Presentation on theme: "Alicia Bárcena Executive Secretary Economic Commission for Latin America and the Caribbean Dialogue with the Second Committee New York, 3 November 2010."— Presentation transcript:
Alicia Bárcena Executive Secretary Economic Commission for Latin America and the Caribbean Dialogue with the Second Committee New York, 3 November 2010
The policies pursued since the 1980s did not produce the rapid, sustained economic growth that was expected… LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH COMPARED WITH TOTAL GDP OF DEVELOPING COUNTRIES AND THE WORLD (Annual rates of variation) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures and World Bank, World Development Indicators [online database].
LATIN AMERICA (SELECTED COUNTRIES) AND THE UNITED STATES: PRODUCTIVITY AND BREAKDOWN OF INDUSTRIAL VALUE ADDED (Percentages of industrial GDP and 1985 dollars) Source: Economic Commission for Latin America and the Caribbean (ECLAC), Industrial Performance Analysis Program (PADI), on the basis of official figures. … Nor they worked towards closing the productivity gaps prevailing in the countries of the region, both domestically and with the United States
In terms of poverty, the lost decade of the 1980s was followed by a difficult 1990s and a new century with notable achievements LATIN AMERICA: POVERTY RATES, (Percentages) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.
The excellent external conditions prevailing in the period strongly contributed to the historical achievement of growing with external-account surpluses and improved public finances LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP GROWTH RATE, CURRENT ACCOUNT BALANCE AND OVERALL FISCAL BALANCE (In annual growth rates and percentages of GDP) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.
Main features and achievements in Three simultaneous macroeconomic developments: –Sound fiscal policies and a better public debt profile –More flexible exchange rates and unprecedentedly high international reserves (+150% between 2003 and 2008) –A regional current-account surplus with economic growth Ready access to external financing Increase in trade (I + X) (value: 138%/volume: 49%) Terms of trade improved by 25% in the region Per capita GDP grew by more than 3% per year for five consecutive years Unemployment diminished from 11% to 7.3% with job quality Poverty rates fell by 11 percentage points (from 44% to 33%)
Nevertheless, the boom in commodity prices has led to the reprimarization of the regions export structure LATIN AMERICA AND THE CARIBBEAN: STRUCTURE OF WORLDWIDE EXPORTS SINCE THE EARLY 1980s (Percentages of the regional total) Source: Economic Commission for Latin America and the Caribbean (ELCAC), on the basis of United Nations COMTRADE database.
LATIN AMERICA (18 COUNTRIES): GINI INDEX, AROUND 1990, 2002 AND 2008 a Economic growth and improvements in income distribution were powerful allies in combating poverty… Countries in which inequality increased Countries in which inequality decreased Countries in which inequality increased Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries a Urban areas.
Number of persons of inactive age per 100 persons of active age: (0-14) + (60 +) / (15-59) Sharp fall: Easy yield from the demographic dividend ( /2015) Stabilization at low levels: The dividend persists, but its activation depends on other factors (2010/ ) Beginning of the end of the demographic dividend: The dependency rate begins to rise … so, too, was the sharp fall in the demographic dependency rate at the regional level
For the first time in the history of the region there were improvements in equality Besides growth, the decrease in poverty rates in the region was also stimulated by improvements in income distribution It is the first time in the history of the region that there are improvements in equality indicators The Gini Index improved between 3% and 10% in 10 out of 20 countries Income in poor households improved 20% (equalize to grow)
The backslide in poverty indicators in 2009 did not wipe out the substantial gains of the past six years, but it did slow the rate of reduction LATIN AMERICA AND THE CARIBBEAN: POVERTY AND EXTREME POVERTY, 1980 – 2009 a (Percentages and millions of persons) PercentagesMillions of persons Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries. a Estimate for 18 countries of the region plus Haiti, The figures shown above the bars represent the percentage and total number of poor (indigent plus non-indigent poor) IndigentNon-indigent poor IndigentNon-indigent poor
The speed of recovery in this crisis was faster compared with other crises LATIN AMERICA: GROSS DOMESTIC PRODUCT IN CONSTANT US DOLLARS FROM 2000 (Rates of change, with seasonal adjustments) The previous exceptional period of prosperity created a larger space for the implementation of public policies, with the exception of the Caribbean –Monetary and financial policy –Fiscal policy –Trade policy –Labour policy Trade is increasing Terms of trade are improving Tourism is recovering and Remittances begin to increase again The region returned to the international financial markets Private sector expenditure is recovering Private consumption is pushed up by increased employment Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information.
Latin America and the Caribbean will grow above 5.6% in 2010 LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH, 2010 a (Percentages) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official information. a Forecasts.
Why time for equality? The crisis has produced questions about the dominant model, creating a turning point and thus an opportunity to chart a new course That model had been associated with two decades of high wealth concentration The challenge at this juncture is to achieve greater equality For the region, this means facing up to its historical and more recent liabilities: –Worst income distribution in the world –Increasingly heterogeneous production patterns –Segmentation of the labour market and social protection –Racial, ethnic and gender discrimination –Asymmetrical vulnerability to climate change
Social equality and economic growth are not mutually exclusive Growth needs equality; equality needs growth With macroeconomic conditions that mitigate volatility, stimulate productivity and favour inclusion With production patterns that close internal and external gaps Promoting equality by building human skills and actively redressing disparities Universalizing rights and social benefits Fostering inclusion through the labour market Achieving territorial convergence With a smarter and stronger State in order to be able to redistribute, regulate and supervise
A development agenda based on six pillars Macroeconomic policy for inclusive development to mitigate volatility, stimulate productivity and favour inclusion Overcoming structural heterogeneity and productivity gaps through more innovation, dissemination of knowledge and support for small- and medium-sized enterprises (SMEs) Overcoming territorial disparities affecting productive, institutional and social development capacities and hindering national production linkages Creating more and better employment to improve equality of opportunities and social inclusion Closing social gaps through a steady increase in social spending and stronger social institutions Building consensus around social and fiscal covenants and a new role for the State
A development agenda based on six pillars Macroeconomic policy for inclusive development: It is necessary not only to achieve greater economic dynamism, but also higher levels of social inclusion and equality, less exposure to the impact of external volatility, more productive investment and generate more quality jobs. The region can grow more and better Production structure: It is crucial to transform the production structure to overcome the structural heterogeneity that the countries in the region face domestically and externally through three areas of policy: Industrial, with an emphasis on innovation Technological, focusing on the creation and dissemination of knowledge and Support for small- and medium-sized enterprises (SMEs) Place does matter: Social gaps and productivity also have their spatial expression, hence the urgency of creating policies to address territorial heterogeneity within countries Intergovernmental transfers and territorial cohesion funds are critical in correcting regional disparities
A development agenda based on six pillars Employment and labour institutions – the key to equality of opportunities and social inclusion: Employment is the master key to solve inequality and close the gaps occurring in income, access to social security and job stability, as well as discrimination against women, ethnic minorities and youth Promotion of a labor pact that will generate economic dynamism and protect the worker Closing social gaps : The State has a crucial role in correcting inequality, implying a steady increase in social spending and progress towards stronger social institutions and income transfer systems to improve distribution to the most vulnerable The State, political action, fiscal policy and social covenants – an equation in the making: it is necessary to provide the State with greater ability to redistribute resources and promote equality is recognized A welfare State moving towards a tax structure and a transfer system emphasizing social solidarity A new equation State-market-society, we should be able to achieve development with quality jobs, social cohesion and environmental sustainability
The fiscal covenant: a sine qua non Never before had the region so many democratically elected governments and for such a long period of time Democracy is ultimately the reflection of the decisions of the citizens in terms of which public goods should be provided to the population, in which manner and magnitude A fiscal covenant is essential in order to enhance the States capacity to redistribute resources and play a more active role in promoting equality and production convergence: –There is significant scope for promoting and strengthening the redistributive role of the State, as regards both –Social expenditure and –The collection of revenue to finance it (tax structure)
There are three specific problems: Tax systems deliver low levels of revenue and are badly designed A regressive tax structure A low tax burden in most countries High levels of evasion Widespread exemptions Social spending with little redistributive impact A weak non-contributory pillar In terms of production: minimum support provided to SMEs and segmented access to financing Insufficient investment for development In infrastructure In research, science and innovation In development banking institutions: inclusive financing In cleaner matrices from the environmental perspective
Latin America has a more regressive tax structure and a higher proportion of indirect taxes than other regions of the world LATIN AMERICA AND THE CARIBBEAN: COMPARATIVE FISCAL STRUCTURE (Percentages of GDP) Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official OECD figures.
A fiscal covenant means that the different public and private stakeholders must come together to define priorities and instruments A clear-cut path for the State to: –Gradually increase the tax burden, with a view to creating tax systems providing appropriate incentives for productive investment –Reform the tax structure by previously agreed stages, primarily by raising income tax –Improve tax collection by reducing and progressively controlling tax evasion, and gradually eliminating exemptions from direct taxes with a view to achieving greater equity and efficiency A shared platform which correlates changes in the tax burden and structure with the allocation of the generated fiscal space among public policies A clear, agreed public agenda for enhancing the transparency, efficiency and effectiveness of public spending and institutions A roadmap for gradually reprogramming social spending in which intra- and intersectoral restructuring demonstrably produces a stronger redistributive impact, greater social cohesion and more widespread externalities in terms of equity and productivity
New equation: State-market-society The public sphere as a forum for collective interests and not simply for State or national matters Political agreements for a new social and intergenerational covenant, with specific responsibilities and accountability systems Consolidation of a culture of collective development based on tolerance of difference and diversity Strategic internally defined long-term vision that promotes covenants between the stakeholders in production Policies of State not only of the current government or administrationchannelled through democratic institutions