It may seem hard to believe today, but Brazil and Mexico were once the envy of the world. Their economies grew more than 6 percent a year between 1951 and 1980, almost as fast as postwar paragons of growth. South Korea Y Japan. Since the debt crisis of the 1980s, Latin America has fallen far behind. In recent years it has sunk to the bottom of the emerging market class, underperforming the Middle East or sub-Saharan Africa.
The inability to Latin America to grow it generates many regrets and many theories. Low productivity, poor infrastructure, corruption and political instability are recurring themes. Left-wing governments in the early 2000s are criticized for not investing enough of the wealth from the commodity boom in building competitive infrastructure or providing high-quality education and health care. The right is criticized for doing too little to combat entrenched inequality, promote effective competition, or make taxation fairer.
The coronavirus cruelly exposed the limitations of Latin America; the combined health and economic impact of the pandemic was the worst in the world. Now change is in the air. In a series of important elections, voters in the region have turned their backs on those in power and elected radical newcomers. Peru Y Chile leaned to the left, while Ecuador, Uruguay Y Argentina they did it to the right. Brazil Y Colombia vote this year.
Fortunately, the great natural resources of Latin America opportunities abound. The region is rich in two key metals for electrification: copper and lithium. With some of the sunniest and windiest areas in the world, it can generate gigawatts of electricity very cheaply to produce and export green hydrogen.
The region is in the midst of a tech boom so big that in the first half of last year it attracted more private capital than Southeast Asia. The world’s largest independent digital bank, Nubank, is Brazilian. the tiny country of Uruguay is one of the leading exporters of software.
The US push to move production closer to its shores may give a boost to manufacturing in Mexico Y Central America. Brazil has fostered the development of globally competitive high-tech agriculture.
To make the most of these opportunities, Latin America it needs to adopt pragmatic solutions that leave ideological debate behind. This must start with the axiom that you must first create wealth in order to share it. A flourishing private sector, a fully functioning state, quality public services, the rule of law and foreign investment are essential ingredients.
Tax revenue in some countries is too low, but raising it will only help if the revenue translates into healthier, better-educated, more productive citizens and competitive economies. Too often in Latin America, increased public spending has translated into increased payrolls and corruption, rather than improving outcomes.
The citizens of all Latin America They are getting more agitated. Tolerance towards governments of any tendency that do not meet their objectives is minimal. His faith in the elected presidents is tested.
During the last phase of growth, Mexico It was a one-party state Brazilmostly a military dictatorship. If the region is to avoid slipping back into populist authoritarianism, its new leaders must urgently demonstrate that democracy can deliver strong, sustainable growth and shared prosperity. This means abandoning dogma and seeking consensus around long-term policies to build effective states, strengthen the rule of law, and create globally competitive economies. The time is finishing.
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