By John Price, managing director, Americas Market Intelligence
Region can no longer afford to lose its bravest and brightest to emigration.
Without a commodity boom to rescue Latin America —because of abundant U.S. energy and weak Chinese infrastructure demand— the region must rise the old-fashioned way: by cutting waste and graft from government and raising productivity through smart reforms. The commodity boom afforded Latin American governments for the first time in a generation the ability to finance new infrastructure. Over $1 trillion was invested. However, much of it was wasted or misdirected through public coffers, though some of that spending worked, especially when run by private concerns. Latin America today has impressive infrastructure for mobile devices, a few dozen world-class ports and airports, improved railways and roads and in several countries much improved electricity grids.
Market reform is a continuous process and an incessantly challenging one. Latin America has much to do to catch up with other emerging markets, many of which kept reforming while South America, in particular, stood still for a decade from 2004 till 2013.
The region’s Achilles’ heel remains its weak rule of law. Until it is strengthened, politicians will continue to rob the region of its wealth and future, crime will continue to tax society and drive the boldest and brightest abroad, and investors will refuse to invest in creative ideas whose intellectual property cannot be protected.
Latin America is now the fastest aging population in the world. The number of elderly in Latin America will triple as a share of the population by 2050 and represent almost one in five Latin Americans. The region can no longer afford to lose its bravest and brightest to emigration. Instead, Latin America must nurture its human capital by increasing access to education and transforming its school system at the secondary, vocational and university levels into one that educates and trains its young people with employable technical skills and a heavy emphasis on STEM at the post-secondary level. Only then, will Latin America have the skill sets the region needs to both harness its impressive natural resources and unleash its creative potential.
Latin America’s political leaders can no longer afford to tinker around the edges and wait for commodity prices and domestic demographics to provide growth. Competing in a globalized world is no longer a choice but a necessity. Can Latin America compete? Only if the region’s political leaders get serious about reform.
By John Price
JOHN PRICE is the managing director of Americas Market Intelligence and a 24-year veteran of Latin American competitive intelligence and strategy consulting. [email protected]