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The Latin America We Dream Of

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Economic and political stability need to be accompanied by better infrastructure, health and education.


BY REINALDO GARCIA

Some 30 years ago, when I left Brazil, Latin America faced difficulties in connection with political and economical stability.

Those were times in which nations such as Brazil, Argentina and Panama were ruled by governments that used less than democratic rules resulting in struggles for a political opening. At the same time, the region suffered serious economic problems such as high inflation and lack of sustainable growth.  Those were times of uncertainties.

Currently, thirty years afterwards, coming back to Brazil, the Latin American scenario appears quite different.  The region is more mature, the political representatives are selected by the people and the civil society institutions operate in a more solid and free manner.

This stable climate allowed those countries to get organized economically.  Inflation was controlled and a long term planning program has now been implemented and a favorable environment developed to attract investments.

The results of the new times may already be seen. Between the years 2005 and 2009, for example, Latin America grew an average of 5 percent a year, even considering the upheaval caused by the last world economic crisis.  Our region has certainly been one of the least affected areas during such adverse economic condition.

FUTURE CHANGES

In the decade just beginning, Latin America should undergo changes and developments at an even higher speed.  Which will be the grounds that will allow the decade to become a reality rather than a promise?

In order to start building the future of Latin America at this time, we need to expand our partnership with governments, companies, customers and civil society organizations and we need to grasp the whims of the local demands to develop and offer innovative products or solutions that fully meet the necessities of each nation.

The growth of the region should take place in a sustainable form and the challenges that are still on the Latin American countries agenda need to be faced. These are challenges that materialize, on a priority basis, in infrastructure, health and education. We need to build and refurbish airports, railroads and ports.  We need to generate more clean and renewable energy and offer quality health and education accessible to the general population and many others.

WORLD-CLASS COMPANIES

Latin America is fertile ground for world-class local companies.  Petrobrás, Embraer, Vale and EBX in Brazil; Pemex in México; PDVSA in Venezuela;  Ecopetrol in Colombia and Enersur in Peru are just a few of such companies that take their stakes in the region. Both Vale and Pemex, for example, have announced investments worth $24 billion in 2011.  The Petrobrás Business Plan 2010-2014 on the other hand anticipates $224 billion investments.

Investments of this size should spur further the demand for qualified labor in the region.  To have an idea of the current size of professional labor shortage, in March 2010, Instituto de Pesquisas Econômicas Aplicadas (IPEA) indicated that there were in Brazil some 200,000 positions still open due to lack of applicants’ qualifications. According to the International Business Report (IBR) 2011 issued by Grant Thornton, 43 percent of the executives in Latin America reckon that the key factor that inhibits growth is the shortage of qualified labor.  It is the education bottleneck that affects most of those companies that seek qualified labor according to the survey Best Companies for Leadership, published by the Hay Group.

LONG-TERM INVESTMENT

With an economically active population amounting to almost 300 million people and an illiteracy rate of 8.3 percent (according to data from 2010 issued by ECLAC), the region must foster the development of its educational reality. This objective requires invariably a firm and continuous long-term investment in quality education. It is no accident that UNESCO and UNICEF suggest that between 6 percent and 8 percent of the GNP of each country should be invested in education. In South Korea, as everybody knows, soon after the Korean War, the government allocated in education, 10 percent of the GDP for a decade. Today Korea is one of the leading countries among the technologically most advanced nations and one of the most developed nations in the world.

Besides investing in basic education, we need to invest in the preparation of skilled and qualified professionals. We need to expand partnerships among local companies and the best universities and research centers in Latin America just like Petrobrás that is bound to invest 1.4 billion reais (US$872 million) until 2014 in this kind of partnership.  This is the only manner we can develop and retain local talent in the region.

Our expectations are indeed very positive. It’s time to work together and build the Latin America we all dream of and deserve.

Reinaldo Garcia is the CEO and President of GE Latin America. He wrote this column for Latin Business Chronicle.

      

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