ECLAC Economic Commission for Latin America and : A Fourth Industrial Revolution Implies for the Region Progressive Structural Change Centered on Equality and Sustainability

Latin American and Caribbean countries need a new style of sustainable development that enables them to resume the path of economic growth by promoting new coalitions between public and private sectors and the citizenry, the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), Alicia Bárcena, said in Davos, Switzerland, where she is participating through today in the annual meeting of the World Economic Forum, which gathers 2,500 world leaders and whose theme this year is the 'Fourth Industrial Revolution.'

'Public and private investment acting together is the option for strengthening innovation and social inclusion. There are enormous opportunities in the creation of a single digital market to expand connectivity to all the region's corners. Investments in energy and digital infrastructure can be combined, boosting technological and environmental innovation to improve productivity indexes and access. Many of these aspects can be addressed in this very favorable context for public-private dialogue that is the World Economic Forum in Davos,' the senior representative explained.

Other relevant matters are evasion and avoidance of personal and corporate income taxes, which in Latin America represented the equivalent of 4% of regional GDP in 2014, as well as the minimum income level that will be required to bolster the households that lag the most in this unstoppable technological transition, she added.

Bárcena said that the region is going through a deceleration phase of the economic cycle-in 2015 the regional GDP contracted 0.4% and in 2016 an expansion of just 0.2% is forecast-with countries and subregions performing heterogeneously. The end of the cycle of high commodities prices, with the subsequent shock in the terms of trade, has had a mixed impact on exporting and importing countries. In addition, the growing uncertainty regarding the slow growth of developed countries and the deceleration of China has led to an unfavorable trade scenario. For that reason, the Executive Secretary indicated that the main challenge facing the region's countries today is to resume growth, boosting the diversification of production and making a jump towards greater technological innovation. She also called for protecting, in this context, the achievements seen in the last decade in terms of poverty reduction, improved income distribution and social inclusion.

ECLAC, the senior official said, is particularly concerned about the deceleration seen in gross fixed capital formation, considering that its participation in the region's GDP declined to 20% in 2015 from 21.5% in 2013. 'The fall in investment is worrisome not only because it exacerbates the effects of the economic cycle but also because it limits the possibilities of future growth and the capacity of our countries to advance on productive diversification and the necessary increases to productivity,' she stated.

In a context in which the region's fiscal deficit grew from 2.7% of GDP in 2014 to 3.1% in 2015, 'the region needs active fiscal policies and intelligent adjustments,' Bárcena stressed. In the current situation the decline in non-tax revenue was compensated by greater tax income derived from the progressive fiscal reforms that more than 15 countries in the region have carried out recently. 'The region has much more economic solidity and space than it had during other periods of deceleration to implement these types of policies, especially in areas that could reactivate the economy, such as infrastructure and innovation and development. We must create incentives today to boost sectors that will invigorate growth and exports in the future, for example, those that are environmentally sustainable such as renewable energy and services for clean and smart urban development,' she sustained.

Bárcena added that in this sense, the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs) represent a framework of reference for countries to develop their own measures to make progress in a parallel fashion on the three pillars of sustainable development: economic, social and environmental.

Many countries in the region have the enormous asset of having a large proportion of young people in their population with innovative potential, and therefore it is fundamental to invest today, with a long-term vision, in the improvement of educational systems and technical training, teaching abilities and skills that will allow them to play an active part in the digital and technological revolution as well as the knowledge-based economy. To that end, governments must establish innovative alliances with the private sector, academic centers and civil society.

Alicia Bárcena moderated a panel on Wednesday called 'Regions in transformation: Latin America,' in which representatives of public and private sectors in the region participated, including Argentina's Foreign Minister, Susana Malcorra; the mayor of Medellín, Colombia, Federico Gutiérrez; the Chief Executive of Cielo (Brazil), Romulo de Mello Dias; the Chief Executive of Empresas Polar (Venezuela), Lorenzo A. Mendoza; and the Chief Executive of Cinépolis (Mexico), Alejandro Ramírez.

In a context of global paradigm shifts, speakers on this panel addressed the principal challenges that Latin American and Caribbean countries face. Special emphasis was placed on bolstering regional integration as a strategy to take advantage of the historic opportunities stemming from the digital revolution, financial governance and the need to reduce the carbon footprint of production and consumption patterns.

The same day, the Executive Secretary participated in an interactive lunch organized by Banco Itaú, with Nelson Barbosa, Brazil's Finance Minister, and Federico Sturzenegger, President of Argentina's Central Bank, in which participants analyzed the region's economic prospects for 2016. During the discussion, they addressed the macroeconomic policy dilemmas in existence with a short- and long-term view to maintaining investment, real wages and social protection systems.

On Thursday, Bárcena participated in the inaugural meeting of a public-private initiative on growth with social inclusion created by the World Economic Forum, in which Nobel Prize-winning economists Joseph Stiglitz and Michael Spence, along with other prominent international figures, made presentations. There they explored the opportunities for the current fourth industrial revolution to be an instrument for global progress and shared prosperity, with more employment and equality.

Bárcena also held a bilateral meeting with the Chief Executive of Telefónica, César Alierta, in which they reviewed collaboration opportunities to dialogue about the possibility of creating a single digital market in the region as part of the eLAC2018 new digital agenda, agreed upon at the Fifth Ministerial Conference on the Information Society in Latin America, held in August 2015 in Mexico.

ECLAC's representative also shared the traditional Latin America dinner with Argentine President Mauricio Macri; the Chief Executive of CISCO, Chuck Robbins; and economic authorities and company executives from Latin America, mainly Mexico, Brazil, Argentina and Chile. There the issue of technology and innovation was explored.

In the framework of the Forum, Bárcena participated as a panelist in other sessions that dealt with topics such as natural resource governance (especially related to the mining industry), gender parity and the data revolution for sustainable development.

In her role as Chair of the Forum's Global Agenda Council on Latin America, the senior official will have an active role in terms of taking this set of issues to the debates that will be held in the regional version of the World Economic Forum, scheduled for June 16-17, 2016 in Medellín, Colombia.