The private sector is the main source of investment, at 78% in 2019, although it is concentrated in large companies. Therefore, “the public sector must play a crucial role by investing in strategic public infrastructure and mobilizing private investment,” says the 2023 OECD Latin American Economic Outlook, prepared jointly with the Economic Commission for Latin America and the Caribbean (ECLAC), the Regional Development Bank (CAF) and the European Commission.
Paris, France
The public sector should be an engine of investment in Latin America, especially in public works, as recommended this Friday by the Organization for Economic Co-operation and Development (OECD), which establishes the green and digital transitions as strategic sectors.
Investment is the protagonist of the 2023 edition of its Latin American Economic Outlook, prepared jointly with the Economic Commission for Latin America and the Caribbean (ECLAC), the Regional Development Bank (CAF) and the European Commission.
The report sees this as key to achieving a “more sustainable and inclusive future”, especially when the region has “great potential” as it has “great wealth of natural resources, biodiversity and green energy”, but also “structural challenges “as poverty dictates. (29%) or informal employment (43% of households).
In this sense, it warns: “Latin America and the Caribbean have one of the lowest total investments of any region in the world, at just 20% of GDP,” which is partly due “to low national savings rates.” .
The private sector is the main source of investment, at 78% in 2019, although it is concentrated in large companies. Therefore, “the public sector must play a crucial role by investing in strategic public infrastructure and mobilizing private investment,” he emphasizes.
“To this end, the public sector can assist by updating investment regulatory frameworks and ensuring good regulation of public-private partnerships (PPPs) within solid institutional frameworks,” adds the report, to be presented in Santiago this Friday.
According to the authors, public investment in infrastructure has been at “low levels” since 2008 (1.6% of GDP in 2021) and the main sectors that would need it would be clean energy, sustainable transport, telecommunications and water.
“High-quality infrastructure in the energy, telecommunications and water sectors can contribute to both green and digital transitions and benefit the region’s citizens,” says the Economic Perspectives.
These recommendations contrast with the economic policies of Argentina's new president, the ultra-liberal Javier Milei, who announced an austerity program that includes paralyzing public works that have not yet begun to combat inflation and the deficit.
Latin American economies will average growth of 2.2% in 2023 and 1.9% in 2024, ECLAC estimated on Thursday.