Published On: Sun, May 10th, 2015

World Economic Forum on Latin America closes with calls for more reforms to end inequality

Impression of the making of the Annual Meeting 2011 of the World Economic Forum in DavosWith global economic conditions more challenging, Latin America needs to pursue reforms and policies to improve productivity, address persistent inequality and promote inclusion. This was the verdict of business and civil society leaders speaking in the closing session of the 10th World Economic Forum on Latin America, which closed today.

“We face a renewed growth challenge now that the commodities boom is over, the period of low interest rates is beginning to end, and it is not fashionable to invest in emerging markets,” Andrés Velasco, Professor of International Practice in International Development at the Columbia Global Centers Latin America in Chile, told participants. “The question is how do we grow, how do we reignite productivity? That is the big economic challenge. In spite of a decade or so of economic growth, Latin America remains a painfully unequal continent.”

“The future of Latin America depends on pushing forward its reform agenda,” Philipp Rösler, Member of the Managing Board of the World Economic Forum, remarked. The goals of this agenda should be strong institutions, sound economic strategy and a well-engaged middle class, he said.

In the session, Co-Chairs of the meeting outlined priorities for the region, including increasing the participation of women in the economy, making institutions work better and more efficiently through stronger and trustworthy leadership, and introducing measures to make societies more equitable.

If the participation of women in the workplace equalled that of men, the GDP of the region would increase by up to 17%, Angelica Fuentes, President of the Angelica Fuentes Foundation in Mexico, said. “This is great for the economic and social growth of the region. It is good for men and women alike. But we need the public policies in place to reduce the barriers for this to happen. Equal pay for equal work must be a rule that is set in place.”

Public and private “institutions are losing their shine, the quality that they should have”, warned Eduardo Leite, Chairman of the Executive Committee of Baker & McKenzie in the USA. “But this should be looked at from the angle of leadership. The global financial crisis and social media have increased scrutiny of leadership. Good policies depend on having the right leaders. It is about leadership and talent as opposed to the institutions. It is about ethics and the way we govern ourselves.”

Carlos Slim Domit, Chairman of América Movil in Mexico, agreed. The world is entering a new era where technology is generating enormous opportunities. Latin America must be part of this transformation, he reckoned. “How can we make this transition faster, better and more inclusive? It requires a lot of investment.” A key tool is public-private partnership, Slim Domit argued. “Public-private partnerships should be strong and address not just economic issues but also social issues. We need to collaborate on more problems beyond economic ones.”

Joseph E. Stiglitz, Professor in the School of International and Public Affairs (SIPA) at Columbia University in the USA, focused on inequality, which is not just a problem in Latin America but also around the world. “All of our societies have been marked by a lot of discrimination. Some of the inequality is because we are discriminating with lower wages not just because of gender but also because of ethnic and racial discrimination. [By addressing this], we can get stronger economic growth and a more equal society.”

Stiglitz advocated raising the minimum wage to increase productivity. “Even if countries reform, growth may be slower now that commodity prices aren’t as high. In this [economic] slowdown, with the prices of commodities down, if you have contractionary policies, this will lower growth and increase inequality. We have seen that vividly in Europe. We can do better if we have more equality policies.” He cited Mexico’s competition policy as an example.

More than 750 business, government and civil society leaders participated in the meeting, which had as its theme “Advancing through a Renovation Agenda”. Next year’s World Economic Forum on Latin America will be held in Colombia.