Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the IV International Economic Forum on Latin America and the Caribbean (Watch the live webcast)
25 May 2012, Bercy, Ministère de l’Économie, des Finances et du Commerce extérieure, Paris
(As prepared for delivery)
Dear Ministers and Excellencies,
President Chinchilla, Prime Minister Douglas, President Moreno, Ladies and Gentlemen,
It is a great honour for me to be at the fourth International Economic Forum on Latin America and the Caribbean. This is a unique opportunity for us to take the pulse of Latin America and strengthen our co-operation with the region.
I would like to thank our partners for organising the Forum: the French Ministry of Economy, Finance and Industry, and the Inter-American Development Bank (IDB).
Nous avons aussi l’honneur d’être reçus par le Ministre aujourd’hui. La France, qui préside notre Commission des relations extérieures, joue un rôle très important au sein de l’OCDE pour promouvoir un partenariat renforcé avec les économies émergentes; et bien sûr, avec l’Amérique Latine. Nous nous réjouissons à l’idée de travailler avec la nouvelle administration afin de promouvoir le développement économique dans la région.
This event is exceptional because it takes place at a time when countries from Latin America and the Caribbean have become a reference in terms of economic resilience and sound management of public finances. The region’s growth remains relatively solid, at an expected 3.7% on average in 2012 and 4.1% in 2013, according to the latest Consensus Forecast. And while unemployment rates have risen in most economies in the last years, in Latin America they have gone down from 7.3% in 2010 to 6.8% in 2011. This is in sharp contrast with the experience of OECD countries, where growth is expected at 1.6% this year and unemployment is close to 8% on average.
Having learned the painful lessons of the financial crises of 1980s and 1990s, Latin American and Caribbean countries are better prepared today to face the challenges ahead. Government indebtedness has fallen significantly from over 80% of GDP in the 1990s to just 32% today. This is less than one-third of the average of the OECD area!
However, Latin America cannot rest on its laurels!
Important challenges remain. Let me just point out briefly three distinct areas which require targeted action: competitiveness, education and inequality.
In terms of competitiveness, the challenge is to remove unnecessary bottlenecks. Latin American economies are growing faster than most OECD countries, but other emerging-market economies, like China or India, are growing twice or three times as fast.
The gap in infrastructures is one of the key elements explaining the region’s low competitiveness. This is particularly evident in the transport and broadband internet sectors. On average, the region invests only 2% of GDP on infrastructure . Just to catch up with South East Asia by 2012, infrastructure spending would need to increase to 7% of GDP.
How can this be done? One option is to seek partnerships with the private sector. Many countries in the region have considerable experience in this area. Others need to strengthen the governance of public-private partnerships to enhance value for money, improve governance and minimise rent-seeking. Such measures can reap significant savings to the budget.
The other key element to boost long-term competitiveness is to invest in high quality education and to provide people with the skills that today’s economy demands. Latin America’s young population is the region’s main asset, a resource that can only be capitalised through a much needed improvement in the quality of education.
Of course, the achievements of the last years have been impressive. Governments in the region have substantially increased their spending on education. The proportion of youngsters who completed secondary education rose from 27 to 51% between 1990 and 2006.
But our PISA study – our international programme to measure the educational achievements of 15 year-olds -- shows that the region continues to fare poorly in terms of performance, with great disparities and inequality of opportunities. Poor performance is due to poor quality of services and a lack of skills creates a bottleneck that clearly hampers competitiveness.
Lastly, we need to address inequality. It is simply unacceptable that 10 out of the 15 most unequal countries in the world are Latin American.
Government policies have a huge potential for redistribution in the region. Currently, the impact of taxes and benefits on the income distribution is, on average, much lower in Latin America than in OECD countries. While taxes and transfers reduce inequality by 19 Gini points in Europe, the corresponding reduction is only 2 Gini points in Latin America .
What can the OECD offer to help address these challenges?
Our annual Ministerial Council Meeting, which ended yesterday, provided a good set of outcomes and guidance on how we can promote growth and jobs that result in more inclusive societies. Ministers called upon the OECD to continue delivering first-class policy analysis and advice, in particular by integrating and deepening our advice to “go structural”, “go social”, “go green” and “go institutional”.
Among other outcomes, we presented our OECD Gender Initiative and our Skills Strategy. We also got an important endorsement to our work on promoting an open multilateral trade system, advancing competitive neutrality, fostering small and medium-sized enterprises, and remaining at the forefront of integrity and anti-corruption efforts through our standard-setting role and peer review mechanisms.
The freshly adopted Strategy on Development will enhance our future work with key emerging regions, like Latin America. The Strategy will help forge the way we engage and collaborate with countries beyond our membership – including in Latin America and the Caribbean. It will also strengthen the OECD’s contribution to global development and will provide a sound basis for governments in the region to improve their education and fiscal policies.
Our member countries also called upon us to deepen our policy dialogue with other countries and regions based on our mutual interests, common goals, experiences and expertise. Becoming more inclusive calls for strengthening our regional initiatives in regions like Latin America.
With eight members from the region — Argentina, Brazil, Chile, Colombia, Costa Rica, the Dominican Republic, Mexico and Peru — the OECD Development Centre is a champion of our engagement with Latin America and the Caribbean.
The Centre also publishes the Latin American Economic Outlook, already in its 5th edition. We are happy to report that next year’s Economic Outlook will focus on small and medium enterprises, which will be the main theme of the Iberoamerican Summit to be hosted by the Spanish Government next November, in Cadiz.
Through the Development Centre and other associated efforts, the OECD’s engagement with Latin America and the Caribbean is growing fast! Our work now covers a wide set of key policy areas, from innovation to education, taxation and investment. Our LAC Initiative, strongly supported by Spain, Mexico and Chile, further emphasises our dedication to the region, with targeted efforts to support four main pillars: fiscal policy, investment, public governance and innovation.
Ladies and gentlemen,
Let me conclude by paying homage to Carlos Fuentes – the great Mexican writer who passed away last week. In these challenging times, I find his words very appropriate, when he talked about "un eterno salto mortal hacia mañana".
Yes, we are constantly catapulting ourselves into the future, and I believe that Latin America has a bright future ahead. But we are lucky to have some safety net underneath, the one that many countries in the region have built over the years through sound policies.
Let’s keep the work and do not hesitate to count on the OECD’s support to promote better policies for better lives in the region.