Latin America

Why we need radical democratic innovation post-COVID

Development Matters Covid-19, Latin America and the Caribbean, New social contract , ,

By Silvia Cervellini, Founder and Co-ordinator of coletivo Delibera Brasil

Although we have talked about inequality and sustainability in Brazil for a long time (we held the Rio de Janeiro Earth Summit in 1992 and the first World Social Forum in 2001 in Porto Alegre), the COVID-19 pandemic struck us in the middle of a “quasi” economic crisis, a declining Gini Index and increasing evidence of biomass destruction in Brazil’s Pantanal, Mata Atlântica and Amazonia forests.1

We have seen some consensual and immediate solutions to the different crises Brazil faces, e.g. quarantine and extra resources allocated to public health to fight the sanitary crisis; temporary financial support and food for the most vulnerable to tackle the hunger crisis; and firefighting to extinguish fires in the jungle. None of these measures, however, address the root causes of these problems, nor can they be sustained as permanent policies.

Continue reading →

The dramatic Latin American crisis

Development Matters Covid-19, Latin America and the Caribbean ,

By José Antonio Ocampo, Professor at Columbia University, and former UN Under-Secretary-General for Economic and Social Affairs and Finance Minister of Colombia

As we ring in the new year, the region needs a new development consensus, committed to reducing inequality, implementing stronger counter-cyclical macroeconomic policies, and spurring production and export diversification – including a major digital transformation. The consensus should accelerate a de-politicised regional integration, push the international environmental agenda forward and renew the region’s commitment to democracy.

The year 2020 closed with the worst economic crisis in Latin American history. The Economic Commission for Latin America and the Caribbean (ECLAC) has estimated that the region’s GDP fell by 7.7%. According to the International Monetary Fund (IMF), this is one of the worst crises in the world, similar to that of Western Europe and only surpassed by the one India has experienced. The projections of all international organisations and private analysts also indicate that the region’s economy will only partially recover in 2021. As economic growth during the quinquenium prior to the current crisis was close to zero, Latin America is immersed in a new lost decade, 2015-2024, which may be worse than that of the 1980s. In addition, the COVID-19 crisis deepens a long period of slow economic growth: 2.7% per year in 1990-2019 vs. 5.5% in 1950-1980. This is the poorest performance of any developing region in the world over the past three decades.

Continue reading →

Fiscal policy in the time of COVID-19: a new social pact for Latin America

Development Matters Covid-19, Latin America and the Caribbean, New social contract , , , ,

By Pablo Ferreri, Public Accountant and former Vice Minister of Economy and Finance of Uruguay

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

We could say that ultimately the role of government remains unchanged overtime: to achieve ever higher levels of development with the understanding that true development means achieving sustained economic growth while generating greater equity and social cohesion. This must be done through more and better exercise of civil rights and in an environmentally sustainable manner. But in achieving this ultimate goal, challenges change according to realities that governments must face.

Challenges that Latin America faced fifteen years ago, when it enjoyed high levels of growth and a commodity boom in an increasingly open world, are quite different to those that have been brought about by economic slowdown, lower international prices and new isolationist tendencies.

Continue reading →

Prospects for Chinese and Mexican South-South co-operation post-COVID-19

Development Matters Asia, Covid-19, Latin America and the Caribbean , , , , ,

By Denghua Zhang, former diplomat and Research Fellow at the Australian National University and Carlos Cortés Zea, Coordinator of the AMEXCID-UNDP Co-operation Programme

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

The COVID-19 crisis is having profound impacts on the international political and economic order. It also provides an opportunity for stakeholders to reflect on past practices in each sector and learn from lessons to improve policies in the future. In this case, we examine the purposes, approaches and capacities of emerging providers (or Southern providers as some may call them) through the lens of China and Mexico—two major players in south-south co-operation (SSC).

Emerging providers, similar to traditional donors, provide aid to serve their own national interest. Motivations underpinning emerging providers’ efforts can vary significantly. The Chinese foreign aid programme is driven by a combination of factors including diplomatic competition with Taiwan, access to natural resources in recipient countries, image building as a responsible global power, and generating geopolitical support when its relationship with developed countries is strained. For example, China is currently taking a whole-of-government approach to conduct its COVID-19 diplomacy; an effort to improve its global image and garner support from developing countries in the face of growing pressure from developed countries over China’s handling of the crisis.  

Continue reading →

Adapting to the new normal: the economic impact of COVID-19 in Central America

Development Matters Covid-19, Latin America and the Caribbean, Social Protection , , , ,

By Miguel Angel Medina Fonseca, Economist at Chief Economist Office, Central American Bank for Economic Integration

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

Eve Orea-shutterstock_1716207883
Photo: Eve Orea / Shutterstock

The COVID-19 pandemic is causing one of the largest economic recessions in the world’s history. In Central America, the Central American Bank for Economic Integration foresees a worst case scenario where the region’s GDP will contract by 4.9%, and public debt will increase by at least 7.6 percentage points of GDP.

The COVID-19 pandemic has prompted most governments around the globe to take preventive containment and mitigation measures, often implemented under state of emergency or similar clauses. In Central America, most policies have focused on saving people’s lives and reducing the socio-economic impact of the pandemic. Some measures stand out:
Continue reading →

América Latina y el Caribe en tiempos del COVID-19: no descuidar a los más vulnerables

Development Matters Covid-19, Latin America and the Caribbean, Policy, Social Protection , , , ,

Por Federico Bonaglia, Director Adjunto, Centro de Desarrollo de la OCDE, y Sebastián Nieto Parra, Jefe de la Unidad de América Latina y el Caribe, Centro de Desarrollo de la OCDE

Este artículo es parte de una serie sobre cómo abordar COVID-19 en los países en desarrollo. Visite la página específica de la OCDE para acceder a los datos, análisis y recomendaciones de la OCDE sobre los impactos sanitarios, económicos, financieros y sociales del COVID-19 en todo el mundo.

Photo by Manuel on UnsplashRead this blog in English

Las medidas de contención necesarias contra el COVID-19 han generado una crisis económica mundial sin precedentes, combinando choques por el lado de la oferta y de la demanda. Ahora, la pandemia está afectando a América Latina y el Caribe y los países se están preparando para el efecto multiplicador que tendrá en la región. Tan solo unos meses antes, a finales de 2019, muchos países de la región tuvieron una ola de protestas masivas impulsadas por un profundo descontento social, aspiraciones frustradas, vulnerabilidad persistente y creciente pobreza. Esta crisis exacerbará estos problemas.

Más allá de la magnitud del impacto en los sistemas de salud que ya son débiles (unos 125 millones de personas aún carecen de acceso a los servicios básicos de salud), el abrumador impacto socioeconómico de la crisis podría recaer desproporcionadamente en los hogares vulnerables y pobres si no se implementan respuestas ambiciosas de política. Continue reading →

Trading to avoid falling behind in the COVID-19 crisis: Lessons from Central America to boost prosperity

Development Matters Covid-19, Latin America and the Caribbean, Trade , , ,

 By Rodrigo Méndez Maddaleno, Economist at Chief Economist Office, Central American Bank for Economic Integration (CABEI)

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

Trade-Central-America-shutterstock_1714688524
Panama City, Panama – container vessel leaving the Panama Canal. Photo: Shutterstock

If what and where you export matters, Central American countries need to upgrade the quality of their exports, produce new ones and dive into new markets.

Central American countries are open to international trade. Trade in the region represents 67% of GDP, more than the world’s average of 51%. Average tariff rates for the region have also shown a consistent decline since 2005 going from 7% to 5%. However, the region’s economic performance has not reflected this, with an average GDP per capita growth of around 2.5% in the 2000s, which means that income doubles approximately every 30 years. So why has there not been an economic take-off? What is missing in the region when it comes to trade and economic policy in general? These questions are even more relevant today, as COVID-19 and the global crisis are affecting the region and its major trading partners.

To address this, it is important to analyse several aspects of Central American trade, such as export composition, main destination markets, and discuss what the region can do to improve its situation and boost economic growth and prosperity. Continue reading →

COVID-19 in Latin America: Promoting entrepreneurship and reducing social vulnerabilities

Development Matters Covid-19, Employment, Human Development, Latin America and the Caribbean, New social contract, Social Protection , , , , , , , , ,

By Jorge Arbache, Private Sector Vice-President, Development Bank of Latin America (CAF)

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

quito-ecuador-informal-worker-shutterstock
Vendor in Quito, Ecuador. Photo: teranbryan_ecu/Shutterstock

Statistics show that economic growth in Latin America is highly volatile, with periods of acceleration and collapse. This dynamic hides perverse implications. The combination of low growth persistence with high-growth volatility is associated with greater risk aversion, which in turn encourages financial speculation and firms to invest in lower risk, but also lower social return projects. Additionally, poverty and other social indicators are also very sensitive to the harmful combination of short growth spells and high volatility. Continue reading →

Is COVID-19 widening educational gaps in Latin America? Three lessons for urgent policy action

Development Matters Covid-19, Education, Human Development, Latin America and the Caribbean, Policy , , , , , , ,

By Nathalie Basto-Aguirre, Paula Cerutti and Sebastián Nieto-Parra, OECD Development Centre

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_552392722
Classroom in Jaqueira Village, city of Porto Seguro, Brazil. Photo: Joa Souza/Shutterstock

COVID-19, like most crises, is exacerbating inequalities in the region. To contain the pandemic, most Latin American countries have closed their schools, affecting the learning of 154 million students. However, not all students are affected equally. While distance education can contribute to alleviate the immediate impacts of school closures, it requires a number of conditions to deliver meaningful results. Students from poorer socio-economic backgrounds tend to suffer the most and risk bearing lasting consequences in terms of learning outcomes and, ultimately, opportunities. In particular, three interconnected dimensions stand out. Continue reading →

Haitian Families and Loss of Remittances During the COVID-19 Pandemic

Development Matters Country systems, Covid-19, Latin America and the Caribbean , , , , , ,

By Toni Cela, Senior Research Associate of the Migration for Development and Equality (MIDEQ) hub & Co-ordinator of the Interuniversity Institute for Research and Development (INURED), and Louis Herns Marcelin, Co-Director of the MIDEQ project; Professor at the University of Miami; & Chancellor of INURED

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

shutterstock_1125196052
Port-au-Prince, Haiti. Photo: Rafal Cichawa/Shutterstock

Migration has always featured prominently in Haiti’s history. At times forced, as in the case of sociopolitical repression and the aftermath of disasters, induced to fulfil labour and workforce needs in the Caribbean and in other periods voluntary as in the circulatory movement recorded in the Caribbean, South and North America. Over the past decades, migration in Haiti has evolved from a survival strategy for individual migrants and their families to now buttressing the local economy through the transfer of remittances. This reality was made evident during the 2010 earthquake rebuilding effort when the Haitian diaspora identified itself as Haiti’s “single largest donor” citing “the magnitude of its remittances to the Haitian Republic and how those contributions totalling [USD] $2 billion dollars annually allot[ed] for 30% of the GNP .”  In comparison, public revenues, excluding grants, represent 13% of GDP and are projected to fall to 10% in 2020.

Remittance transfers to Haiti have continued to grow over the past decade, the lion’s share of funds originating in countries throughout the Americas, particularly the United States, where the majority of Haitians have settled. Yet, the global economic crisis brought on by the COVID-19 pandemic poses a serious threat to the global remittance economy. For Haiti, reduction in remittances will further weaken an already feeble economy while negatively impacting the livelihood and health of families and communities. Continue reading →