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Development prospects for Latin America and the Caribbean in a post-COVID-19 world

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In May 2020, Latin America and the Caribbean became the epicenter of the global COVID-19 pandemic, and the number of positive cases and deaths related to the SARS-CoV-2 virus continues to grow at a fast pace. The severity of the health crisis is exacerbated by the structural problems that characterize the region in areas such as health, social and economic inequality, political strife, violence and insecurity, as well as environmental degradation. The outbreak of COVID-19 threatens to reverse economic and social progress achieved in the region over the last decade; moreover, it compromises prospects of achieving the Sustainable Development Goals (SDGs) by 2030.

In this context, the United Nations Industrial Development Organization (UNIDO) and the Latin American Network for the study of Learning Systems, Innovation and Skills Construction (LALICS) together organized a webinar titled: “Technological revolutions, changes in lifestyles and sustainable industrial development in Latin America and the Caribbean in a post-COVID-19 world”. The webinar served as platform where more than a hundred researchers, policymakers and practitioners discussed pressing challenges and opportunities, taking into account both the current health and economic crises, and the aforementioned structural problems faced by the region.

In his opening remarks, Diego Masera, Chief and Deputy Director Regional Coordination Division – Latin America and the Caribbean, highlighted the severity of the pandemic. According to the Economic Commission of Latin America and the Caribbean (ECLAC), in 2020, the region’s GDP will fall by 9.1% in annual terms, with a drastic decline in manufacturing production. Masera emphasized the pertinence of identifying alternative development models that would reduce the risk of falling into an even greater crisis due to climate change. He endorsed the UN General Secretary, Antonio Guterres who, in his recent report on the impact of COVID-19 in Latin America and the Caribbean (July 2020), asserts that the crisis calls for a reassessment of the roles of the State, the market and of civil society, in order to improve equality, transparency and democracy in the region.

In the search of long-term solutions, Masera stressed that the promotion of sustainable and inclusive industrial policies, the integration of informal workers into formal and decent work, as well as investment in research and development are crucial factors to consider. SDG9, which promotes inclusive and sustainable industrial development, innovation and resilient infrastructure, should be a central element in the development agenda of countries in the region. He stated that UNIDO, in accordance with its mandate to promote sustainable and inclusive industrial development, is ready to assist member states in the region to achieve a fast recovery from this crisis, and to prepare and build the strengths needed to give local populations a better future. 

Prof. Gabriela Dutrénit, Professor at the Department of Economics and the Postgraduate Programe in Economics and Management of Innovation Policies at the Autonomous Metropolitan University Xochimilco in Mexico City, and President of the Scientific Board of LALICS, described the current events as an historical moment marked by changes in various areas that highlight the challenges of building innovation capacities in order to reduce dependencies on external technologies and knowledge, while also opening new development opportunities. Latin America, in particular, faces new possibilities for closing gaps and contributing to an inclusive and sustainable development. She appealed to the LALICS network to rethink and propose new courses of action driven by innovation policy and productive transformation while, at the same time, building the necessary resilience to confront future crises. 

The main speaker for the webinar was Prof. Carlota Pérez, British-Venezuelan researcher, lecturer and international consultant specializing in technology and socio-economic development. Addressing the question of what influence the COVID-19 pandemic could have on the growth prospects of Latin America and the Caribbean, Pérez noted that, based on historic experience, such influence would depend on how much the pandemic can affect the pace and direction of the ongoing technological revolution in industrialized countries. In her opinion, the present situation is comparable to the post-war era, and we are moving to a situation requiring an active and omnipresent state. The challenge however, is not to replicate the past but to take a leap forward. In a scenario where Asia dominates the manufacturing of products, the opportunity for Latin America is to focus on processing industries and in the valorization of natural resources, targeting increasingly specialized, high-value markets. However, because processing industries tend to be labour-saving, she proposed a dual but integrated strategy, one that realizes potential productivity in every part of the territory, tapping into hyper-segmented markets and capitalizing on new forms of communication, transport and logistics.

According to Pérez, demand for natural resources-driven innovation will continue to grow, as production methods and lifestyles increasingly orientate towards environmental sustainability. She asserted that success in implementing this dual strategy depends on the ability to build private-public consensus framed by appropriate supporting institutions at the two ends of the strategy.

Lastly, during her intervention, Professor Helena Lastres, Associated Professor at the Institute of Economics, Federal University of Rio de Janeiro, noted that the pandemic is worsening the already complex political, economic and social situation experienced in Brazil and other countries in Latin America and the Caribbean. In her opinion, the situation is best described in the words of the late Brazilian economist Celso Furtado: “In no other moment in our history is the distance between where we are, and where we expected to be, as great as it is today.”

According to Lastres, addressing the crisis and fostering development in a post-pandemic future for Latin America and the Caribbean requires a strengthening of the role of the State, and a recovery of its development-promoting functions in the region. At the same time, she noted the growing importance of digitalization and the rapid adoption of information and communication technologies (ICT), together with the relevance of building national consensus around the pressing development needs affecting the future of Latin America. Lastres said the pandemic is reinforcing the need to prioritize the development of manufacturing systems oriented towards the provision of goods and services that are essential for the life, well-being and security of people in the region, with a special emphasis on ICTs for health and education.

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Human Rights

Only ‘real equality’ can end vicious cycle of poverty

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Children play outside a metal polishing workshop in a slum in Uttar Pradesh, India. © UNICEF/Niklas Halle'n

Although poverty and privilege “continue to reproduce themselves in vicious cycles”, it is possible to break the chain and shift the paradigm, an independent UN human rights expert told the General Assembly on Wednesday. 

Presenting his reportThe persistence of poverty: how real equality can break the vicious cycle, Special Rapporteur on extreme poverty and human rights, Olivier De Shutter, said that “with political will”, it is possible to end centuries of entrenched inequality and “move from fate to opportunity”.  

Early investment 

“Investing in early childhood, promoting inclusive education, given young adults a basic income financed through inheritance taxes, and combating anti-poor discrimination are the key ingredients needed to break the cycles of advantage and disadvantage”, Mr. De Shutter said in his statement.  

Acknowledging that many countries pride themselves on ensuring high levels of social mobility, the human rights expert stated that “the truth is that the persistence of privilege at the top, and deprivation at the bottom, are all too commonplace.” 

“The top 10 percent of people living in OECD countries control 52 percent of total net wealth, while the bottom 60 percent own just over 12 percent, condemning the poor to a lifetime of poverty”, he said. According to the report, based on data from countries which are part of the Organization for Economic Cooperation and Development (OECD), it takes four to five generations for children in low-income households to reach the mean income in their country. In emerging countries such as Brazil, Colombia or South Africa, it can take up to nine or even more generations.  

Tougher with time 

Observing that children born in disadvantaged families were denied equal opportunity, the Special Rapporteur examined the channels through which poverty is perpetuated, in the areas of health, housing, education and employment. 

“Children born in poor families have less access to healthcare, decent housing, quality education and employment than those in better-off households”, De Shutter said. “This dramatically reduces their chances of breaking free from the poverty trap”.  

Describing the outcomes as “appalling”, the Rapporteur added that children born in a family experiencing poverty are more than three times as likely to be poor, aged 30, than those who were never poor. 

Poverty costs 

The UN rights expert reminded that child poverty is not only “morally unconscionable and a human rights violation”, but also expensive. “In the United States, child poverty costs over one trillion dollars annually, or 5.4% of its GDP, but for each dollar invested on reducing it, seven dollars would be saved,” said the expert.  

Calling for and end to the myth that inequality is an incentive that encourages people to work harder, Mr. De Shutter said that the facts point to the exact opposite: “Inequality lowers social mobility and entrenches advantage and disadvantage over decades. When we fetishize merit, we stigmatize those in poverty or with low incomes, and blame them for their own condition”.  

Call for action 

Stressing that “no child should be penalized for being born in poverty” in mind, and stating that, in fact, “poverty is a failure not of the individual, but of society”, Mr. De Shutter called on governments to act now, “before another generation is condemned to the same fate as their parents”.  

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Finance

Montenegro on Course for Stronger Economic Recovery in 2021

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The Western Balkans region is rebounding from the COVID-19-induced recession of 2020, thanks to a faster-than-expected recovery in 2021, says the latest edition of the Western Balkans Regular Economic Report, Greening the Recovery.

The outlook for the region has improved significantly, with GDP growth now projected to reach 5.9 percent in 2021, after a 3.1 percent contraction in 2020. Growth in the region is projected at 4.1 percent in 2022 and 3.8 percent in 2023.

Driven by a rapid recovery in tourism, Montenegro’s economy is projected to rebound strongly by an estimated 10.8 percent in 2021, the highest rate among the six Western Balkan countries. Strong peak summer season has supported a rebound in tourism revenues, which are likely to reach close to 75 percent of their 2019 levels, from 55 percent previously estimated.

The rebound of economic activity has boosted government revenues, which coupled with careful fiscal management have led to a reduction in fiscal deficit from 11 percent of GDP in 2020 to an estimated 4 percent in 2021. Maintaining fiscal prudence in the medium term will be critical, as uncertainties loom.

“The economic crisis brought on by the COVID-19 pandemic continues to be a source of uncertainty, but also presents an opportunity for Montenegro to ensure a resilient, inclusive, and green post-pandemic recovery,” says Christopher Sheldon, World Bank Country Manager for Bosnia and Herzegovina and Montenegro. “The World Bank is committed to helping Montenegro implement reforms that can help ensure macroeconomic stability, create economic opportunities, and spur strong private-sector led growth”.

The report finds that unemployment in Montenegro remains high as the recovery has not ignited the labor market yet, which limits the pace of resumed poverty reduction. Poverty is projected to decline slowly in 2021, but it remains higher than its 2019 level.

The poverty rate for the region is projected to resume its pre-pandemic downward trend and fall by around 1 percentage point to 20.3 percent, close to its 2019 level.

The regionwide recovery is due to strength in both domestic and external demand. A sharp rebound in domestic consumption and in travel across Europe helped boost remittances as well as tourism inflows during the 2021 peak summer season. A strong recovery in advanced economies also provided a boost to demand for the region’s exports.

However, the recovery remains fragile. Early warning signals from the labor market call for close policy attention. Job losses from the recession and its aftermath have disproportionately affected women and youth, which may set back efforts to raise the region’s perennially low rates of labor force participation. Youth unemployment rose to 37.7 percent in 2021, up 5.4 percentage points from June 2020, further worsening youth employment prospects.

“As the Western Balkans countries look to a post-pandemic future, their policy approach will need to focus on addressing key impediments to job creation and economic transformation, including green transition,” said Linda Van Gelder, World Bank Country Director for the Western Balkans. “All six countries would benefit from reforms in the business environment, governance, and digitalization, which would contribute to growth and close the gap with EU countries.”

The report also looks at the macro-fiscal challenges and drivers of greening the region’s growth. The Western Balkans now find themselves at a key decision point regarding the impending green transition.

Global strides toward climate action are causing fundamental changes in society. Consumer and investor preferences are shifting, green technologies and new business models are disrupting more markets, and green policies are reshaping economic landscapes. As such, greening a country’s economy is becoming a decisive factor in international competitiveness and the ability to attract international finance and investments.

The Western Balkans are no exception. Still characterized by a development model tilted toward familiar brown industries, moving toward a green growth pathway is far from easy, especially in the short term. Yet, the green transition offers significant opportunities for the Western Balkans – including closer integration into Euro-centric global value chains and access to significant EU resources to help fund a green transition.

Effectively managing this green transition, including the many policy tradeoffs, will need to be a core focus of policy attention for the Western Balkans in the years ahead.

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Environment

UNESCO ‘eDNA’ initiative to ‘unlock’ knowledge for biodiversity protection

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To understand the richness of biodiversity across World Heritage marine sites, the UN scientific organization launched on Monday a project to protect and preserve biodiversity, based on the study of environmental DNA – cellular material released from living things into their surroundings. 

Launching the new programme, the UN Educational, Scientific and Cultural Organization (UNESCO) said that scientists and local residents would take samples of genetic material from fish waste, mucous membranes or cells, eDNA, to monitor species. 

Marine World Heritage sites play a critical role in protecting marine ecosystems of exceptional universal value and provide opportunities for the public to appreciate and preserve marine environments”, reminded UNESCO Assistant Director-General for Culture, Ernesto Ottone Ramírez. 

Species under threat 

UNESCO said that the two-year initiative would help measure the vulnerability of marine biodiversity to climate change and its impact on the distribution and migration patterns of marine life across World Heritage sites. 

The eDNA project, which involves collecting and analyzing samples from the environment – such as soil, water and air – rather than an individual organism, will also better monitor and protect endangered species included in the International Union for Conservation of Nature (IUCN) Red List.  

Climate change is affecting the behaviour and distribution of underwater life and we must understand what is happening so we can adapt our conservation efforts to evolving conditions”, explained the UNESCO official. 

Beneath the waves 

UNESCO’s marine World Heritage sites are recognized for their unique biodiversity, outstanding ecosystems, or for representing major stages in Earth’s history.  

In the context of the UN Decade of Ocean Science for Sustainable Development (2021-2030), the project was launched to contribute to the understanding of global trends and knowledge to preserve marine ecosystems. 

Since 1981, when Australia’s Great Barrier Reef was inscribed at UNESCO’s first marine site, a global network of 50 others are now included as “beacons of hope for healing the ocean”, according to the UN agency. 

Guided by expert support, the eDNA project will engage local citizens to gather material, so samples such as particles gathered through water filtering, can be genetically sequenced in specialized laboratories, without having to disturb animals themselves.   

Implemented by UNESCO’s Intergovernmental Oceanographic Commission (IOC) and World Heritage Centre, IOC chief Vladimir Ryabinin described the project as “a step toward the Ocean Decade’s vision of unlocking the knowledge we need to create the ocean we want by 2030”. 

Breaking new ground 

The use of eDNA in ocean monitoring and data collection is still in its infancy and standard protocols for sampling and data management will be streamlined in UNESCO’s groundbreaking eDNA project.  

For the first time, it will apply a consistent methodology across multiple marine protected areas simultaneously, helping establish global standards, data monitoring and management practices while making that information available to the public. 

All data will be processed and published by the Ocean Biodiversity Information System (OBIS), the world’s largest open-access data system on the distribution and diversity of marine species, maintained and collectively supported by a worldwide network of scientists, data managers and users.  

Sustainability goal 

The project works to advance the world’s understanding of life in the ocean, and establish conservation and management policies indicators.   

“eDNA sampling can provide an innovative, affordable, and long-awaited capacity to better understand the ocean ecosystems, their composition and behaviour, and to start managing ocean resources more sustainably”, said Mr. Ryabinin. 

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