The COVID-19 crisis and the structural problems of Latin America and the Caribbean: responding to the emergency with a long-term perspective

The economies of Latin America and the Caribbean have been slipping behind in the global economy, weighed down by structural problems that hinder their capacity to grow and absorb technology. The coronavirus disease (COVID-19) pandemic has not only brought these structural problems into sharper relief, but has also exacerbated them, by reinforcing adverse trends in growth, employment and income distribution. This article analyses these trends and argues that the crisis requires a response that is both immediate but also aims to overcome long-term constraints. Very robust fiscal policies are ne…

Hyper-fortunes and the super-rich: why a wealth tax makes sense

This article proposes a model to estimate the wealth of the richest groups in society and to design an efficient wealth tax system. For design and implementation issues, it reviews comparative international experience and provides an analytical discussion of the effects of a wealth tax, reviewing the main criticisms that orthodox economists have levelled against it. The methodology used to calculate wealth involves first-order approximations and Pareto criteria to compensate for data shortcomings. This article also presents a tax system which corrects the problems that have arisen when impleme…

Editorial note

Introduction. The global economy and development in times of pandemic: the challenges for Latin America and the Caribbean

Why the rich always stay rich (no matter what, no matter the cost)

This article returns to the Ricardian tradition of understanding income distribution as the outcome of an “antagonistic” conflict with a multiplicity of actors and struggles, where history, politics and institutions matter as much as economic “fundamentals”. Because this relates to the political sphere, there are no purely logical solutions to the conflict, but rather options in a scenario of multiple equilibria. In deregulated markets, this conflict favours the supremacy of unproductive rent (especially those of “inefficiency”), to the detriment of operating profits, affecting investment and …

A “new normal” as a “new essential”? COVID-19, digital transformations and employment structures

This paper explores the new policy challenges that have emerged as a result of the coronavirus disease (COVID-19) pandemic. The “new normal” should acknowledge the “new essential” in terms of jobs and sectors. First, the paper examines the trade-off between health policies and anti-recessionary policies. It studies the economic impact of lockdown on households and firms and, relatedly, the slowdown in global value chain-related trade. It the examines lessons that can be learned from this crisis in areas that were topical before the outbreak and are likely to be even more so after it. These inc…

CEPAL Review no. 132. Special Issue. COVID-19 and the socioeconomic crisis in Latin America and the Caribbean

Building pro-development multilateralism: towards a “New” New International Economic Order

This paper explains how a “New” New International Economic Order (NNIEO) may be emerging from the slowly crumbling neoliberal international economic order that came into being in the 1980s and 1990s. First, it examines how the neoliberal order has been fading and is being reshaped in the wake of the decline of the multilateral international trading system (embodied by the World Trade Organization (WTO)) and the 2008 global financial crisis. It then discusses how recent changes in the world economy and in prevailing ideas, together with a number of contingent factors —such as climate change, th…

Unbridled liberalism and a pandemic: at a crossroads between techno authoritarianism and a new social order

This paper analyses some of the trends in global capitalism prior to the pandemic and some specificities of the latter that are likely to place the global economy at a crossroads between maintaining the prevailing trend of techno authoritarianism in the governance of countries and a change in the social order. It describes the arrival of the pandemic amid increasing technologization and a fragile socioeconomic architecture, which has been deteriorating since the emergence of neoliberalism in the 1980s and, especially, since the 2008–2009 financial crisis. The major trends analysed are: globali…

Central America and the pandemic: macroeconomic policy challenges

This article has a twofold purpose: to describe the social and economic situation in the countries of the Central American subregion prior to the coronavirus disease (COVID-19) pandemic and to provide a comparative analysis of the macroeconomic policies introduced by the governments of these countries in response to this health crisis. As a central part of that analysis, it looks at the main structural policy challenges for the enhancement of social protection and reactivation of production activity and employment to be met by these countries during and after the pandemic. The need for a natio…

Structural asymmetries and the health crisis: the imperative of a transformative recovery for the advancement of sustainable development in Latin America and the Caribbean

This article underscores the pressing need to transition to a new development model in Latin America and the Caribbean as the region strives to cope with the current health emergency. Statistics show that the Latin American and Caribbean region has been hit harder by the pandemic than any other and that it has also sustained the most damage in economic and social terms. This is attributable to long-standing structural factors that set the stage for the emergence of its present dysfunctional development pattern. The region grew by a scant 0.4% per year between 2014 and 2019 against the backdrop…

Brazil: the effects of COVID-19 and recovery

This article analyses the effects of coronavirus disease (COVID-19) on Brazil’s population and economy, including its high mortality rate per 100,000 inhabitants and its slow stabilization. A brief comparison is made with what is happening in a similar Latin American country, Argentina, where the results in terms of mortality per 100,000 inhabitants have been better, and in France, where the recovery has been more robust. The article also assesses the efficiency of expenditures and notes that the comparison is also not favourable for Brazil. Lastly, it addresses the problem of financing and ar…

Women’s economic autonomy during the COVID-19 pandemic

This article is a contribution to the debate on the impacts of the COVID-19 crisis on gender inequalities in Latin America and the Caribbean, with a focus on women’s economic autonomy. Through a review of the contributions of feminist economics and an analysis of the empirical evidence, it identifies a deterioration in the indicators associated with women’s incomes and their participation in the labour market. The sexual division of labour is deepening in the region, endangering the scant progress made regarding women’s economic autonomy in the pre-crisis years. It warns about gender biases in…

COVID-19, elites and the future political economy of inequality reduction in Latin America

The literature is divided on the impact of pandemics on income inequality. The economic literature points to an increase in inequality as a result of pandemics, whereas historical and political science literature argue that pandemics may create breakdowns of institutions, maintaining inequality due to elite shifts and pressure from below. We review current data on the impact of COVID-19 and find that there is evidence of an upward income transfer as well as some elite shifts in the region. However, elites have controlled the economic measures to alleviate and confront the crisis and there is l…

The health economy in Mexico

The global health crisis caused by the coronavirus disease (COVID-19) pandemic has highlighted the important connection between the economy and health. This relationship exists at the microeconomic, macroeconomic and institutional levels, as health markets tend to suffer from market failures; health expenditure tends to increase as a percentage of gross domestic product (GDP), and its financing has long-term implications for public finances. In the case of Mexico, the creation of a public health system that is segmented —as a result of the social protection scheme applied since 1943, which has…

COVID-19 and social protection of poor and vulnerable groups in Latin America: a conceptual framework

The growing crisis caused by the coronavirus disease pandemic has dire implications for Latin American societies. As is often the case, the most vulnerable sectors of society —especially those living in extreme poverty— are being hit the hardest. This article identifies strategies and specific responses designed to achieve three goals: (i) reduce epidemiological risks to save lives; (ii) protect livelihoods; and (iii) ensure human capital accumulation. Epidemiological externalities, as well as humanitarian concerns, demand universal social inclusion. In order to protect the lives, health, live…

Foreign Direct Investment in Latin America and the Caribbean 2020

The decade ending in 2019 saw the highest ever foreign direct investment (FDI) inflows to Latin America and the Caribbean, which reached their peak in 2012. Since then, foreign investment inflows have declined steadily, bringing into focus, especially in South American countries, the relationship between FDI flows, the macroeconomic cycle and commodity price cycles in the region. In 2019, Latin America and the Caribbean received US$ 160.721 billion in FDI, 7.8% less than in 2018, a decline that is seen intensifying sharply in 2020 when inflows are forecast to drop by between 45% and 55% as a r…

Public-private partnerships under the “people-first” approach

One of the structural problems that hinders fuller development in Latin America is a lack of infrastructure investment. Since the 1980s, when investment in economic infrastructure ceased to be almost entirely public, the private sector has played an important role, at times accounting for about half of the total. Such investments mainly take the form of concession contracts or other forms of public-private partnerships (PPPs). Traditional PPP initiatives for the provision and financing of infrastructure services have had varying success, resulting in contrasting perceptions of their performanc…

The impact of COVID-19 on transport and logistics connectivity in the landlocked countries of South America

Given their geographic situation, landlocked developing countries have been hit doubly hard by the cross-border processes implemented to contain the coronavirus disease (COVID-19) pandemic. This research provides a detailed explanation of the responses to the COVID-19 pandemic in the areas of international trade and transport adopted by the Governments of the Plurinational State of Bolivia and of Paraguay to limit the effects of the pandemic on trade operations and supply chains in their countries. It also provides a set of policy recommendations to preserve and improve trade facilitation and …

Caribbean in Brief: an information document for Caribbean Small Island Developing States

This brief is intended to provide general information on the upcoming United Nations Ocean Conference on scaling up ocean actions based on science and innovation for the implementation of Agenda 2030 - Sustainable Development Goal 14 (SDG 14), with a view to stimulating more active, engaged participation of the Caribbean in the discussions. The United Nations Ocean Conference will be co-chaired by Kenya and Portugal, and hosted by the Government of Portugal in Lisbon, during 2021. The objective of this conference is consistent with the 2017 UN General Assembly proclamation on the Decade of Oce…