Over the course of the last decade, Latin America has achieved economic expansion and made significant progress in poverty reduction. Between 2003 and 2012, the region grew at an average annual rate of 4% thanks to the rapid rise of global trade and increasing commodity prices, and this despite the contraction brought about by the international financial crisis.
Today, world events such as the euro area’s weak performance, the slowdown in China’s economy and uncertainty over US monetary policy have caught up with Latin America and have resulted in declining trade, falling commodity prices and increasing unease about external financing.
And many structural challenges remain. Take commodities. They make up 60% of the region’s exports. While the value of these goods rose over the past decade, half this increase was accounted for by rising prices and not, as in the 1990s, by rising volumes. Moreover, income from rising commodity exports has allowed Latin American countries economies to substitute locally-made goods with imports, contributing to a slowdown in regional manufacturing. This also has stifled innovation and growth in value-added production in Latin America, which still relies heavily on exports of raw materials rather than more sophisticated finished goods.
The growing so-called “middle class” also brings a number of challenges as evidenced by the social unrest that gripped Brazil earlier this year. And despite recent gains, Latin America still contains some of the least equitable countries in the world. Government policy must therefore meet a rising demand for public services and promote growth that improves the market distribution of income over the long run. Consolidating the economic position of this part of the population will also mean creating more and better jobs and improving productivity. There is also much to be done in areas such as education, tax policy, investment in innovation and logistics.
For many countries, the willingness to play a leading and integrated role in the world economy is there. Chile joined the OECD in 2010, relieving Mexico of its status as the Organisation’s sole Latin American member, and earlier this year Colombia opened membership talks. Just this month, Costa Rica adhered to OECD legal instruments on Internet governance and international business conduct, demonstrating its willingness to also join the Organisation.
The OECD is committed to build on our proven expertise of promoting better policies for better lives throughout the world. Secretary-General Ángel Gurría is currently in the region (Costa Rica, Panama, Brazil, Chile and Colombia) to launch several country economic surveys and to engage with government representatives – proof positive that both developed and developing countries will increasingly walk together in this century.