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Latin American Finance Ministers Look for Inclusive Development

 

April 19, 2013

Doug Hadden, VP Products

Latin American countries are experiencing growth and resilience to the financial crisis. Finance Ministers from Colombia, Paraguay and Peru discussed the next wave of reforms for Latin America yesterday at the Inter-American Bank. You would think that the Ministers would be touting accomplishments and speaking, with some certainty and authority, about future plans. The Finance Ministers demonstrated a grasp of reality. And, a framework for growth that includes horizontal initiatives that support inclusive growth. To reduce income inequality. They showed a willingness to consider labour, business and tax reform that seems so unlike the rhetoric we hear in most OECD countries.

Government Reform in Latin America

Running out of good ideas?

Storified by · Fri, Apr 19 2013 10:20:30

There seems to be a persistent superiority complex in developed countries. There seems to be the view that less developed countries, such as those in Latin America and the Caribbean, are chronically incompetent. This perception is far from the truth. Many leaders in Latin America, as witnessed from a panel discussion yesterday at the Inter-American Development Bank, are competent, articulate with a deep understanding of the complex socio-economic factors. And, prepared to admit what they do not know. It was a dogma-free zone.
Policy Seminar: Reform Priorities in Latin America and the Caribbean *NEW TIME 4:30pm* – IDBPolicy Panel with the World Bank

Presentation by: 

Andrés Rodriguez-Clare (Professor UC-Berkeley)

Panelists:
Mauricio Cardenas (Finance Minister, Colombia)
Miguel Castilla (Finance Minister, Peru)
Manuel Ferreira (Finance Minister, Paraguay)

John Paul Rathbone points to a http://yfrog.com/hwcbroyj questioner at @IDB_news seminarFreeBalance
Interesting how finance ministers in #LAC have deep understanding of what they know& don’t know unlike those elsewhereFreeBalance
The Latin American region has shown excellent growth with some resilience to the financial crisis. Speakers were not ready to congratulate governments on this achievement. Rather, the notion of sustained growth and prosperity was top of mind.
Augusto de la Torre: #LAC has enjoyed growth but there are growth & policy changesFreeBalance
Andres Rodriguez-Clare: are political economy forces in #LAC conducive to policy changesFreeBalance
Miguel Castilla: growth in#Peru despite poor foundations, human capital, infrastructure, large informal sectorFreeBalance
Andres Rodriguez-Clare: #LAC countries may not be addressing market failuresFreeBalance
.@MauricioCard: governments not without ideas but are running out of ideasFreeBalance
.@MauricioCard: enjoying the effects of previous reforms but seeing unbalanced growth in#LACFreeBalance
.@FerreiraBManuel: #Paraguay had low public investment so low debt to GDP ratioFreeBalance
.@MauricioCard: 2/3 of LabourMarket informal in#LACFreeBalance
Andres Rodriguez-Clare: #infrastructure problems in #LAC where public investment not transformed into public capitalFreeBalance
There is a recognition in the LAC region that individual “vertical” interventions are unlikely to be successful.
.@MauricioCard: need for horizontal interventions in#ColombiaFreeBalance
.@FerreiraBManuel: will we be able to move to a more efficient economy yet achieve social inclusion in #Paraguay?FreeBalance
.@FerreiraBManuel: general agreement in#Paraguay among political parties for infrastructure investmentsFreeBalance
.@MauricioCard: legal frameworks in#LAC modernized that reduces speed of infrastructure developmentFreeBalance
.@MauricioCard: use of State capitalism & #socents with market tests to improve productivityFreeBalance
The theme of business growth outside of the informal sectors of the economy was a dominant theme. The need for taxation and labour reform to enable equitable growth was discussed. Finance Ministers were not dogmatic by rejecting interventions as out of hand.
Andres Rodriguez-Clare: efficiency major growth in #LAC, lots of self employmentFreeBalance
Andres Rodriguez-Clare: #LAC small firms do not growFreeBalance
Andres Rodriguez-Clare: lack modern firms that can grow b/c lack of finance in #LACFreeBalance
Andres Rodriguez-Clare: taxation increases with size, discourages growth in #LACFreeBalance
Andres Rodriguez-Clare: #LAC Labour regulations make it difficult to hireFreeBalance
Andres Rodriguez-Clare: expensive to set up firms in #LACFreeBalance
.@MauricioCard: #Colombia reduced payroll taxes to encourage growth in formal sectorFreeBalance
.@MauricioCard:had good analytical basis to reduce payroll taxes& increase income taxFreeBalance
.@FerreiraBManuel: pressure in the budget that will result in increasing taxesFreeBalance
.@MauricioCard: most important public service capacity strengthening is in revenue collectionFreeBalance
Productivity was seen as a significant inhibitor for growth.
Andres Rodriguez-Clare: gap in productivity in services in #LAC less than manufacturingFreeBalance
Miguel Castilla: significant reform with excellent outcomes in #Peru with productivity improvements & shy away from protectionismFreeBalance
.@FerreiraBManuel: increase productivity&reduce inequality focus of policy in#ColombiaFreeBalance
Finance ministers discussed limitations and opportunities
.@MauricioCard:how can you expedite in a Democratic County where you want to engage citizens?FreeBalance
.@MauricioCard:no clear road map for improved policy in #LACFreeBalance
. @FerreiraBManuel: #Paragusy affected by volatility in and out of agricultureFreeBalance
@FerreiraBManuel: #Paraguay needs to leverage inexpensive electricity for growthFreeBalance
@FerreiraBManuel: #Paraguay access to large markets in#Brazil #Argentina but needs human capital improvementsFreeBalance
Miguel Castilla: difficult to change public service incentives without creating inertiaFreeBalance
.@MauricioCard: legal frameworks in#LAC modernized that reduces speed of infrastructure developmentFreeBalance
.@MauricioCard:how can you expedite in a Democratic County where you want to engage citizens?FreeBalance
.@FerreiraBManuel:facing huge continuity problem across electoral termsFreeBalance
@FerreiraBManuel: #Paraguay needs to leverage inexpensive electricity for growthFreeBalance
@FerreiraBManuel: #Paraguay access to large markets in#Brazil #Argentina but needs human capital improvementsFreeBalance
.@FerreiraBManuel: pressure in the budget that will result in increasing taxesFreeBalance
.@FerreiraBManuel: will we be able to move to a more efficient economy yet achieve social inclusion in #Paraguay?FreeBalance
Miguel Castilla: difficult to change public service incentives without creating inertiaFreeBalance
.@FerreiraBManuel:facing huge continuity problem across electoral termsFreeBalance
.@FerreiraBManuel: #Paraguay had low public investment so low debt to GDP ratioFreeBalance
.@FerreiraBManuel: needed capacity to do policy the best possible wayFreeBalance
Miguel Castilla: is possible to have labor flexibility yet improve social inclusionFreeBalance
.@FerreiraBManuel: status quo hard to overcomeFreeBalance
The leadership burden was discussed.
.@MauricioCard:my job is to say no to bad ideasFreeBalance
Miguel Castilla: populist politics gets in the way of improving productivity&building sustainable growthFreeBalance
.@MauricioCard: in good times easy to consume, leadership necessary during good timesFreeBalance
.@MauricioCard: need to make strong case for reformFreeBalance
.@FerreiraBManuel: need for long term hard reforms in government across electionsFreeBalance
.@FerreiraBManuel: in politics might have the best idea, if can’t sell it you’re out of a jobFreeBalance
.@FerreiraBManuel: ministers of finance need to know more about marketing to convince people to support the right thingFreeBalance

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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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