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July 6, 2010 10:56 pm
While Latin Americans have been fixated on the ups and downs of their football teams in South Africa, financial analysts point to a more impressive set of indicators that should capture the world’s attention.
Economic growth in Latin America and the Caribbean is forecast to average 4.5 per cent this year, twice the estimated US rate and four times faster than the eurozone. Fiscal deficits in Latin America are expected to average 2.3 per cent of gross domestic product in 2010, compared with 6.8 per cent in the euro area and 10.6 per cent in the US. The region’s total public debt is roughly only half the level of Europe and the US.
This economic role-reversal is no accident. Although problems such as drug-trafficking and emigration still dominate and distort public perceptions of Latin America, over the past 20 years the region has undergone a quiet but profound transformation.
Brazil is the most visible example: it has emerged as an industrial and agricultural powerhouse while lifting some 30m of its citizens out of poverty, and is on track to grow more than 7 per cent this year. But Brazil’s progress is echoed, to varying degrees, by most of its neighbours.
The foundations for sustained development – particularly in the area of political stability and fiscal reform – have been laid in much of the region. Having weathered the financial crisis, Latin America now has the opportunity to join Asia in leading a global economic recovery. To do so, however, its governments will have to tackle several long-neglected problems.
One is education. Latin America can take pride in having achieved near-universal primary school enrolment. Illiteracy has been essentially eliminated, and a growing percentage of children complete high school and have a chance to attend university. However, the region still scores near the bottom of international standardised tests. To finish the job, Latin America must revolutionise teacher training, adopt world-class curricula and make school administrators accountable for student performance.
Almost every Latin American and Caribbean country is on track to meet the Millennium Development Goals for improving access to safe drinking water. But millions of people with faucets in their homes only get water for a few hours a day, and some 80 per cent of all sewage is still dumped raw into rivers and lakes. Governments must ensure that 100 per cent of their populations have reliable water 24 hours a day and that all wastewater is properly treated.
Mobile phone penetration is nearly 90 per cent across Latin America and the Caribbean, while internet access is among the highest in the developing world. Many large cities have state-of-the-art Bus Rapid Transit systems that provide safe, efficient mobility to millions of low-income commuters. But crumbling ports, railways and highways hobble exporters with needless costs and delays. Clear incentives and legal safeguards are needed if Latin America is to attract the private capital that could overhaul its infrastructure.
Latin America’s energy system is among the world’s cleanest. More than 65 per cent of the region’s electricity comes from hydroelectric sources, and it is a leading producer of sustainable biofuels. But in recent years severe droughts have left key reservoirs without water, while fossil fuel production is flat or declining in Mexico and Venezuela. The region needs to develop new sources of energy and fully embrace the regional energy integration that would allow natural gas, for example, to flow freely from countries that have it abundantly to those that do not.
Finally, regular and credible elections are one of Latin America’s greatest recent achievements, given its history of military coups. However, violence and organised crime have become so pervasive in some cities that they threaten hard-won political and economic progress. To address this, governments must reform law enforcement and judicial systems. More fundamentally, they need to confront the staggering inequality and lack of economic opportunity that drive so many into lives of crime.
As in marathons or football championships, the final stretch is often the hardest. Yet each of the objectives I have described is within reach. If the region’s leaders rise to the challenge, we stand poised to see the 2010s become the decade of Latin America.
The writer was re-elected president of the Inter-American Development Bank by its 48 member nations on Tuesday
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