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José Antonio Ocampo: "To grow, Latin America needs new environmental and social policies"

2022-01-19T18:36:58.055Z


The economics professor at Columbia University talks about the changes that could satisfy the appetite for a new economic model in the region


José Antonio Ocampo during an interview in Bogotá, Colombia. Jaime Saldarriaga (Reuters)

In Latin America, a desire was awakened to change the extractivist model that has written the rules of the economy for centuries. It is a movement that wants to protect natural resources, instead of exploiting them disproportionately in exchange for income and, at the same time, guarantee access to services for all citizens, not just the richest. This is confirmed by the victory of Gabriel Boric, president-elect of Chile. This is reflected in the rhetoric of the leading candidate in Colombia, Gustavo Petro, who proposes creating an "anti-oil front." It is represented by indigenous groups and activists, but also young people in urban centers.

Although Boric and Petro declare themselves to be on the left, not everyone on the left is part of it. In Peru, Pedro Castillo, a candidate for a Marxist party, proposed nationalizing natural resources, not slowing their extraction. In Mexico, President Andrés Manuel López Obrador, also on the left, has undermined renewable energy to give oil and coal an advantage. Environmental protection and social struggles divide the Latin American left and paint themselves above the ideological spectrum.

In tune with this appetite for a new model, the economist José Antonio Ocampo, former executive secretary of the United Nations arm for the development of Latin America and the Caribbean (ECLAC) and today a professor at Columbia University, proposes economic, environmental and and social that, he assures, would boost the region.

The also former Minister of Finance of his native Colombia spoke with EL PAÍS about the changes that must be made to achieve prosperity, even if this means that businessmen must reduce their profits.

Ask.

How can better environmental and social policies boost the economy?

Answer.

I have two basic ideas: the first is that it is necessary to enter the world of science and technology in a much more active way. Latin America has, on average, a level of investment in science and technology that is a tiny fraction of the OECD level. The only country that exceeds 1% of gross domestic product (GDP) in research and development is Brazil. The others have been much lower, when the OECD or China invest 2% and the leading countries such as South Korea and Israel almost 4%. How to connect science and technology or research and development with productive development? What are the new productive branches that we are going to develop? For me, that doesn't mean that natural resources should be completely cut off, because we are a region that is very rich in natural resources.What you have to see is how to use the opportunities. Metals like copper and lithium, for example, are important for new technologies and are abundant in several South American countries. In the case of agricultural products, our countries can be inserted into complex food product chains that use highly advanced technologies that can compete with the United States. Colombia, for example, has dedicated itself to promoting and expanding the export of specialty coffees that are much more controlled for quality, for ecological inputs, and have a much higher price in international markets. That's the first idea. A second idea is: Latin America has to sit down fully in a process of regional integration. Many of these productive chains can be developed regionally, instead of, for example,be processors of input products that sell to China, or other Asian countries, to export to the US We can sell to our own markets. The Latin American market as a whole is a very large market. In the case of manufacturing sectors or services with a higher technological content, there are great opportunities. It is something, even paradoxical, that Latin America prefers to integrate with the US or with Europe, rather than integrate with each other. We have to depoliticize our integration processes, develop a scheme like that of the European Union, in which, with one exception, governments go from left to right and vice versa, but the countries do not leave the EU.All in all, it's a very big market. In the case of manufacturing sectors or services with a higher technological content, there are great opportunities. It is something, even paradoxical, that Latin America prefers to integrate with the US or with Europe, rather than integrate with each other. We have to depoliticize our integration processes, develop a scheme like that of the European Union, in which, with one exception, governments go from left to right and vice versa, but the countries do not leave the EU.All in all, it's a very big market. In the case of manufacturing sectors or services with a higher technological content, there are great opportunities. It is something, even paradoxical, that Latin America prefers to integrate with the US or with Europe, rather than integrate with each other. We have to depoliticize our integration processes, develop a scheme like that of the European Union, in which, with one exception, governments go from left to right and vice versa, but the countries do not leave the EU.develop a scheme like that of the European Union, in which, with one exception, governments go from left to right and vice versa, but countries do not leave the EU.develop a scheme like that of the European Union, in which, with one exception, governments go from left to right and vice versa, but countries do not leave the EU.

P.

Many will say that an attempt to do this has been Mercosur, today a divided bloc.

A.

No, but Mercosur was the poorest of all the processes.

We have other processes that have worked very well, starting with the Central American Common Market, with all its flaws.

The Andean Community works in terms of trade and despite the fact that Venezuela has decided to leave.

Bolivia, with Evo Morales, did not decide to leave the Union of the Andean Community and took great advantage of it.

Mercosur was always an incomplete process and now they are totally divided politically.

And well, Mexico has always been reluctant to be part of anything with Latin America.

However, the Pacific Alliance, of which Mexico is a part, is one of the few processes that has advanced in recent years.

It is another positive example.

José Antonio Ocampo in Washington, DC. TJ Kirkpatrick (Bloomberg)

P.

You assure that to get the region out of the coming economic stagnation, it is also necessary to pass social policies.

A.

That's right. We have to make significant progress in reducing inequality. We have made progress in certain areas: today there is less inequality in access to education and health but income and wealth inequality, income inequality is still very high. This has to do with how we modify our social policy, on the one hand, and also the tax structure so that there is a much stronger redistribution through fiscal means. Europe is an example that through fiscal policy reduce inequality. We have only been able to advance in this more than very little. That is an important issue, because this social explosion in Latin America is associated with that problem, that we are a very unequal region.

Q.

How does reducing inequality drive the economy?

R.

Because it strengthens internal markets.

If one manages to reduce inequality, it means that you have a popular sector that can consume much more, that you have a much more powerful internal market.

If the low-income sectors of Latin America can consume more technology, more industrial products or more services, all this is potential for development.

Low-income sectors tend to spend 100% of the additional income.

If you have a better health system, people will be able to work more, for example.

P.

Many want a model that stops exploiting natural resources and combats climate change.

But can you grow economically while also protecting the environment?

R.

Yes, this is the third big topic. Latin America has the task of climate change, which is also an important productive opportunity. All the new sectors associated with clean energy technologies are an immense opportunity to be able to develop ourselves some of the inputs that are required for this renovation. Why can't solar panels be produced in Latin America on a large scale? There is also a lot of talk about the costs of combating climate change. Latin America has the largest number of megadiverse countries in the world. So the protection of diversity and of our native forests in South America is important. In the long run, humanity has to pay for its original environmental resources, right? You have to pay to conserve the Amazon rainforest.We all have to pay to protect Antarctica, we have to contribute to the protection of the poles because they are a universal asset. So the question is: How do you pay for these global environmental services? It is an issue that is still pending on the agenda. A more advanced one is the proposal for a kind of universal insurance for natural disasters. Barbados' proposal is that there be universal insurance for countries that lose more than 4% of their GDP in a natural disaster. These costs are currently paid by national governments, but many countries do not have that magnitude of resources.A more advanced one is the proposal for a kind of universal insurance for natural disasters. Barbados' proposal is that there be universal insurance for countries that lose more than 4% of their GDP in a natural disaster. These costs are currently paid by national governments, but many countries do not have that magnitude of resources.A more advanced one is the proposal for a kind of universal insurance for natural disasters. Barbados' proposal is that there be universal insurance for countries that lose more than 4% of their GDP in a natural disaster. These costs are currently paid by national governments, but many countries do not have that magnitude of resources.

P.

What has to happen for these policies to materialize?

R.

They have to be on the political agenda of the countries.

You mentioned Boric, and one of the interesting things about Boric's agenda is that the environmental agenda entered and that is why the youth support him.

Now, with the issue of natural disasters, it has clearly entered the world agenda, not only the issue of mitigation, but an issue that I knew had been underestimated, which is the issue of adaptation.

All tropical countries are affected by adaptation.

For example, Colombia is a rich country and our snow-capped mountains are melting much faster than the poles.

This will be a problem of water availability.

It is a matter of severe attention.

Jose Antonio Ocampo during an interview in New York.

Christopher GoodneyBloomberg

P.

Will this change imply that Latin American businessmen sacrifice revenue?

R.

Yes, and I would say that they have to do it through taxation, but there are also opportunities for them.

Some sectors are possibly going to be net payers, but there may be net beneficiaries.

If we make a good policy regarding the production of medicines, or food, or regarding the transformation of energy generation, the opportunities will be there.

Our automotive sectors have to start large-scale production of electric vehicles.

This is not just costs.

there are opportunities, but they are diverse, they are for certain sectors and perhaps not for others.

Source: elparis

All business articles on 2022-01-19

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