Again I am writing about the lost, past decade in Latin America. Many things in the world become a widespread consensus, such as: the urgent necessity of Latin America to invest more in education and to improve its infrastructure, laws, R&D, etc, in order to grow again and create jobs and development. Another worldwide consensus is the support for my candidacy. Again I'd like to thank you all for this support and encouragement to the next election, because last year despite all the worldwide support I had only 34 votes. Another consensus is the urgent necessity of Latin America to increase the trust of its population in the democratic institutions, including institutions of the electoral systems, because if not the support for democracy can lower and it is not what the majority of the Latin American population wants, so instead only put the blame on the party you do not like or in some powerful person in those institutions, try to change what you think is wrong, become an activist, and try being a candidate in the next elections, but remember always to respect the human rights and fight for more democracy. Do not let anybody to intimidate you, read about politics, democracy, human rights and anything else you think it is important to a better country. And do not discourage if you have few votes. This post is a summary of two articles. The first was published with the title above in April 2021 at https://www.chathamhouse.org/2021/04/economics-populism-failing-latin-america. The second was published in November 2022 at https://www.ft.com/content/5c50cfec-6f07-46ed-8990-3c91fc3a34ad
The spectre of populism, both of the left and right variety, has hung over Latin America politics and economics since the 19th century but, for the last two decades, a new wave of populist leaders has developed as a result of ongoing economic dislocation and popular anger at the political class. For many countries in the region the effect of COVID-19 on economic growth and social mobility casts a dark shadow. Even before the pandemic, conditions were fertile for the rise of populist leaders such as Hugo Chavez in Venezuela, Brazil's Jair Bolsonaro and Mexico's Andres Manuel Lopez Obrador all rode a wave of social distrust as established party systems collapsed in their countries. Latin America were already flatlining prior to COVID-19 as, according to the IMF, their average growth was only 1% in 2018 and 0% in 2019. Such low rates are insufficient to sustain gains in social mobility from the early 2000s when, due to Chinese demand, the region grew on average by 5% from 2004 to 2007, and more than 50 million people joined a fragile middle class. The ECLAC estimates that more than 20 million people in the region joining the ranks of the poor from 2018 to 2020, and those in poverty now making up more than 33% of the population. Added to these dismal numbers and the long-term scarring from this past year that more than 53% of the region workforce labours away in the informal economy. Running in parallel to these economic dire straits, but only in part caused by them, are troubling increasing popular distrust to the state among Latin America's electorate. There is a lack of trust in the institutions of government and democracy. According to the same surveys before the pandemic struck, only 39.4% in 18 Latin America countries trusted their national parliament, only 45.5% trusted their elections and a measly 28.2 had confidence in their political parties. These conditions have created fertile ground for the collapse of traditional political parties and the arrival of outsider candidates. Despite such different fiscal and monetary policies, what populist leaders do share is likely to spell economic trouble in the medium and long-term because, irrespective of economic orientation, all tend to have little tolerance for checks on executive power including the independence of monetary policy, regulatory bodies and independent or semi-independent parastatals. Importantly, the economic policies characterizing populists in Latin America are more subtle and less ideologically obvious than others but still deserve close consideration and scrutiny given how they will impact growth in the region. Weak investment, low productivity and inadequate education have condemned Latin America to a period of economic failure even worse than the "lost decade" of the 1980s, according to the top U.N. economic official in the region. The stagnation of the past decade contrasted not only with the 5.9% annual growth of the 1970s, but also the 2% achieved in the 1980s, a decade characterised by a wave of debt crises. José Manuel Salazar Xirinachs, new head of the ECLAC, said to FT from ECLAC's base in Chile, also called on the region's three newest leftwing leaders to prioritise growth. Brazil, Colombia e Chile have all elected leftwing presidents. "In general the progressives in Latin America have been preocupied with distribution but not with wealth creation", said the Costa Rican economist. "We need both and they go hand in hand." Latin America has grown more slowly than almost any other part of the world over the past decade. "The underperformance was due to a lack of investment and poor education, both of which had hurt productivity. We are investing too little in infrastructure and we have an education system which is not delivering the talent we need in terms of numbers and quality," he said. ECLAC, has been wedded to "dependency theory", the idea that raw material producers are trapped in an unfair global economic system that prevents them from moving up the value chain and has in the past advocated state-led industrialisation as a response. This meant harnessing public and private money to develop high value-added goods and tech-enabled services in sectors such as medical devices, electric vehicles, green energy and pharmaceuticals. This was best achieved by creating "clusters" close to universities and research institutes. Salazar Xirinachs said Spain's Basque region had successfully used the model but it had been used only sporadically in Latin America, for example in the Bogotá region of Colombia or in the automotive sector in Mexico. "It needs to become a more coherent policy and to leave to one side those debates about whether it is the state or the market. What is good about the clusters focus is that it is a very pragmatic way to collaborate." he said. Other priorities include improving the efficiency of government spending, making tax system more progressive and increasing the supply of trained mid-level technicians, engineers and managers. The region has been very weak in technical capabilities. Latin American countries trade less with each other than any other region, with their economies geared instead to export raw materials to the U.S., Europe and China. Salazar Xirinachs wants to see a greater focus on practical measures to facilitate inter-region trade, rather than the grand political declarations that have characterised past efforts at their integration. "In the past, regional integration was seen as an alternative to insertion in the world economy, Now it is clear that it is more complementary. For Latin America to successfully become part of the world value chains, it needs regional chains of production," he adds.
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