Middle income countries require differentiated access to the mobilization of external resources, capital markets, concessional financing and trade, along with bolstered instruments to attract quality foreign direct investment, Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), contended today.
The regional organization’s most senior representative participated in the second high-level ministerial meeting of like-minded nations that support middle income countries, which was held in New York and coordinated and organized by the Foreign Ministers of Costa Rica, Manuel González, and Belarus, Vladimir Makey. The Vice President of Panama, Isabel de Saint Malo, attended the event along with other authorities.
During her speech, Alicia Bárcena emphasized that middle income countries’ contribution to global development and their growing political and economic influence have positioned them as key actors in international relations.
However, she said, they still confront significant challenges due to their different levels of development, their needs, the classification criteria and dependence on development assistance.
In that sense, ECLAC’s Executive Secretary called for modifying the current criteria used to classify middle income countries, which she considered to be inadequate for the allocation of financial resources and for addressing the changes that these nations face.
“The criterion of per capita income does not reflect or capture the social, economic and environmental heterogeneity and the vast diversity of needs and challenges that characterize the countries belonging to this income group,” she stated.
She noted that, according to the World Bank classification from June 2017, in Latin America and the Caribbean 25 countries are deemed to be middle income, 7 high income (5 of these are Caribbean nations) and just one is classified as low income.
Alicia Bárcena added that the income criterion should be complemented by a structural gap approach that provides the development-suited orientation that is needed to effectively address the potential and challenges of middle income countries.
This approach, she said, identifies the main structural obstacles that hinder the sustained, equitable and inclusive growth of such countries. It includes 12 additional indicators in terms of inequality and poverty, the debt coefficient, investment and savings, productivity and innovation, infrastructure, education, health, taxes, gender and the environment.
“The structural gap approach rests on the premise that there cannot be one single classification or criterion that fits all countries and, therefore, it is the basis for an inclusive and egalitarian cooperation agenda,” she affirmed.
ECLAC’s Executive Secretary explained that the closing of development gaps necessitates the mobilization of resources, both from traditional and new sources. For example, she said, according to ECLAC’s estimates, closing the infrastructure gap in Latin America and the Caribbean will require an average annual investment of around 6.2% of GDP in the 2012-2020 period.
She said that a breakdown of financial flows shows that private flows have become the main source of financing for middle income countries, even for developing countries in Latin America and the Caribbean.
However, she stated, middle income countries also need new and innovative ways of combining different financing modalities, such as donors that are traditional and emerging, multilateral and bilateral, from North to South and South to South, among others.
