Although unthinkable, the pandemic brought something good. “It moved a lot of the policy conversations out of certain comfort zones and conventional wisdoms. This is always good news: thinking out of the box,” said the new Executive Secretary of the Economic Commission for Latin America and the Caribbean, ECLAC, José Manuel Salazar-Xirinachs.
José Manuel Salazar-Xirinachs spoke with Latin Trade’s Strategic Advisor, Ricardo Meléndez-Ortiz, during Latin Trade Week.
He has been an avid promoter of these new conversations that are sprouting in the region. “There is a certain freshness, a certain willingness of policymakers, on both private sector and public sector, to revisit things; to change traditional ways of doing things,” he said.
Latin America has deep, structural gaps that must be addressed with strong actions. “The data tells us that there are backward steps in major indicators of the economy, of poverty, and informality,” he added.
Salazar-Xirinachs wrote a ‘Decalogue’, ten points to guide policy-making and interventions in the region. It is likely to guide ECLAC’s research efforts. The list begins, perhaps as most economists would agree, with productivity.
Sectoral policy activism
‘Productivity, productive development, employment and inclusive growth’ is the first commandment. “It is really a tragedy of Latin America. If you look at the figures of productivity in the last 30 years, it is flat. We have not been converging with the leading countries,” he said. Growth in the past decades has been driven by investment in infrastructure and by the favorable effects of demographic change. Productivity has not contributed much, he added.
“The toolbox to change the story of no of productivity, is productive development policy. There is a whole new generation of productive development policies along with new visions about cluster policies,” he said.
He claims it requires not being timid about working sector by sector, and he cites a good amount of very successful cases that resulted from doing so. “Mexico has medical devices, motor engines, cars, aerospace, and software. Costa Rica has been very successful in medical devices and new modern services. Argentina has agricultural machinery.”
He attributes these sectorial and cluster successes to active sectorial policies. “Sometimes we have too much macroeconomic and governance conversations, and public policies have not emphasized the need to work with economic agents and with everyone that is relevant in specific sectors.”
Salazar-Xirinachs explains why employment is under the same heading with productivity. “You cannot build a better future of work without building a better future of production. These are two sides of the same coin.”
This portion of his agenda should then be understood as a critical element for inclusive growth and for employment.
The region saw lower growth in the 10 years from 2014 to 2023
than during the lost decade of the debt crisis
Executive Secretary of the Economic Commission for Latin America and the Caribbean, ECLAC, José Manuel Salazar-Xirinachs, set a 10-point list of policy priorities to solve the region’s structural problems.
- Productivity, productive development, employment and inclusive growth.
- Inequality. Reducing inequality should be a high priority area.
- Social policies and social protection. There is much work to be done in coverage and efficiency.
- Education. The pandemic produced an ‘educational blackout’ with serious consequences for the poor.
- Gender. The difference in labor force participation in Latin America is 24% on average. Employing women “is a matter of justice. It is a moral imperative.” Opens a great opportunity in the care economy.
- Sustainability and climate change
- Digital transformation. It is both a challenge and a huge opportunity for the region.
- Economic integration.
- Macroeconomic policies for development. Action on any of the areas above need fiscal resources or state financing.