THIS IS A SUMMARY OF AN EVENT WITH MR ENRIQUE GARCIA RODRIGUEZ ON FEBRAURY 12th
In light of the global economic crisis of 2008-2009, a certain degree of triumphalism might be expected when considering the performance of the economies of Latin America. Enrique García Rodríguez, speaking at an event held in Westminster, London on 12th February 2013, presented what lessons Latin American economies have taken from their past experience and addressed the role of CAF in the intricate issue of Latin America’s regional integration.
1- Readjustment Process (1990s)
- Troubled past (1970s-80s): macroeconomic disequilibrium, high fiscal deficits, high debt, and hyperinflation. Countries were forced to make sacrifices that today are paying dividends.
- A majority of countries today have a good macroeconomic frame, high reserves ($800 billion in the region), and have been resilient to the severe impact of the crisis in Europe and the United States.
- The dynamic evolution of Asia, most notably China has had important implications in the prices of commodities.
2- How to strengthen regional integration?
Three crucial points were evaluated as fundamental for the advancement of Latin America’s regional integration. A comparison with Asia was kept in parallel.
- Infrastructure (Latin America attributes 3% of GDP to infrastructure ≠ Asia 10% of GDP). Areas located far from the coast are still considerably isolated and therefore need roads, bridges, sewers, and energy to be integrated.
- “Education, education, education. Education in all levels” (Compared to Japan, South Korea, and Singapore where the quality of human capital has made a substantial change).
- Reinforcing and strengthening institutions: not only governments, executive branches, or judiciaries, but also the corporate organization of each country.
3- Role of CAF
CAF tries to support initiatives on the policy side, particularly in the promotion and financing of projects in areas that are crucial for development. It has taken an important lead in the financing of infrastructure by:
- Stimulating a comprehensive agenda of development with efficient macroeconomic stability and implying macroeconomic concepts for productivity and investment. The big challenge is to have good quality growth with stability by developing the economies as well as creating employment.
- Planning in a way that the benefits of higher rates of growth reach the majority of the population. In other words, encouraging equity and inclusion.
- Being conscious of the environment and sustainability.
4- What can be perceived for the future of Latin America?
The good results in the last ten years are a great platform to take necessary steps in the direction of reshaping the model for development. The main risk is not necessarily what happens to American, European, or Chinese economies; the main risk is complacency. Finally, the good news is that most governments today are becoming aware of this situation and understand that the time has come to carry on with the changes.