Moving the poor into the middle class through a thriving private sector is vital to the Latin America’s success.
BY HENRY M. PAULSON JR
The nations of Latin America and the Caribbean have the capacity to become engines of growth, opportunity, and poverty reduction for their own citizens and throughout the region. And the United States is committed to supporting the people of this region in achieving these goals. President Bush made it clear during his recent visit that the United States stands with those who seek greater opportunity and with those leaders who are delivering it.
In recent years, many governments have enacted pro-growth policies – shored up public finances, reduced debt, and opened markets – and your economies are responding. Yet many people in the region do not feel the benefits of this progress. It is my goal to work with the [Inter-American Development Bank] and regional leaders to ensure that more people in the Americas share in the benefits created by economic growth and trade opportunities, to help every nation reduce poverty and build a strong middle class.
CAPITAL ACCESS ESSENTIAL
Moving the poor into the middle class through a thriving private sector is vital to the region’s success. This kind of economic mobility is one of the core strengths of the United States, and it is both urgently needed and possible to achieve throughout this hemisphere. Access to capital is essential to reducing poverty. Whether it’s a loan to start a business, grow a business, or buy a house, access to capital helps people acquire assets that give them a foothold in the economy – personal wealth they can leverage into greater prosperity and economic security. (...)
Our first priority is to work together to promote these goals for the region: more opportunity and more prosperity for all people. The best ideas will come from the people who live ...and work [in Latin America].
Our second priority is to create an environment that nourishes the growth of small and medium-sized businesses, which is vital to reducing poverty and inequality, and creating jobs and opportunity. Small businesses are engines of job creation in any economy. Yet in this region, it is estimated that only 10 percent of small businesses have access to financing from the formal financial sector.
As President Bush announced earlier this month, the United States is developing an initiative to help both local and U.S. banks increase their lending to small businesses in the region and to do it on a large scale. We are working through U.S. agencies such as the Overseas Private Investment Corporation to share risk with banks willing to lend to these clients. And the start of the second Multilateral Investment Fund provides an excellent opportunity to partner with the IDB to build banks’ capacity to do this kind of lending profitably.
Our third priority is developing the region’s infrastructure, which will produce tangible benefits for the people of Latin America, whether a farmer looking to increase sales of his produce or a mother trying to get her children to schools and doctors. Greater private sector investment can quicken the pace and expand the scope of infrastructure development. We are working to catalyze private sector investment by establishing a fund to reduce the upfront costs of identifying attractive projects.
These three priorities – enhanced regional cooperation, more financing for small enterprises, and better infrastructure – are keys to reducing poverty and expanding prosperity in Latin America. (...)
Let us work together to make progress on the issues I discussed today – progress that will help us reduce poverty, extend access to capital, spread opportunity to more people in the region, and contribute to the development of a middle class that will lead the way to a prosperous future for Latin America.
Henry M. Paulson Jr is the U.S. Treasury Secretary and former Chairman of Goldman Sachs. This column is based on an excerpt of Mr. Paulson's remarks at the annual meeting of the Inter-American Development Bank in Guatemala City, Guatemala on March 19, 2007.