an accelerating effect on regional growth, while ensuring economic, social and environmental sustainability. The Council believes that inclusive, qualitative and sustainable growth can be supported by progress in the following areas: 

• Investing in physical infrastructure. Latin America lags behind other developed or emerging economies in investments in physical infrastructure, including large-scale projects, urban development and housing. Investments should increase considerably, combined with an improved framework of planning and management, from government vision and strategy to the regulatory framework, to project execution and delivery. 
• Improving social infrastructure, like health, education, social protection and security, should also become a priority, with a particular focus on broadening the coverage and quality of the education system. 
• Driving and enabling the transformation and diversification of the region’s productive structures, through sound industrial policy and innovation, would allow Latin America to look beyond commodities and enhance its position in offering and exporting higher-standing products and services. 

In all these elements, innovative public-private partnerships can positively contribute to the modernization and strengthening of the Latin American economies, so the region can better respond to its looming slowdown and instability. 

Contact Information

Research Analyst: Vanessa Lecerf, Senior Associate, Global Agenda Councils, vanessa.lecerf@weforum.org
Council Manager: Fernando Gómez, Associate Director, Latin America and Global Leadership Fellow, fernando.gómez@weforum.org
Forum Lead: Marisol Argueta, Senior Director, Head of Latin America, marisol.argueta@weforum.org