How can Latin America benefit from a more sustainable global economy? 5 leaders speak at Davos 2023

Global attention on Latin America has recently been focussing on political shifts and their possible impact on the region’s domestic politics, social and economic policies, and its global role. At the same time, a challenging economic outlook – radically different from the naughties when the commodity boom drove growth in the region- is putting a strain on governments’ capacity to deliver on social, economic and political expectations.

Notwithstanding these difficulties, Latin America has invaluable resources to not only ride waves of economic headwinds but help the world build a more sustainable economy.

Five leaders of the region – Ecuador, Colombia, Costa Rica, the Dominican Republic and Brazil – shared their views on how to deliver a forward-looking common agenda at the World Economic Forum Annual Meeting 2023 in Davos.

They highlighted opportunities in the areas of renewable energy, trade and investment and how they can be further enhanced by resolving structural bottlenecks, improving the climate for investment and boosting regional integration.

“Controlling the pandemic was part of Ecuador’s economic plan”

Guillermo Lasso Mendoza, President of the Republic of Ecuador

Ecuador’s economy rebounded strongly from the pandemic thanks to a well-executed vaccination campaign. Growth reached 4.2% in 2021, although it is expected to moderate in 2022 and 2023 in line with the rest of the region, according to the International Monetary Fund (IMF) and the UN Economic Commission for Latin America and the Caribbean.

President Guillermo Lasso told the Davos Forum, “Controlling the pandemic was part of Ecuador’s economic plan. We managed to vaccinate 52% of the population in the first 100 days of government in order to achieve economic reactivation as quickly as possible.”

“We managed to generate employment, we managed to reduce the number of poor people in Ecuador, and if you ask me where the secret is, I say: we tackled corruption,” he said. “Avoiding squandering generates resources to invest in social issues.”

“We could sell our clean energy potential to help the US change its energy matrix, which is the first element in solving the climate crisis”

Gustavo Francisco Petro Urrego, President of Colombia

President Petro of Colombia put forward a vision for an integrated use of renewable energies with the aim of contributing to shared goals such as taking climate action, preserving the Amazon biome and maximising the potential for energy integration.

“If you look at South America, we have two potentialities with regards to the climate crisis: one, the Amazon forest. This one implies a coalition of governments with territorial responsibility (over the forest) and a constitution of a kind of global fund including our contributions, if we want to revitalise the forest,” President Petro said. “The second great potential we have in South America is our capacity to generate clean energy.

“With the available technologies, we could, if we build an American electricity grid – from Patagonia to Alaska – sell our clean energy potential to help the US change its energy matrix, which is the first element in solving the climate crisis.” He said building such a network “can lead us to a common agenda, not just a technical, political agreement.”

Latin America would benefit from the foreign direct investments required to enable such integration, increase its opportunities to sell green energy via land or sea, and use it to leverage its own re-industrialization process. “We will be able to move from a coal-based energy investment agenda to an agenda based on clean energy production,” said the Colombian President.

“We have a three Ps strategy: people, planet, prosperity”

Rodrigo Chaves Robles, President of Costa Rica

Costa Rica has successfully integrated global value chains based on sustainable parameters in line with consumer markets, President Rodrigo Chaves told the Davos Forum. He also emphasised the country’s successful strategy to attract direct foreign investment, particularly in the areas of medical devices, electronic components, microchips, aerospace, automobile and back-office.

“How have we achieved this? Costa Rica has a brand that is very important in the modern world. Consumers, especially young consumers, are interested not only in the price and quality of what they buy. They are interested in where it is produced and under what working conditions.

“In that sense, Costa Rica has invested in having an energy matrix 100% based on renewable energies for practical purposes. This helps companies meet their sustainable development goals. We have democracy, freedom of expression, gender parity, and respect for all minorities. That makes a good brand.”

In addition, Costa Rica has taken measures to improve the climate for investments, having recently eliminated 164 regulatory bottlenecks, and it is reaping benefits from global and regional trade integration and free-trade agreements with countries such as China, the US, Chile and -soon- Ecuador.

“We have a three Ps strategy: people, planet, prosperity,” President Chaves said. “At a time when the world is seeing foreign direct investment contract, we have a very positive outlook to continue integrating into value chains.”

“Many of the micro, small and medium enterprises are exporting their products”

Raquel Peña, Vice-President of the Dominican Republic

Effective pandemic control and support for small businesses have been at the heart of the Dominican Republic’s economic strategy, which grew by 5% in 2021 and is expected to grow by 5.5% in 2022, Vice President Raquel Peña told the Davos Forum.

President Luis Abinader’s response targeted micro, small and medium-sized enterprises (MSMEs) which account for 98% of all Dominican businesses, with measures to strengthen existing business and supporting the creation of new ones. On average in Latin America, 70% of the productive base are SMEs.

“We have allocated very significant amounts in terms of soft financing to these companies, but also, above all, to training the human resources of these companies in terms of innovation, training for economic strengthening and, above all, to make them more competitive,” Vice-President Peña said.

MSMEs were also given access to a larger market after the Government instructed the state sectors to take into account MSMEs as suppliers. “This has been extremely wonderful because it immediately increased the amount of sales of each of them.” She pointed out that most of the country’s free trade zones are currently being supplied with raw materials from MSMEs.

The strategy has led to the creation of good jobs, said Vice-President Peña. “This sector has been strengthened and many of the micro, small and medium enterprises are exporting their products.”
Source: World Economic Forum