ECLAC Invites Countries to Rethink, Reimagine and Transform Latin America and the Caribbean’s Development Models

Latin America and the Caribbean needs to undertake profound transformations to overcome the development crisis in which it is immersed and which is occurring in an uncertain international context, posing challenges as well as opportunities for the region. To that end, ECLAC has identified 11 vital transformations and offers guidelines on how to manage them. This is an invitation to countries to converse not only about what to do but also how to manage the necessary transformations that would make a real difference in shifting development towards greater growth, productivity, inclusivity and sustainability.

This is the proposal that the Economic Commission for Latin America and the Caribbean (ECLAC) will present to its 46 Member States and 14 associate members during its Fortieth Session, the United Nations regional commission’s most important biennial meeting, which will take place on October 9-11 in Lima, Peru.

At this event – which will bring together senior authorities from the region along with researchers, academics, civil society representatives and international officials – ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, will unveil an institutional document entitled Development Traps in Latin America and the Caribbean: Vital Transformations and How to Manage Them. In its seven chapters, this document analyzes the three development traps in which ECLAC sees the region mired: one involving low capacity for growth; another of high inequality, low social mobility and weak social cohesion; and a third trap of low institutional capacities and ineffective governance.

In this proposal, ECLAC addresses the following questions: i) what must Latin America and the Caribbean do to move towards more productive, inclusive and sustainable development?; and ii) how can it manage the actions needed to achieve this? ECLAC puts emphasis on the importance of moving from “what” to do, to “how” to do it. In other words, it offers recommendations that go beyond lists of goals and aspirations, systematically addressing the challenges of governance, institutional quality and social dialogue for implementing successful policies and transformations.

Regarding “what to do,” the report suggests 11 great transformations that are deemed vital for moving towards more productive, inclusive and sustainable development: 1) Rapid, sustained, sustainable and inclusive growth, with emphasis on productive development, productivity and employment; 2) Reduced inequality and increased mobility and social cohesion; 3) Expansion of social protection and the welfare State; 4) Effective education for all and wide access to vocational training; 5) Progress towards gender equality and the care society; 6) Environmental big push to promote sustainability and address climate change; 7) Digital transformation; 8) Safe, orderly and regular migration; 9) Progress towards greater regional and global economic integration; 10) Sound and strong taxation; and 11) Strengthened capacities of the State: institutions, governance and social dialogue.

In this document, ECLAC has selected four of these transformations for in-depth analysis: (i) the great productive transformation for achieving higher, sustained, inclusive and sustainable growth; (ii) the great transformation to reduce inequality and foster inclusion and social mobility; (iii) the great transformation to boost sustainability and combat climate change; and (iv) the great transformation in terms of financing for development. The document answers questions about these transformations and offers analysis, guidance and instructions on how to manage them.

“The task of building a new regional consensus on how to approach development challenges and how to overcome them may be an ambitious objective, but it is without a doubt a necessary and desirable one. Moving towards a more productive, inclusive and sustainable future requires long-term vision and strategies, the real participation of all stakeholders and a competent State and institutions with the capacity to guide, mobilize and provide quality services,” José Manuel Salazar-Xirinachs, ECLAC’s Executive Secretary, states in the document’s foreword.

To achieve the great productive transformation and escape the trap of low capacity for growth, countries need productive development policies centered on productive transformation and diversification and on increasing productivity, under a new vision that emphasizes the central role of governance and public-private collaboration, the document indicates.

For the great transformation to reduce high inequality and increase social mobility and cohesion, integrated and coordinated policies are needed that would simultaneously address the various causes of this trap, which are identified in the document.

In addition, the region needs to foster sustainability and address climate change, which can be achieved through a new and broader productive development policy approach that prioritizes dynamic sectors to give a big push to environmental sustainability in Latin America and the Caribbean. The sectors analyzed include the energy transition; electromobility; critical minerals’ responsible management, supply chains and productive development; efficient, accountable and sustainable water management; the promotion of sustainable tourism; the fostering of the bioeconomy; and the promotion of the circular economy.

The analysis that ECLAC presents regarding how to carry out these proposed great transformations includes a strategy for mobilizing the financing needed, in terms of mobilizing domestic resources by strengthening public finances and mobilizing resources from the private sector, Foreign Direct Investment and development banks, as well as macroprudential policies. And on the external front, it includes support for reforming the international financial architecture.

In all these areas, Latin America and the Caribbean has considerable leeway for action, which depends on countries’ respective public policy decisions and resource allocation. ECLAC calls on the region to not wait for global transformations to be completed before tending to its needs and satisfying its population’s legitimate aspirations. Latin America and the Caribbean must act, undertaking decisive, integrated and coordinated actions that would enable it to overcome development traps. We trust that this document will serve as a guide for managing the transformations needed to achieve this.

“A country’s development is a complex process that happens over the long term and is not automatic owing to market forces, which nevertheless can play a major role with appropriate forms of governance and regulation. If we are to overcome traps and close gaps, if we are to realize the often-delayed dream of more productive, inclusive and sustainable development and prevent Latin America and the Caribbean from living through more lost decades, the time to act and work together is now,” José Manuel Salazar-Xirinachs affirms.

Finally, ECLAC reiterates that it puts its knowledge and capacities at the disposal of the region’s countries to support national and regional processes that would allow for managing the transformations needed to escape development traps, through analysis and recommendations on the challenges and opportunities that the region has to move towards more productive, inclusive and sustainable development, with technical evidence for public policy formulation and monitoring, and the forging of spaces for technical collaboration to strengthen the technical, operational, political and prospective capabilities (TOPP capabilities) of its institutions by, for example, creating innovative technical tools; offering courses, workshops and seminars; developing methodologies for public planning and intervention; disseminating international best practices; and supporting collaborative processes.