Economic policy, institutions and productive development in Latin America

ECLAC has submitted an overall assessment of the economic reforms implemented during the past 15 years to the Governments of the region and, based on that assessment, a proposal for strengthening the development process. The central message that emerges from this analysis is that the region needs to work towards forming closer linkages among its macroeconomy, microeconomy and institutional structure by reinforcing the complementarities between macroeconomic and microeconomic sources of competitiveness and fortifying the institutional framework for the development of production activity. Without jeopardizing existing macroeconomic sources of competitiveness ­low and declining inflation, incentives for saving and investment, and a competitive exchange rate­ the region needs to design microeconomic policies that will open the way for new sources of competitiveness: training and productivity, technological dissemination and innovation, investment abroad and infrastructure. To this end, a unified approach should be adopted which, while preserving a growth-oriented form of macroeconomic stability on the basis of a more determined savings and investment effort, will also foster a greater dissemination of technical progress and less heterogeneous gains in productivity than at present. This type of approach also appears to call for a better balance in terms of both institutions and resource allocation between macroeconomic policies and policies for promoting productive development. In addition, an effort must be made to refine the assessment capabilities and relevance of policy tools for productive development, to enhance the performance and decentralization of policy management in this area, and to reinforce these policies' linkages with growth and efficiency.