There is a newfound sense of optimism in our Hemisphere today, particularly in Latin America. Two decades of democratic transition have led to the consolidation of democracies, and, while our democracies are not perfect, the region has come a long way in recent decades. The unanimous adoption of the Inter-American Democratic Charter on September 11, 2001 by OAS member states represented a significant milestone on the path toward democratic consolidation.
For the first time in its history, Latin America achieved during the past decade a combination of high growth, macroeconomic stability, poverty reduction, and improvement in income distribution. With unprecedented resilience, Latin America weathered the international crisis that began in 2008 and which continues to produce unemployment and low growth rates in the United States and Europe. Despite the global recession, Latin America registered 6 percent economic growth in 2010 compared to only 2.45 percent in the developed world. While growth rates were more modest in 2011 at 4.5 percent and 2012 at 3.2 percent, the region is expected to continue to show modest growth over the next two years.
This continues a trend from the past decade when Latin America began a period of expansion that would allow the region to potentially double its income by 2025. This has resulted so far in more than 50 million people escaping poverty. According to the UN Economic Commission for Latin America and the Caribbean (ECLAC), poverty in the region has fallen significantly from 43.9 percent in 2002 to 28.8 percent in 2012. For the first time, the number of people in poverty in Latin America is now equal to the size of the middle class.
Still, much remains to be done to make these gains permanent, address issues of inequality, promote greater inclusion, and seek real solutions for those countries and communities in the Hemisphere that have not fared as well. While Latin America has experienced sustained growth, Caribbean countries continue to struggle to find their economic footing, as recently noted by the Caribbean Development Bank. Indeed, the Hemisphere as a whole faces a number of ongoing challenges with which it must grapple going forward, including lagging infrastructure, tax reform, energy insecurity, insufficient scientific and technological development, public security concerns, natural disasters, and the impact of climate change.
Hemispheric trade has grown substantially over the past 20 years as a result of sub-regional arrangements and the signing of over 80 free trade agreements, but taking advantage of the opportunities created by these instruments remains an unfinished business. Export diversification, improved productive sector competitiveness, and debt sustainability are essential to the region’s long-term growth prospects. Strengthened horizontal cooperation, sharing of best practices, and the adoption of initiatives geared toward improved public policies and institutional capacity building are key for supporting the advancement of national development objectives. So too is ensuring that micro, small, and medium enterprises (MSMEs), which account for more than 90 percent of all businesses in the Hemisphere and employ close to 70 percent of workers, are fully integrated into the productive fabric and development calculus of countries.
Moreover, even though the region is rightly proud of its recent economic success, it is still burdened with the enduring challenge of being the most unequal region in the world. This requires an adjustment in thinking and approach to development. Both developed and developing countries grapple with the issue of how to achieve more inclusive societies. On this, the region has shown leadership with the adoption of a Social Charter of the Americas in 2012. In so doing, the most unequal region has taken an important step in declaring its commitment to work toward more sustainable and inclusive development.
As the region’s population approaches one billion, governments, business, and international organizations have an unprecedented opportunity to work in partnership to position Latin American and Caribbean countries to maximize their individual and joint capacities to achieve sustained growth, stability, and prosperity.
Jose Miguel Insulza is Secretary General of the Organization of American States (OAS).
This article was originally published in the Diplomatic Courier's May/June 2013 print edition.
Photo Copyright World Economic Forum / Edgar Alberto Domínguez Cataño.
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A More Politically Stable and Prosperous Hemisphere
May 15, 2013
There is a newfound sense of optimism in our Hemisphere today, particularly in Latin America. Two decades of democratic transition have led to the consolidation of democracies, and, while our democracies are not perfect, the region has come a long way in recent decades. The unanimous adoption of the Inter-American Democratic Charter on September 11, 2001 by OAS member states represented a significant milestone on the path toward democratic consolidation.
For the first time in its history, Latin America achieved during the past decade a combination of high growth, macroeconomic stability, poverty reduction, and improvement in income distribution. With unprecedented resilience, Latin America weathered the international crisis that began in 2008 and which continues to produce unemployment and low growth rates in the United States and Europe. Despite the global recession, Latin America registered 6 percent economic growth in 2010 compared to only 2.45 percent in the developed world. While growth rates were more modest in 2011 at 4.5 percent and 2012 at 3.2 percent, the region is expected to continue to show modest growth over the next two years.
This continues a trend from the past decade when Latin America began a period of expansion that would allow the region to potentially double its income by 2025. This has resulted so far in more than 50 million people escaping poverty. According to the UN Economic Commission for Latin America and the Caribbean (ECLAC), poverty in the region has fallen significantly from 43.9 percent in 2002 to 28.8 percent in 2012. For the first time, the number of people in poverty in Latin America is now equal to the size of the middle class.
Still, much remains to be done to make these gains permanent, address issues of inequality, promote greater inclusion, and seek real solutions for those countries and communities in the Hemisphere that have not fared as well. While Latin America has experienced sustained growth, Caribbean countries continue to struggle to find their economic footing, as recently noted by the Caribbean Development Bank. Indeed, the Hemisphere as a whole faces a number of ongoing challenges with which it must grapple going forward, including lagging infrastructure, tax reform, energy insecurity, insufficient scientific and technological development, public security concerns, natural disasters, and the impact of climate change.
Hemispheric trade has grown substantially over the past 20 years as a result of sub-regional arrangements and the signing of over 80 free trade agreements, but taking advantage of the opportunities created by these instruments remains an unfinished business. Export diversification, improved productive sector competitiveness, and debt sustainability are essential to the region’s long-term growth prospects. Strengthened horizontal cooperation, sharing of best practices, and the adoption of initiatives geared toward improved public policies and institutional capacity building are key for supporting the advancement of national development objectives. So too is ensuring that micro, small, and medium enterprises (MSMEs), which account for more than 90 percent of all businesses in the Hemisphere and employ close to 70 percent of workers, are fully integrated into the productive fabric and development calculus of countries.
Moreover, even though the region is rightly proud of its recent economic success, it is still burdened with the enduring challenge of being the most unequal region in the world. This requires an adjustment in thinking and approach to development. Both developed and developing countries grapple with the issue of how to achieve more inclusive societies. On this, the region has shown leadership with the adoption of a Social Charter of the Americas in 2012. In so doing, the most unequal region has taken an important step in declaring its commitment to work toward more sustainable and inclusive development.
As the region’s population approaches one billion, governments, business, and international organizations have an unprecedented opportunity to work in partnership to position Latin American and Caribbean countries to maximize their individual and joint capacities to achieve sustained growth, stability, and prosperity.
Jose Miguel Insulza is Secretary General of the Organization of American States (OAS).
This article was originally published in the Diplomatic Courier's May/June 2013 print edition.
Photo Copyright World Economic Forum / Edgar Alberto Domínguez Cataño.
