G30: LATIN AMERICA CAN BUILD SUPPLY CHAINS THAT ARE NOT POLITICALLY CONFLICTIVE
However, although the opportunities are obvious, they are not being fully exploited.
Latin America is at the crossroads of financing climate change policies and rebuilding supply chains, which opens the way to potential benefits that could be realized if correct policies are implemented, says a recent G30 report on the causes of underdevelopment in the region. Andrés Velasco, project director of the G30 Working Group on Latin America, said that “the opportunities are obvious” for the region and that “The West needs countries with which it can build supply chains that are not politically conflictive and Latin America – or at least a large part of it – has a historical closeness to the West,” he stated.
According to him, Latin America can provide the world with water, food and clean energy and therefore, “the opportunities are there. The question is: are we going to take advantage of them? The evidence so far is that we are not doing everything necessary to do so. “he highlighted. In this regard, the report gives a series of recommendations, including putting the region’s macroeconomic framework in shape, investing better in infrastructure and strengthening political parties.
The report takes individually, due to their great magnitude, the economies of Mexico and Brazil. The first of these, he notes, is trapped in a “growth paradox” where decades of macroeconomic stability and a sophisticated manufacturing sector have not produced economic growth. While in Brazil “political challenges, including inequality, populism and polarization, hinder the necessary fiscal adjustments.
“On the other hand, Argentina, Ecuador and Venezuela have macroeconomic instability and have suffered from hyperinflation and debt sustainability problems. “Little or no sustained growth can be expected until all three address fiscal, debt and, in some cases, , inflation,” indicates the report, which also highlights that even in a context of macroeconomic stability, Chile, Colombia, Peru and Uruguay have experienced a decline in growth, which is why it recommends further diversifying these economies “and developing new sectors with high growth potential.”
The report states that the region suffers from a “governance deficit” that will require “deep and ambitious” political reforms. “Latin America may be trapped in an unhealthy balance, where a lack of trust hinders the performance of government institutions, and poor performance in turn explains low trust,” he details.
The way out, the study highlights, is through the strengthening of political parties and “skillful political entrepreneurs” who could gather enough support to update electoral rules “to ensure that governments can secure the majorities necessary to govern.”