ECLAC: Productivity remains the “Achilles’ heel” of the region’s economies

“Productivity remains the Achilles’ heel of Latin American and Caribbean economies,” especially in view of the heavy recessionary bias in the world economy today, said Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), at the opening session of the first high-level meeting of the OECD Regional Programme for Latin America and the Caribbean and the second meeting of its Steering Group, of which the Commission is a member.

Increasing productivity, advancing social inclusion and strengthening governance are the three priorities of the Regional Programme of the Organization for Economic Cooperation and Development (OECD), which was launched in June 2016 in Paris to support Latin America and the Caribbean in advancing its reform agenda. Chile and Peru are the first two Co-Chairs of the Programme for the period 2016-2018.

According to the latest economic projections by ECLAC, the gross domestic product (GDP) of Latin America and the Caribbean will shrink by 0.9% on average this year, while in 2017 it is expected to grow by 1.5%. “Our region urgently needs an environmental big push to change its development model”, said Bárcena, who called on countries to make strides in industrial and technology policies, focused on investment and innovation, in order to achieve the new Sustainable Development Goals (SDGs).

Tax evasion, she said, is another weak point in Latin American economies. ECLAC estimates that, in 2015, non-compliance amounted to 2.4 percentage points of regional GDP for value added tax (VAT) and 4.3 points of GDP for income tax, representing a total of US$ 340 billion (6.7% of total GDP).

Néstor Popolizio, the Vice-Minister for Foreign Affairs of Peru; Andrés Rebolledo, Director General for International Economic Affairs (DIRECON) of the Ministry for Foreign Affairs of Chile; and Gabriela Ramos, the OECD Chief of Staff, Sherpa to the G20 and Special Counsellor to the Secretary-General also made statements at the opening session of the meeting held at ECLAC headquarters in Santiago.

Alicia Bárcena highlighted the fact that the OECD Programme had brought together organizations that have a long history of multidisciplinary analysis of development in Latin America and the Caribbean and experience in formulating recommendations on policies and tools: ECLAC (since 1948), the Inter-American Development Bank (IDB) and CAF-Development Bank of Latin America, all members of the Steering Group.

A specific example of cooperation between ECLAC and OECD, Bárcena said, is the annual Latin American Economic Outlook report (to which CAF also contributes). She announced that this year’s edition will be launched at the end of October, at the twenty-fifth Ibero-American Summit of Heads of State and Government, to be held in Cartagena, Colombia.

Néstor Popolizio, the Vice-Minister for Foreign Affairs of Peru, reaffirmed his country’s commitment to promoting best practices in Latin America and the Caribbean in order to achieve the 17 SDGs of the 2030 Agenda. He noted the support that the various international organizations involved are providing to the OECD initiative, citing, for example, “the great wealth of knowledge and statistics that ECLAC has compiled on issues in the region”.

Andrés Rebolledo, of DIRECON, said that Chile’s involvement in the OECD Regional Programme is central to the country’s foreign policy. “We have made a commitment to integration with the region”, said the official from the Ministry for Foreign Affairs.

Gabriela Ramos, OECD Chief of Staff, said that “the programme that we are launching is not an attempt to reinvent research on Latin American and Caribbean; rather, it aims to build on progress already made by the Latin American institutions in analysing and understanding the regional situation”, adding that “with the determination, know-how and desire for good policies, great things can be achieved”.

Attending the meeting in Santiago are Ministers and Deputy Ministers for Foreign Affairs, Foreign Trade and Planning, among other government representatives, and international civil servants, who will examine the challenges related to the three priorities of the OECD initiative and the items to be included in the programme of work 2016-2018, which is expected to be adopted in December 2016.