Data Paints Troublesome Picture for Latin American Growth

By Claudio Loser
Latin America Advisor, August 24, 2009

Originally published in Claudio Loser’s “By the Numbers” column for the Dialogue's daily Latin America Advisor

WASHINGTON—The peak of the summer vacation is not the best time to burden my patient readers with heavy statistical material or complex discussions. However, we cannot forget what is happening in our troubled and promising region. Thus, I just want to present a few simple tables and a chart that Drew Arnold, a Georgetown University student working with Centennial Group, where I am president, and I have worked on in recent weeks. The data are part of a project commissioned by the Andean Development Corporation about the prospects of our Latin America in the next 20 years. While the chart and tables are only inputs based on available information, they present a troublesome picture about the prospects for sustained growth in the region. Just their observation suggests that the task ahead is difficult, even if the prospects for coming out from the current recession are much better than in the past.

The chart and tables show a laggard region in savings and investment, infrastructure, quality of education, competitiveness and ease of doing business, as well as in other areas not shown here, like technology, financial and overall economic resiliency. The lesson, unfortunately, is that the region has done its homework on macro-management, as the current crisis shows. However, if Latin America wants to prosper, we need to make much more intense efforts to solve our secular problems, and break away from our "middle-income trap." And in order to think about that, we cannot afford to take a full summer break.

Also, one correction: In my last column, published June 25, I predicted that the Argentine government would be defeated soundly in congressional elections, and that this would not be the case in Mexico. I was only half right (about Argentina), while I partially missed the mark for the other half (about Mexico). President Calderon's popularity did not extend to members of his party in Mexico's Congress, while in Argentina voters' lack of trust was much more general. Of course, this should not be seen an ex-post explanation but as an apology for my simplistic projection.

Claudio Loser is a senior fellow at the Inter-American Dialogue and former head of the Western Hemisphere Department at the International Monetary Fund.