Publications /
Opinion

Back
Global Leadership for Latin America and the Caribbean
Authors
Pepe Zhang
September 14, 2023

This publication was originally published in Project Syndicate 

 

WASHINGTON, DC – The world economy remains beset by challenges, from tight monetary, financial, and fiscal conditions to the effects of the war in Ukraine. These headwinds are impeding global growth – which is expected to slow to 3% this year, compared to 3.5% in 2022 – and damaging lives and livelihoods, with poverty and food insecurity on the rise, particularly in developing countries. In addressing the complex and overlapping challenges the world faces, Latin America and the Caribbean (LAC) is a region with much to offer.

For starters, LAC countries can help create a more resilient global food market. As early as 2017, the World Economic Forum facilitated a joint ministerial declaration calling for the region to become the “breadbasket of the world.” And at last year’s Summit of the Americas, hosted by the United States, participants released an Agriculture Producers Declaration underscoring the important role of major LAC exporters in strengthening global food security.

The reason is obvious. With one-quarter of the world’s arable land and one-third of its freshwater resources, LAC already comprises the largest net food exporter among world regions. What is needed now is new investment, especially in physical and digital infrastructure and in climate- resilient agriculture, continued technological and competitiveness improvements, and better integration into regional and global value chains.

Beyond food, the region is well-positioned to become a global climate leader. LAC countries account for less than 10% of global greenhouse-gas emissions, and are home to trailblazers in the quest for a green and just transition. For example, Costa Rica and Uruguay were among the first countries in the world to start generating nearly all domestic electricity from renewable sources. Even carbon-intensive economies, such as Colombia, are now undertaking ambitious reforms to mitigate climate change.

More important, with two-thirds of the world’s lithium reserves and 40% of its copper reserves – both essential to climate-friendly technologies – the region holds the key to curbing emissions everywhere and will play a major role in ensuring that these critical minerals are sourced and processed in environmentally and socially sustainable ways. This explains why these resources featured prominently in the recently announced €45 billion ($49 billion) European Union-LAC Global Gateway Investment Agenda.

LAC countries also have an important role to play when it comes to climate adaptation. With climate change already affecting vulnerable communities in the region, these countries are offering valuable insights into the dangers that lie ahead and into the virtues and limits of current adaptation strategies – and becoming increasingly influential in global discussions. Already, Barbados played a prominent role in the Paris Summit for a New Global Financing Pact in June. Moreover, Brazil will assume the G20 presidency at the end of this year, and host the United Nations climate summit (COP30) in 2025.

More broadly, LAC countries are experimenting with, and bringing into the mainstream, innovative instruments that link policy, climate, nature, and finance. The Caribbean Catastrophe

Risk Insurance Facility – created in 2007 as the world’s first multi-country, multi-peril risk pool – provides a financial buffer against increasingly frequent extreme weather.

Furthermore, in May, Ecuador completed the world’s largest-ever debt-for-nature swap, generating $323 million in savings to finance conservation projects. This followed Belize’s landmark 2021 debt-for-nature swap, widely hailed as a successful model for subsequent conversions.

Last year, Chile and Uruguay issued the world’s sovereign sustainability-linked bonds. Moreover, Colombia became the first country in the Western Hemisphere to adopt a national green taxonomy, a classification tool that enables lenders and borrowers to identify economic activities that contribute to environmental goals. This year, Mexico unveiled its own sustainable taxonomy, covering both environmental and social objectives.

LAC countries are bringing their experience to bear on other vital global policy discussions, too. Consider inflation, a frequent challenge in the region. Over the last two years, many LAC central banks hiked interest rates more quickly and aggressively than their advanced-economy counterparts. The policy appears to have paid off: the region, excluding Venezuela and Argentina, kept inflation below the OECD average in 2022 (though complacency must be avoided).

At the same time, the region is devising potentially transferrable approaches to international migration and displacement, which remain high worldwide as a result of humanitarian, economic, climate, or other factors. For example, the socioeconomic integration of Venezuelan migrants in host communities in Colombia and elsewhere makes for a useful case study.

Clearly, there is no shortage of areas where LAC countries can leverage their strengths to assert global leadership. But if the region is to seize the opportunities ahead, it must prepare itself better by accelerating development progress at home.

On the macro front, many LAC countries need to do more to advance and balance their growth, fiscal, and equity goals. Rigorous, evidence-based policymaking is urgently needed amid continued inflationary pressures and risk-off sentiment. On the micro front, productivity and labor-market improvements are essential to repair the damage caused by the COVID-19 pandemic and make the most of the region’s most valuable asset: human capital.

Sound public policy, strong institutional capacity, and more effective and efficient government programs will be vital to address these macro and micro challenges and ensure socioeconomic progress. Greater regional integration would also help, by supporting the protection and development of regional and global public goods. And collaboration with the private sector, civil society, multilateral organizations, and the international community will be indispensable.

Can the region meet its potential for global leadership? We certainly hope so. A more resilient, sustainable, and inclusive LAC can help build a world that is greener, more energy-secure, and better fed, while contributing solutions to the most pressing global policy and governance challenges. At this critical moment, what is good for Latin America and the Caribbean is good for the world.

RELATED CONTENT

  • Authors
    Luis de la Calle
    August 1, 2016
    This policy brief argues that Mexico’s future agenda of negotiations should include three main priorities. Firstly, with the help of its NAFTA partners, Mexico should position itself as the export platform of North America to the world. Its structural changes, web of agreements, and strategic location pave the way for this. Secondly, it should insist on being invited to the negotiating table of the Transatlantic Trade and Investment Partnership (TTIP). If full participation is not p ...
  • July 13, 2016
    Housing is part of the United Nations 11th Sustainable Development Goal, which is to “make cities inclusive, safe, resilient and sustainable”. One of the most important targets of such a goal is to “ensure access for all to adequate, safe and affordable housing1 and basic services and upgrade slums”. Since 2007, the world has faced rising inequality, insecurity and climate change impact. According to UN Habitat, 54% of the world´s population currently live in cities. By 2050, this n ...
  • Authors
    July 11, 2016
    The Chinese economy is rebalancing while softening its growth pace. China’s spillovers on the global economy have operated through trade, commodity prices, and financial channels. The global reach of the effects from China’s transition have recently been illustrated in risk scenarios simulated for Latin American and the Caribbean economies.  The Chinese economy is rebalancing while softening its growth pace… The weight of the Chinese economy in the global economy rose on its way t ...
  • June 30, 2016
    Latin American economies are facing two historically defining challenges. First, how to cope with the end of the commodities “super-cycle” and the prospect of a long period of low prices for basic natural resources. After all, raw materials production and semi-industrialized goods encompass most of their comparative advantages. Second, and even more exacting, how to adjust to the present disruptive transition from an old to a new global economic and social model. The 20th century in ...
  • Authors
    Silvia Colombo
    Mohamed El Harrak
    Nicolò Sartori
    May 27, 2016
    Energy is at the core of the remarkable current transitions in the global economy and geopolitics, and natural gas plays a crucial role in these processes. In this context of rapidly evolving trends at the market level and developing dynamics between regional and global actors, The Future of Natural Gas aims at analysing the role of natural gas in the future energy mix by considering several key factors: the ambitious climate policies agreed by the international community, cost issu ...
  • Authors
    Ana Maria Bonomi Barufi
    Peter Nijkamp
    May 27, 2016
    The tendency towards urbanisation in the emerging world accompanied by the constant pursuit of higher productivity has prompted many studies which aim to understand agglomeration economies. In the context of Brazil, a country with extremely high regional disparities, exploring this issue is important not only for private stakeholders but also for public policy practitioners. In the framework of static agglomeration effects, we investigate the industrial scope of agglomeration econom ...
  • Authors
    Otávio José Guerci SIDONE
    Jesús Pascual MENA-CHALCO
    April 6, 2016
    A recente evolução da ciência brasileira é caracterizada pelo crescimento acelerado da produção científica e pela intensificação da colaboração entre seus pesquisadores. Este trabalho tem por objetivo apresentar elementos sobre o papel da geografia na evolução da produção e colaboração científica no Brasil entre 1992 e 2009, por meio da identificação de padrões espaciais e da importância relativa das regiões em termos de produção, especialização científica e grau de interação colabo ...
  • Authors
    March 8, 2016
    Along with phosphorus and nitrogen, potash constitutes one of the three nutrients used in the production of fertilizers. Although the factors that influence its demand are mostly common to other fertilizers and in large part determined by the agricultural market conditions, its supply depends on specific factors. Long known to be controlled by two production and export cartels, the potash market experienced a major change in 2013 with the end of the RussianBelarusian agreement. In a ...