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José Antonio Ocampo: "Latin America has to reinvent itself"

2020-08-30T00:49:19.878Z


The former executive secretary of ECLAC and professor at Columbia University is very critical of the continent's political passivity and asks for help for SMEs


Jose Antonio Ocampo, during an interview on Bloomberg Television.Christopher Goodney / BLOOMBERG / Bloomberg

If anyone has been practically everything in the Latin American economy in recent decades, it is José Antonio Ocampo (Cali, 67 years old). Executive Secretary of ECLAC (the United Nations arm for the development of Latin America and the Caribbean), UN Deputy Secretary for Economic Affairs in the time of Kofi Annan, Minister of Finance of his country - Colombia -, professor in four of the most prestigious universities in the world (Cambridge, Yale, Oxford and, now, Columbia), in 2012 he was in the final shortlist to lead the World Bank. Heterodox confessed, answers the questions of EL PAÍS by videoconference on a hot Californian morning.

Question. At what point is the region?

Reply. Latin America has become the center of the pandemic and the economic figures that are coming out are in the ranges of the worst in the world along with Western Europe. The second trimester has been fatal.

Q.  What will recovery be like?

R. In most countries I see a relatively rapid reactivation. Not total and with some weaknesses, but in V. There are, however, two things that we still do not know: if there will be new relapses, although I do not think they will be of the same magnitude, and how many companies will be available. Because the volume of bankruptcies can be enormous. Governments have to approve new mechanisms to support them.

P.  Large companies, except airlines, have generally endured the downpour. The problem is in SMEs.

R.  Yes, and it is just what I miss: more aid mechanisms for small and medium-sized companies, such as partially non-repayable loans that give them capital. I do not see any country involved in this task, despite the fact that it is the most urgent together with support for households. The reactivation will be much slower in employment and poverty than in economic activity; this is why it is so important to maintain and improve basic income programs.

P.  In the social, the deterioration will be serious.

R.  Above all, it is about a path that was already weak before the start of the crisis, with five years, 2015-2019, very bad for Latin America. And since 1990 annual growth has been half that between 1950 and 1980 ... Latin America has to reinvent itself for its development.

Q. How?

R. It  is necessary to depoliticize regional integration: the EU works for governments of the left and of the right, and that we have not achieved. International trade is going to be much less dynamic in the coming years and Latin America has to make full progress in its integration process. We have to rethink reindustrialization, with much more ambitious development policies. And research, science and technology, where we are an international disgrace: we invest a third of China. Only Brazil dedicates more than 1% of GDP.

P.  How do you assess the response of governments to the crisis?

R. It  has been very diverse. Peru and Chile have implemented ambitious policies because they had fiscal space. On the opposite side is Mexico, which has not adopted anything important to face the crisis. Nothing. And in all the intermediate cases, less has been done than was intended; much more needs to be done for reactivation.

Q.  And that of international organizations?

R.  They have increased their support, but to a lesser extent than the crisis of 2009. Furthermore, the main funders in Latin America, which are neither the IMF nor the World Bank, but the IDB and CAF, are not going to be able to fulfill an important function if they are not recapitalized. Multilateral action has been weak and that is the most negative of this crisis.

P.  The good news is that the period of time in which the large Latin American countries have been without access to the market has been minimal ...

A.  Yes ... Less than a couple of months, when after the [Latin American debt crisis of the eighties] we had no access for eight years; after the Asian crisis [of the 1990s] there were five; and after Lehman Brothers, 13 months. It is an essential difference. And it is the most positive: it has helped more than any multilateral action.

Q.  What else can be salvaged?

R.  The debt agreements of Argentina and Ecuador, both in very difficult conditions.

Q.  Can the risk of a financial blowout be ruled out?

A.  I think so, just as we didn't have one after the 2009 crisis. The region has learned to handle these situations thanks to the increase in international reserves. But we need more action from development banks, the big absentees this time.

Source: elparis

All business articles on 2020-08-30

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