Photo: Ecuador Chancellor's Office
Ricardo Haneine, Management Consulting Partner and Vice President at A.T. Kearney tells us the key.
Mexico hosted the World Economic Forum on Latin America 2015 earlier this month, and one major issue addressed is how Latin America can maintain sustainable economic growth going forward. After more than a decade of growth saw Latin America’s share of global GDP grow from 5.9 percent to 6.4 percent in 2013, the region’s relative size has sunk in the past two years and is expected to be 6.3 percent.
What’s important to understand is just how diverse Latin America is. Two countries have GDPs greater than $1 trillion, five have GDPs between $100 and $500 billion, and 14 are smaller than $100 billion. Of these 21 countries, only nine have a GDP per capita of greater than $10,000.
Some of these countries are wealthy in natural resources. Seven countries generate 12 percent of global oil production and 7 percent of natural gas; four countries produce 21 percent of global iron ore 51 percent of copper; three countries produce 53 percent of global soy beans, 38 percent of orange production; four countries yield 30 percent of the world’s beef and 24 percent of poultry.
Yet this wealth of natural resources is not yet reflected in individual wealth. Productivity is the key: By one prominent measure, GDP per employee, Latin American levels are less than 30 percent of U.S. levels, which has led to a corresponding difference in income per capita.
Improving labor productivity will …
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