Publish in Perspectives - Wednesday, April 12, 2017
Argentine president Maurico Macri at the the World Economic Forum in Buenos Aires last week, with WEF founder and executive chairman Klaus Schwab. (Photo: Argentine President's Office)
Highlights from the World Economic Forum Latin America 2017.
BY STÉPHANIE THOMSON
World Economic Forum
BUENOS AIRES -- After almost a decade of economic growth – growth that has helped lift millions out of poverty – the past couple of years have been challenging for Latin America. Two consecutive years of recession have taken their toll, and changes at the international level have led to even more uncertainty.
It’s against this backdrop that 1,000 leaders from business, government and civil society met in Buenos Aires for the 12th World Economic Forum on Latin America last week. These are some of the highlights.
Latin America has seen it all before
The rise of populism across North America and Europe has been making headlines in the Western world, but for Latin America, it’s all too familiar. And they know that it doesn’t work.
“When you promise people things you can’t deliver, it’s a recipe for disaster,” Felipe Larraín Bascuñán, of Chile’s Pontificia Universidad Catolica, told participants in the first session of the day.
“I would rather lose an election by telling the truth than deceiving people by making false promises,” he added.
In a separate session, Argentinian President Mauricio Macri echoed these sentiments, speaking of the disappointment many people in his country have been left with after the Kirchner administration. “Argentinians have had to deal with years of frustration and unkept promises.” His job now, he said, was to channel those frustrations into something more positive.
Another hot topic in the West that’s giving Latin Americans a sense of déjà vu? Fake news.
“All this talk of a ‘post-truth’ reality is nothing new,” one participant pointed in a session in the morning. “The US now has a president who attacks the media, but in Latin America we know this – Cristina Fernandez de Kirchner did it every day.”
But while it might be familiar, this time is different, largely because of the new technologies available. “We’re over-estimating the newness of this, but we’re not over-estimating the impact,” said Felipe Estefan of Omidyar Network, a social enterprise that has committed $100 million to fighting fake news.
This digital revolution is having an impact far beyond the media industry. While almost every participant at the meeting spoke of the unrivalled opportunities this revolution will create, they also recognized that the transition won’t be easy.
“In the short term, we have a lot to fear,” Ricardo Luna Mendoza, Peru’s minister of foreign affairs warned.
If there’s one part of life that is being completely turned on its head by this revolution, it’s the world of work.
“Old white collar jobs will be destroyed or they will start to pay less,” Susana Malcorra, the Minister of Foreign affairs and worship of Argentina, warned. And while new roles will be created, that’s little comfort to those without the necessary skills.
“For those who have been making cars, for example, do you think they can suddenly become IT professionals,” questioned James Z. Li of McKay & Co.”
For Latin America – a region with the world’s biggest skills gap – this issue will be one of the defining ones for many years to come.
Things are looking up
But despite all the uncertainty brought on both by international events and the digital revolution, the day ended on a positive note: after two years of negative economic growth, things are starting to look up for Latin America.
“The region is pulling out of recession,” David Lipton of the International Monetary Fund predicted. “The region has the chance to make important strides.”
The secret to a more productive region
After almost a decade of growth, Latin America has had two years of recession to contend with, threatening to reverse some of the gains it has made. Leaders in Buenos Aires have been full of ideas to help boost regional productivity, largely centering on education and skills development.
But Ricardo Hausmann of Harvard University had another suggestion: open up to immigrants.
“Part of the reason Panama has grown so much is because, by Latin American standards, it has a relatively open immigration policy,” he said, picking up on a point he had already made in previous sessions. “We have carried out studies showing that the productivity of locals is dramatically increased when they work with foreigners.”
Focusing on its competitive edge
Another way for Latin America to overcome the challenges it faces is to focus on what it does best. One of those areas is alternative energy. “Latin America is a leader in renewable energy,” Luca D’Agnese of Italian energy firm Enel noted in a session.
Indeed, according to a 2016 report, countries in Latin America and the Caribbean have some of the most ambitious clean energy targets in the world. As this Forum video shows, some countries in the region are running almost entirely on renewables.
Making Latin America safer
As Robert Muggah of the Igarapé Institute wrote (…), Latin America is the most violent region in the world – even as homicide rates fall in other parts of the world.
“Latin America has long been the world’s most murderous part of the world, experiencing some 2.5 million homicides since 2000.”
Friday we heard of bold plans to tackle this problem and halve homicide rates over the next 10 years through a new initiative, Instito de Vida. “This target might sound ambitious,” Ilona Szabó de Carvalho, also of the Igarapé Institute, told participants in a briefing. “But it can be done. In fact, many cities – Medellín, São Paulo – are already doing so.”
Federico Gutiérrez, the mayor of Medellín, was there to share some insights into how this progress could be replicated across the region.
“In the 1990s, Medellín was the most violent city in the world,” he explained. “There were socially marginalized areas where the state was absent, and then criminals filled that void.”
Getting to grips with the problem didn’t involve ramping up police presence or sending more people to prison; instead it involved policy-makers working with society, addressing the problem in a holistic way, and tackling the root causes rather than the effects.
“If we see that young people who end up as criminals are also those who are dropping out of school at an early age, then we need to get in there early and stop them from dropping out,” Gutiérrez said as an example. “Much progress has been made in Medellín, but there’s still a lot to do – you can never stop working.”
Stéphanie Thomson is an editor at the World Economic Forum. This summary is based on her reports from the World Economic Forum Latin America held in Buenos Aires, April 5-7, 2017.