Executive Secretary José Manuel Salazar-Xirinachs presented the annual report “Panorama of Productive Development Policies in Latin America and the Caribbean 2025” today in Mexico City.

Latin America and the Caribbean must embrace a new vision of productive development policies (PDPs) to escape the trap of low capacity for growth in which it is mired and to be able to tackle the challenges imposed by the new global geopolitical context, the Economic Commission for Latin America and the Caribbean (ECLAC) contends in a new publication launched today in Mexico City.

The annual report Panorama of Productive Development Policies in Latin America and the Caribbean 2025: How to escape the trap of low capacity for growth was presented at a press conference by ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, who indicated that the trap of low capacity for growth can be attributed largely to a slow productive transformation and more than a decade of corresponding stagnation, and even decline, in the region's labor productivity rate, which has fallen below average global productivity since 2017. Although the document indicates a 2.2% rise in the region’s labor productivity between 2023 and 2024, that increase is not enough to surmount the overall lag, the United Nations regional organization warns. 

The study points to great diversity regarding productivity levels and growth between countries, territories, companies of different sizes and sectors in the region, with the lowest-productivity sectors accounting for the largest share of employment in Latin America and the Caribbean. The lowest productivity rate is seen in the agriculture, livestock and forestry sector, representing just 44% of the region’s average productivity, according to data from 2023. It is followed, among the sectors with the lowest productivity, by commerce, with 69%, and construction, with 77%. Meanwhile, microenterprises account for a mere 12.5% of the productivity of the region’s large companies, which is a much bigger gap than what is seen in more developed economies.

“The quandary facing Latin America and the Caribbean is substantial: either we begin a new era of high, sustained, inclusive and sustainable growth, or we head for a third lost decade. To avoid the latter scenario, countries must scale up and improve their productive development policies based on a new vision that includes, among other things, working on strategic agendas around driving sectors, multilevel and multi-stakeholder collaborative efforts, and the promotion of clusters and other productive articulation initiatives. Let’s raise the political profile of these policies and delve deeper into the ‘hows,’ meaning how to carry out these transformations in practice,” urged ECLAC’s Executive Secretary, José Manuel Salazar-Xirinachs, recalling that the Panorama’s 2025 edition being presented today joins other documents and projects by ECLAC that aim to provide practical guidance on how countries and their territories can use PDPs to accelerate their productive transformation.

The report analyzes various productive development policy efforts being carried out in the region – such as the Plan Nova Indústria Brasil, the Sustainable Productive Development Program of Chile, the National Reindustrialization Policy of Colombia, Mexico’s Plan (Plan México) and the National Industrial Development Policy of Peru – in light of the recommendations that ECLAC has been formulating, which include sector prioritization, resource allocation, leadership at the highest level, collective construction, the territorialization of policies, the utilization of cluster initiatives, and monitoring and evaluation. Although progress has been made, there are significant opportunities for improvement in the way the region has been developing PDPs, the Commission affirms.

According to the report, the ability to scale up and improve productive development policies depends, in part, on the way in which countries and their territories align their science, technology and innovation (STI) efforts with their economies’ productive transformation.

The region is clearly lagging on STI investment, ECLAC says, with investment levels in research and development of around 0.56% of GDP, far below the countries belonging to the Organisation for Economic Co-operation and Development (OECD) (3.0%), the United States (3.6%) and China (2.6%). However, the impact of STI policies depends not only on greater resources, but also on the design, operation and coherence of the strategies, institutions and instruments involved, the Commission notes.

For that reason, ECLAC recommends strengthening multi-stakeholder coordination and governance (in particular, university-business relations); bolstering the technical, operational, political and prospective (TOPP) capabilities of the entities in charge of STI policies; diversifying and scaling up tools; increasing the financing of STI while also enhancing its direction and quality; and harnessing opportunities for regional and extra-regional cooperation in this area.

In addition, the Commission stresses that cluster initiatives and other productive articulation initiatives are a powerful tool for the multi-stakeholder and multilevel articulation that new-generation productive development policies require, which means they should play a leading role. 

To date, ECLAC has identified 712 active cluster and productive articulation initiatives in 20 of the region’s countries. The most highly represented sectors in these initiatives are agriculture, manufacturing industries, tourism, and information and communications technology. Of this total, 58% receive financing from national governments, 51% from subnational governments and 39% from the private sector.

Productive articulation initiatives do not occur spontaneously but rather require deliberate policies, ECLAC affirms, which is why the report offers multiple recommendations grouped into 11 guidelines, such as utilizing these initiatives to work on strategic agendas around prioritized sectors under national and subnational PDPs; increasing the resources invested; ensuring the continuity of productive articulation initiatives; fostering evaluation capabilities and promoting the adoption of an experimentalist governance approach; and strengthening the Platform for cluster and other productive articulation initiatives, launched by ECLAC in 2023.

Finally, the document analyzes the opportunities for the region’s productive transformation arising from climate change and the energy transition. According to ECLAC’s calculations, between $2.1 and $2.8 trillion dollars in investments are needed in the region, cumulatively by 2030, in order to fulfill climate commitments while simultaneously driving economic growth.

Green and inclusive productive development policies represent a major opportunity for the region to establish itself as a global power in decarbonization and resilience. To that end, ECLAC recommends that the scaling-up and improvement of PDPs take into account the Nationally Determined Contributions (NDCs), which could, in turn, be strengthened by incorporating elements of productive development policies. Finally, the document stresses the urgency of bolstering capabilities for managing green and inclusive productive development policies.