Towards a consensus of the global south

Adam Smith used to say that "there can be no flourishing and happy society when the majority of its members are poor and wretched."

Latin America faces the challenge of advancing in its sustainable and inclusive development, within the framework of its democratic institutions and the rhythms that this imposes.

Humanity has achieved, after the Second World War, the highest levels of well-being and progress in its history.

Indicators of literacy, health or life expectancy demonstrate this.

However, there can be no room for complacency in the face of the challenges and megatrends to be overcome.

The strengthening of the middle classes is configured as one of the main characteristics of this century.

According to Centennial Group projections, 80% of the world's population will be middle-class and high-income earners by 2060. 4 billion people in emerging economies will form part of this segment in the next 40 years.

The vast majority of the inhabitants of the countries of East Asia will conform it, while those of Latin America will be 66% and Africa 50%.

However, there are risks of setbacks in the region.

The emerging middle classes – as engines of growth – are less resilient and may fall back into poverty.

Their role is critical for greater social cohesion, less conflict and breaking the intergenerational transmission of inequality.

Therefore, it is necessary to consolidate its position.

The so-called Asian Tigers (Korea, Hong Kong, Singapore, and Taiwan) have valuable lessons to offer.

Its level of development in the 1950s was very similar to that of Latin America.

Today they have reached a per capita income similar to that of industrialized countries.

For example, that of Singapore is higher than that of the United States, France or Spain and nine times higher than that of Brazil.

Likewise, they achieved convergence with the largest economies, while those of Latin America did not.

The latter continue under the multidimensional concept of the "middle income trap" and have comparatively lost space in terms of trade, investment, innovation and presence in the main forums and debates.

According to the former Minister of State of Chile and president of CIEPLAN, Alejandro Foxley, the trap consists in the difficulty of sustaining growth rates above 5% for more than a decade, accompanied by a reduction in inequalities and the consolidation and improvement of democratic institutions.

East Asian countries ―with the particularities of their political regimes― managed to advance by virtuously combining different elements of public policy and institutionality, influencing early and strategically in certain sectors.

Indeed, its leaders concentrated more on building long-term visions;

they prioritized economic issues, leaving ideological debates aside;

boosted total factor productivity;

they stimulated savings and investment rates;

they promoted human development and education;

favored the equitable distribution of income and assets;

they invested in infrastructure;

they constantly innovated;

they promoted changes in productive structures and their linkages;

they opened up their economies and became export oriented;

they established a favorable investment and business climate with clear and stable rules of the game;

they promoted the construction of solid bureaucracies based on meritocracy, among others.

Are the Latin American countries following the path of the “Tigers”?

The region has many lessons to learn here and value the positive and negative experiences.

It must go halfway to where it needs to go and redouble its efforts for a structural transformation, under close public-private collaboration.

Productivity and quality employment are at the heart of the debate.

Today it is necessary to take advantage of the technological dynamism of natural resources, print greater added value to exports and modernize educational systems to reinforce innovation.

An updated development strategy is required, which is not anchored in the past, responds to the new needs of the 21st century and is sustainable in the long term.

We must move from the theories of Raúl Prébisch and the "Washington Consensus" towards a "Global South Consensus" that promotes sustainable, stable and equitable development.

New political leadership, greater international cooperation and an intelligent international insertion are central elements for this purpose.

The crossroads of our time requires that democracy, development and social justice become a virtuous and indissoluble triad in compliance with the 2030 Agenda.

Andrés Rugeles

is a visiting professor at the University of Oxford and a member of the

of the LSE Global South Unit.

Subscribe to continue reading

Read without limits

Keep reading

I'm already a subscriber