La siguiente es una columna del ex presidente Sebastián Piñera publicada en Latin America Policy Journal de Harvard Kennedy School, Cuarta Edición 2015. Aquí, el ex mandatario hace un análisis de la situación actual de la región y de cómo se deberían enfrentar los próximos años para progresar y recuperar el dinamismo de la economía, cerrando el texto con un análisis de la situación de Chile.
Latin America: The Continent of Hope
Latin America has always been a continent full of opportunities. It has a huge territory of over 21 billion km2, twice the size of Europe. It is a rich continent with abundant natural resources, including vast reserves of water and energy. Latin America has never seen great wars like those that destroyed Europe last century. Nor has it faced religious conflicts as the ones that divide many countries of the Middle and Far East, or even racial conflicts that affect many African countries. It has a population of over 600 million people, who share Christian cultural roots and who speak two languages: Spanish and Portuguese. Recently, the vast majority of Latin American countries have celebrated their first 200 years of independence. And despite all these great opportunities, Latin America remains an underdeveloped continent with an average per capita income close to $10,000 a year and poverty affecting nearly a third of its population.
Why Hasn’t Latin America Made the Most of Its Opportunities?
Certainly, the reasons are manifold. But in general, the causes of these missed opportunities are rooted to the tendency of Latin America to drift away from three basic pillars that dictate its basic development. First: A stable and legitimate political system based on freedom, democracy, and the rule of law. Second: An economic system based on social market economy, entrepreneurship, and integration into the world economy. Third: An inclusive social system, which requires effective tools to fight poverty and achieve greater equal opportunities for everyone and upward social mobility.
If we look at the evolution of per capita production in the world during the twentieth century, we see that the United States, Europe, and in the second half of the century, countries like Korea, Taiwan, Singapore, and China in recent decades, experienced solid and extended periods of growth. However, Latin America lagged behind. Its development in the last thirty years has been very heterogeneous, with countries such as Chile, Peru, and most recently Colombia leading in growth compared to Venezuela and Argentina, which have consistently been losing relative positions. It’s no surprise that according to the Heritage Foundation’s Index of Economic Freedom only two Latin American countries currently qualify as economically “free,” while eight are rated as “mostly unfree” or “repressed.”
Looking at the state of democracy in the continent, there are still significant lags. Over 40 percent of the population is currently living in “not free” or “partly free” countries according to the latest report by Freedom House. As for the quality of our institutions, only two countries in the region qualify in the top fifty of the least corrupt countries by Transparency International.
It is certain that in recent decades Latin America has made efforts to strengthen these development pillars. But to come to fruition, it must persevere in strengthening these traditional pillars and strive to build the new pillars of development in the new knowledge and information society, which has been knocking on our door for some time now.
In the late half of the twentieth century, the world watched the collapse of two walls that should never have existed: the first one running north to south separat- ing the world into two ideological blocs and irreconcilable enemies. The fall of the Berlin Wall and the Iron Curtain symbolized this collapse. Moreover, globalization and the knowledge and information society are collapsing an equally ignominious wall, running east to west, separating the world of the north, which was the world of wealth, from the world of the south, which was the world of poverty.
This new knowledge and information society has been, is, and will remain an open and generous society to those countries, including developing countries, willing to assume their responsibilities, face their challenges, and seize these new opportunities and horizons. But this new knowledge and information society will be indifferent and even cruel to those countries that do not meet their responsibilities, are reluctant to face new challenges, and simply let new opportunities and horizons pass.
The Two Souls of Latin America
Today, the countries of Latin America seem to have two souls in their models and strategies to meet the challenges of development and modernity. For some countries like Mexico, Colombia, Peru, and Chile, who make up the Pacific Alliance, development strategy is based in a free, open, competitive, and integrated economy. Countries like Venezuela, Ecuador, Nicaragua, and Bolivia, which form the Bolivarian Alliance for the Peoples of Our America (ALBA), base development strategy in economies with high intervention and state control, severe restrictions on freedom, and little integration with the world economy. Others are found in intermediate stages, such as Brazil and Argentina, which have lost much of their ability to grow and now face serious macroeconomic imbalances that could eventually result in recessions.
The New World of the Twenty-First Century: The Knowledge Society
The main features of this new world are:
1. The emergence of the knowledge and information society, which is radically changing our lives—how we work, inform, educate, communicate, entertain—and is certainly one of the most extensive and profound transformations humanity has ever experienced. Not out of nowhere, there are as many mobile phones as there are people worldwide, around seven billion, which shows that information flows today in a way and at a rate we could have never predicted.
2. World globalization. In the 60s, world trade stood at $62 billion. Late last century, it had expanded one hundred times, reaching $6,500 billion. In 2013, in just thirteen years, it had tripled, reaching $19,000 billion. Additionally, new players have joined the world trade, such as China and India, whose trade with the world surpasses the United States and Europe.
3. The awakening of the emerging world. In 1980, the economies of the emerging world accounted for only 31 percent of the world economy; in 2013, it reached more than half, 50.4 percent. Moreover, in the period between 1980–1990, emerging economies accounted for 38 percent of global growth. In the period between 2000–2013, they accounted for 92 percent of that growth.
New Economic Order
While the United States has been by far the world’s largest economy, in the coming decades we will have three giants: China, India, and the United States—a situation that will undoubtedly transform the foundations of the international political and economic order.
In addition, the global economy today is experiencing the end of three great cycles: the end of the supercycle of monetary expansion and debt of the United States, the end of the supercycle of growth and accumulation of reserves in China, and the end of the supercycle of commodity prices.
What Are the Tasks and Challenges Facing Latin America?
If Latin America wishes to adopt these radical transformations and take on these new opportunities in the new knowledge and information society—and not let the opportunity pass by as happened during the Industrial Revolution—it must undertake seven challenges or steps that should be tackled sooner rather than later:
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Conduct a Copernican transformation to increase the quality and coverage of their educational system, particularly in its earliest stages, and in its system of employment training.
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Unleash the forces of freedom, innovation, and entrepreneurship of its inhabitants.
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Triple its investment in science and technology, both basic and applied.
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Defeat poverty and move towards a more inclusive society with greater equality of opportunity and upward social mobility.
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Make up for lost time by expanding and strengthening its infrastructure in all areas of society.
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Integrate itself into the world by opening its markets and daring to compete in the global economy.
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Improve democracy’s quality, politics, and institutions and develop a deep process of modernization.
If we are successful in addressing these seven tasks and challenges, then Latin America will leave behind decades of stagnation and frustration; the region will seize opportunities and potential, while remaining the continent of hope and achieving comprehensive development.
Quo Vadis Chile?
Chile was the poorest colony of the Spanish Empire. It is separated from the rest by the world’s driest desert in the north, the Andes Mountains to the east, the Pacific Ocean to the west, and the eternal ice of Antarctica in the south.
However, through the efforts and the will of its people, it has a per capita income of almost $23,000, the highest in Latin America, and is in a unique position to be the first country in Latin America that before the end of this decade, eradicates poverty and achieves development, ensuring that all its children will enjoy the security of a decent life and the opportunity to develop their talents. Thus, we can create a society of freedom, securities, and opportunities for all, allowing citizens to seek personal fulfillment and happiness with their loved ones.
Nothing unites and motivates a country but a noble and feasible project in which everyone has a place to contribute towards development and a fair share of the benefits.
Versión en español aquí.