Everyone is talking about Latin America’s “new decade.” Discussions in economic forums, investors, multilateral banks and social development groups are focused on Latin America’s new star position — and with good reason. So far, we’ve seen only the tip of the iceberg when it comes to Latin America’s new era of growth, prosperity, poverty reduction and opportunity. Here are just some of the many reasons why the buzz about Latin America isn’t just buzz but the real deal.
While the United States — and the rest of the world — saw their economies shrink as a result of the economic crisis, Latin America experienced steady growth. Because of its sound economic policies, fiscal responsibility and macroeconomic reforms over the past several years, most of the region proved that it could withstand the financial shocks plaguing the rest of the world. The region emerged from the crisis stronger than ever, with global recognition of its success and a newfound confidence that is evident in many forms.
The success, however, was not overnight. It consisted of at least two decades of economic reform with a focus on creating stable macroeconomic environments and low inflation as well as rebuilding banking systems. The results are clear: In 2010, Peru saw 8.6 percent growth; Brazil, 7.7 percent; Uruguay, 9 percent; and Mexico and Chile, 5.3 percent. Uruguay, Colombia, Brazil and Peru are looking closely at OECD benchmarks like income inequality, inflation, labor reform and education. Strong economic growth, coupled with ambitious goals to build on recent successes, is just one example that Latin America is poised to see its best decade yet.
Economic growth is not the only reason why this is Latin America’s decade. Social development in the region, specifically poverty-reduction programs, is some of the best in the world. Projects targeting poverty have resulted in a 16 percent drop in poverty since 1990, according to United Nations Economic Commission for Latin America and the Caribbean (ECLAC). Peru, Mexico, Chile and Colombia continue to usher in more citizens into the middle class and into the formal sector because of these programs, in turn fueling demand for goods and services that drives even more economic growth.
In Brazil, popular income-transfer policies and the Bolsa Familia program brought 36 million people into the middle class and lifted 28 million out of extreme poverty.
On the healthcare front, by providing subsidies for medicine and medical care to the poorest populations, Mexico’s Seguro Popular has provided vital care around the country. The affiliation rate is at about 1 million people per month currently.
Just as importantly, economic growth and successful social development programs would not be successful were it not for a strong commitment to democratic values. Regular, free and fair elections are the norm in the majority of the region, and Latin Americans themselves have a positive attitude toward democratic systems and their leaders. According to a study by the Latin American Public Opinion Project, 69.9 percent of those surveyed in 26 countries, including Haiti, voiced high support for democracy. In a majority of the 26 countries, more than half of the respondents feel proud of their political system. Furthermore, the majority of Latin Americans believe they are better off economically today than they were 12 months ago, a show of confidence in their countries’ leaders. Democratic institutions are the bedrock of any successful, stable society, and Latin America has come a long way in political reform.
Even with all the success in Latin America, one cannot ignore the challenges it faces. The region still needs to address education, innovation, infrastructure, crime and diversification of exports, among other issues. However, developed countries — including the United States and Europe — all have their own issues. Latin America is not alone in its challenges, but I am optimistic that leaders in the region will continue to work toward finding solutions. I believe policymakers know the challenges ahead and are committed to improve quality of life for their citizens and to make their countries more globally competitive.
Latin America’s era of prosperity is upon us. Its citizens are more optimistic than ever about their future and we should be too. The region is a proven bright spot in a time when recessions and economic instability have take center stage, and I believe it has far from reached its fullest potential.
Susan Segal is president and CEO of the Americas Society and the Council of the Americas.
Photo courtesy of Mexico City: Newscom / Russell Gordon
About the Author: Susan Segal is president and CEO of the Americas Society and the Council of the Americas.