HOW LATIN AMERICA CAN HELP ACHIEVE THE SUSTAINABLE DEVELOPMENT GOALS

Three major trends can be identified. The global economy is mired in a recessionary bias associated with falling growth in output and trade flows, as well as a financial system that is increasingly decoupled from the real economy. Worsening global and domestic inequality is posing serious threats to social and political cohesion within and among societies. Lastly, irreversible environmental degradation and the effects of climate change have reached potentially disastrous levels with direct consequences for the planet, resulting in loss of biodiversity and livelihoods, as well as sparking new conflicts.

In addition, these trends are playing out in a world characterized by tectonic shifts. The emergence of China as a world power is redefining international strategies on the economic and trade fronts, as illustrated for instance by the negotiation of mega-regional agreements and the move towards regional integration. The Fourth Industrial Revolution, the main topic at January’s annual meeting in Davos, calls on society to jointly harness the power of the digital economy, technology and big data, recognizing the tremendous impact of these areas on the world of work. The ongoing demographic transition, involving slower growth and rapid ageing of the population and high rates of south-north migration, is also at the centre of the policy agenda.

Against this backdrop, Latin America and the Caribbean, a region composed mostly of middle-income countries, is at a crossroads. In the context of the current economic slowdown, the region must take urgent steps to avoid falling further behind the industrialized countries and the most dynamic parts of the developing world in terms of growth and productivity, while also preserving the significant social gains it achieved during the commodity price supercycle, which has now come to an end.

Countries of the region have displayed an extraordinary commitment to sustainable development in their extensive participation in the process of formulating and adopting the 2030 Agenda and its Sustainable Development Goals. They must now show their ability to lead the way in making this vision a reality. The new position paper of the Economic Commission for Latin America and the Caribbean (ECLAC), Horizons 2030: Equality at the Centre of Sustainable Development, sets forth key elements to define strategies for progressive structural change, with a focus on an environmental “big push” towards 2030.

In this endeavour, it is clear that a “business as usual” approach will no longer work and that the state, the private sector and civil society all have key roles to play, both individually and through renewed partnerships at the national, regional and global levels.

On the domestic front, these actors must devise new schemes for intersectoral dialogue to strengthen the integration of the Sustainable Development Goals into national, territorial and local development strategies, as well as into corporate strategies and business models. In this respect, government and business actors must shift into a new cooperation mode with a view to adopting a forward-looking co-investment approach that can foster the skills, innovation and technologies required to roll out the environmental “big push” proposed by ECLAC.

The current break in the investment cycle must be addressed through new public and private investment portfolios geared towards reducing infrastructure and energy gaps, and adopting cleaner patterns of production and consumption with low-carbon objectives. This will mean enhancing public-private institutional arrangements and establishing new legal frameworks to ensure that risk is shared evenly, taking into account the importance of competition policy and industrial policy incentives. In a world in which the risk of secular stagnation is a matter of concern for policy-makers, more active fiscal policies, aimed at fostering low-carbon growth paths and full employment, are more necessary than ever.

Transitioning towards more knowledge-intensive sectors with industrial and technology policies for an environmental big push will facilitate production diversification, creating opportunities to embed knowledge, increase social inclusion and protect the environment. As the most urbanized region in the world, with over 80% of the population living in cities, urban development is a key area for pursuing innovation in public transport and traffic management, solid waste and wastewater treatment, and low-energy buildings.

Big data is another key field that offers scope for transforming private information into a public good. The amount of data generated by individuals through technology and the internet has never been greater. That data can be used openly for the public good as a tool for decision-making with greater accuracy, timeliness and geo-visualization, while ensuring the protection of anonymity and privacy. This is an area where businesses, governments and civil society must urgently boost their collaboration, learning from existing successful case studies, with a view to monitoring the achievement of the Sustainable Development Goals.

Finally, social protection and labour policies must be strengthened through renewed public-private partnerships. While high-quality jobs represent the key to equality, new business models and the fast pace of digital and technological development are reconfiguring the labour market, collective bargaining and the role of trade unions. Many of the jobs in the future world of work will be generated in areas that do not yet exist. In order to adjust to this new reality, the state, businesses and academia must rethink capacity-building to meet new demands in education, universal protection and a society-wide care economy.

In spite of significant progress in parts of the region, Latin America and the Caribbean has yet to close the gap between rhetoric and reality in terms of regional and subregional integration. This will mean boosting intraregional trade – rates of which are still significantly lower than in other regions – as well as building currently underdeveloped regional value chains in environmental goods and services. To this end, regional financial safety nets and the role of development banks and payments clearing systems must be strengthened.

Lastly, countries should pursue greater coordination to control illicit capital flows and apply common fiscal, social and environmental standards to attract good-quality foreign direct investment without predatory competition, thus avoiding a “race to the bottom”. In an era of innovation-led mega-regional manufacturing, the region should consider the creation of a digital common market with intellectual property rules that favour technology transfers and a fund for the purchase and licensing of patents, which are invaluable assets in a knowledge economy.

The World Economic Forum on Latin America is taking place in Medellin, Colombia from 16 to 17 June.