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OAS Secretary General and President of the World Bank Group Discuss the Economic and Social Outlook for Latin America and the Caribbean

The Secretary General of the Organization of American States (OAS), José Miguel Insulza, and the President of the World Bank Group, Jim Yong Kim, today spoke on the “Economic and Social Outlook for Latin America and the Caribbean,” at the 55th Lecture of the Americas, in which along with noting the progress made in development in the region in recent years, they offered their points of view on pending challenges and areas for improvement in the future.

Secretary General Insulza reiterated that one of the main challenges of the region is building more inclusive societies and reflected on what will be the central theme of the next General Assembly of the OAS, to be held in Paraguay in the first week of June – “Development with Social Inclusion” – asserting that an important step forward could be taken in this area. Upon recalling that the OAS General Assembly of 2012 approved the Social Charter of the Americas, he called for advances in the application of the Charter during the General Assembly of Asunción. “The theme of this year’s OAS General Assembly provides an impetus to complete and approve the Plan of Action of the Charter and make this instrument a powerful tool for sustainable and inclusive development.”

The OAS leader, on one hand, highlighted the economic growth of Latin America and the Caribbean in the last decade, which allowed for a 50 percent growth of the middle class, made up of some 150 million people, but also warned that despite this growth, Latin America and the Caribbean continues to be one of the most unequal regions in the world. “At the end of 2013, an estimated 164 million people in Latin America were living in poverty—almost 28% of the region’s population—while 66 million people or 11.5% were living in extreme poverty or indigence. These statistics are too high for a region with our level of development”, Secretary General Insulza remarked during the Lecture, held at the headquarters of the hemispheric institution in Washington, DC.

The Secretary General of the OAS said the inequality in Latin America and the Caribbean has its roots in the colonial history of the hemisphere, and that it is accentuated by the inequality in access to essential public goods such as education. “Unequal access to quality education and other productive assets is not only the source of wide economic disparities, but it also prevents intergenerational mobility”, said Secretary General Insulza, who noted that "half the adults aged 25 to 65 years living in indigence have not completed their primary education.”

Secretary General Insulza recalled that during the recent joint meeting of the World Bank and the International Monetary Fund (IMF), one of the key messages was that “it is imperative not just to lift people out of extreme poverty; it is also important to make sure that, in the long run, they do not get stuck just above the extreme poverty line due to a lack of opportunities that might impede progress toward better livelihoods.” Insulza warned that, in that sense, the fact that in Latin America and the Caribbean four of every ten people live in what has been called “the fragile middle,” meaning “they are neither poor nor middle class, they earn between $2 and $10 a day and are very vulnerable to a slowdown in the global economy.”

Finally, the OAS Secretary General cautioned that the latest forecasts of the IMF and the World Bank predict that the region will grow by 2.5% in 2014, 3% in 2015, below the world average which will be 3.6% in 2014 and 3.9% in 2015. “In this context, an important issue to be addressed is what are the social development implications of a weak economic outlook for the region, in particular in relation to sustaining poverty reduction efforts and reducing inequality,” concluded Secretary General Insulza.

In his presentation, the President of the World Bank Group focused on the need for “inclusive economic growth” in the region, to respond to the growing demands of the population. “The governments of the region are, in part, victims of their own success,” said Kim, and added that “they’ve achieved a great deal in terms of fostering growth and reducing inequality. Yet, precisely because of this success, citizens are now asking for more than ever before, and pressuring governments to respond.”

In order to grow, said President Kim, Latin America must be more productive, innovative and adaptable. Moreover, to promote development, the region must improve “logistics and infrastructure, education, and the contractual environment” as well as competitiveness.

“Economic and social gains support one another,” said the President of the World Bank Group. “Providing disadvantaged children access to a quality education raises their productive capacity and enhances social inclusion through higher employability. This, in turn, leads to higher growth, which provides people with still more resources to improve their quality of life.”

Following his address, President Kim and Secretary General Insulza took part in a dialogue on the subject with the audience for the event. Minutes before the Lecture, the two leaders held a private meeting which included the Vice President of the World Bank for Latin America and the Caribbean, Hasan Tuluy; the Chief of Staff of the OAS Secretary General, Hugo de Zela; the Secretary for External Relations of the OAS, Alfonso Quiñonez; and the Director of the Department of International Affairs of the OAS, Jorge Sanin.

A gallery of photos of the event is available here.

For more information, please visit the OAS Website at www.oas.org.

Reference: E-157/14