Latin America’s Priorities for the Next Decade

  • Latin America has made significant social gains in the past 15 years
  • Given weak global conditions, region needs to develop new opportunities for social development
  • Key priorities include participation in formal labor markets, increasing productivity
  • The “Growth and Inclusion in Latin America: The Next Decade” seminar explored the region’s social transformation and strategies for inclusive growth in the next decade. The October 8 seminar was held as part of the 2015 IMF-World Bank Annual Meetings in Lima, Peru.

    Helped by strong growth, social transformation in Latin America over the past decade and a half has been impressive. The region sharply reduced its poverty rate, cut extreme poverty in half, and income inequality also fell. Going forward, the challenge is preserving and increasing gains in a more difficult environment for growth, especially for commodity exporting countries.

    Mitsuhiro Furusawa, a Deputy Managing Director at the International Monetary Fund, mentioned three key factors behind these impressive social gains in Latin America—robust economic growth that enabled the creation of jobs, macroeconomic stability (low inflation and sustainable fiscal policies), and well-designed and innovative targeted social programs.

    Panelists agreed, noting that social assistance programs in particular have contributed to the impressive social progress of the region. They pointed out that Latin America has become a global leader in the use of conditional cash transfers. Brazil and Mexico have two of the largest schemes, with transfers contingent on requirements such as school attendance or vaccination records.

    “Peru’s social programs seek to build capacity,” added Alonso Segura, Minister of Economy and Finance of Peru. Peru’s very successful Juntos program, launched in 2005, has human capital development as its key goal.

    Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean, explained that conditional transfer programs in Latin America cost, on average, about 0.4 percent of GDP. “It’s not that expensive to support 124 million people.”

    But panelists stressed that over the next decade—marked in particular by less favorable global conditions and the end of the commodities boom—Latin America will need to develop new opportunities for social development.

    Lifting all people

    Panelists noted that labor market policies and programs should be targeted to disadvantaged groups, such as rural populations and...

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