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Latin America's future requires more investment and education and less inequality, according to panel at Annual CAF-OAS- Inter-American Dialogue Conference

Increased investment, promotion of innovation and a substantial reduction in inequalities are the key factors for Latin America to face an optimistic future, was the conclusion reached today by a panel of senior officials of international organizations and economists at the XVII Annual Conference of the Development Bank of Latin America (CAF), the Organization of American States (OAS) and the Inter-American Dialogue.

The panel, which opened the second day of the conference in Washington, DC, was moderated by the CAF President, Enrique García, and included the participation of Luis Alberto Moreno, President, Inter-American Development Bank (IADB); Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) of United Nations; Hasan Tuluy, World Bank Vice President; Alejandro Werner, Director for the Western Hemisphere, International Monetary Fund (IMF); José Antonio Ocampo, Professor at Columbia University and former Minister of Economy of Colombia; and Ernesto Talvi, Director of the Latin American Initiative of the Brooking's Institution.

The panelists agreed the strategic vision on the economy displayed in recent years by the region's leaders helped produce high levels of growth and let the region weather the global crisis that began in 2008 unscathed. However, they warned that further fiscal reforms and new infrastructure will be needed for the bonanza period to continue.

The CAF President, Enrique Garcia, said in particular that investments in technology and education are essential. "A key fundamental challenge is to add value to the natural advantages of the region, through technological development and the training of human capital," he said.

IADB President, Luis Alberto Moreno, warned that the "economic boom" that Latin America experienced in the last decade was due more to exports and rising prices of raw materials than to increased productivity in the region. "The region lost more than five percent of productivity" over the past decade, Moreno said, and mentioned the example of South Korea, a country which "invests more in innovation than all of the Latin American countries together".

ECLAC Executive Secretary, Alicia Bárcena, said that the region needs to tackle structural reforms in the area of education, as well as to increase tax revenues. Bárcena also defended the need to continue implementing social policies to combat problems such as poverty and inequality. "We must invest more in the social aspect, not only in infrastructure but also in technologies such as broadband Internet, which should be universal," she said.

Meanwhile, the Director for the Western Hemisphere at the IMF, Alejandro Werner, said the economic growth of the past decade in Latin America was nearing its end, and predicted that the region should be prepared to face a "more difficult" world stage, caused in part by the slowdown in China's economy, which has been one of the main buyers of Latin America's raw materials.

Director Talvi warned in turn that the growth experienced by the region in the last decade was due to external factors rather than internal, and argued that the region now has to take action to deal with a difficult period. In that sense, Talvi agreed with the other panelists that the necessary and safe bet is investing in education: "We must make a greater effort in educational attainment; otherwise our societies will not be transformed."

For his part, the World Bank Vice President, Hasan Tuluy, said South America experienced tremendous economic growth over the past decade, but noted that in the case of Central America and the Caribbean, the past years were not as fruitful. Tuluy said that, in addition to efforts to reduce poverty, it is necessary to place special emphasis on equitable distribution within countries. He also coincided with IADB President Moreno that domestic investments in the region are very low compared to other regions.

Finally, Professor Ocampo disagreed with other speakers regarding the notion that Latin America had a "good decade". "Yes, we had it in social terms, but in economic terms only the first five years, from 2003 to 2007 were good. Since then, growth in Latin America has been less than 3 percent, and this is very poor," he said. Ocampo said that in the last five years the Latin American economic performance was "mediocre". Regarding the price of raw materials, the former Colombian Minister of Finance stated that "the rise in raw material prices is over." "Oil is now rising due to the crisis in the Middle East, but when the troubles recede, the price will fall," he said.

A gallery of photos of the event is available here.

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

Reference: E-327/13