Brazilian President Luiz Inácio Lula da Silva and his Chilean counterpart Michelle Bachelet called for deeper regional integration and increased investment in education, two priorities that mirrored a consensus among the 400 business, government and civil society leaders from 28 countries participating in the World Economic Forum on Latin America in Santiago.
"It is important that you believe in the integration of Latin America," Lula said. Bachelet underlined that for Chile and other Latin American nations to reach a higher level of growth and productivity, "the priority is to take a great leap to ensure quality education for all", adding "we want to grow to be inclusive and be inclusive to grow".
Participants at the two days World Economic Forum on Latin America agreed on five top priorities for the region geared to for achieving and sustaining higher growth and productivity. The "Santiago Consensus" includes education, the environment, R&D investment, efficient taxes and infrastructure.
In recent years, countries in the region have been growing by over 5% on average and the incidence of poverty has fallen below 40%.
"It is not sufficient to bring growth back to our economies," said José C. Grubisich, CEO, Braskem, Brazil, and a Forum Co-Chair. "We should focus on how to bring about a stable macroeconomic position and combine growth and investment to reduce poverty."
Infrastructure is the key priority, said Grubisich. If Latin America is to secure its place in the global supply chain, it must invest in upgrading its infrastructure.
"If we want to be successful, we need to make it easier to move capital and products to and from the region and inside the region," he stressed.
More generally, the priority has to be to boost investment. "The question is how we may be able to invest more," said Andrés Velasco, Minister of Finance of Chile. "We have to have good sound projects. And we can agree that a major priority is to reduce the costs of investment."
This means reforming capital markets, ensuring that the banking system is sound, bringing interest rates down, and promoting innovation and venture capital. All of this will then drive new growth. "If we accept the idea that growing means to innovate, then to innovate means to be daring and to do something different," said Velasco.
Other panelists agreed that countries have to further reform their financial sectors to deepen capital markets, improve access to credit, and make sure that the region is not vulnerable to shocks.
"The familiar agenda of structural reforms to boost productivity is still essential," John Lipsky, First Deputy Managing Director, International Monetary Fund (IMF), Washington DC, told participants.
He added that it is also important to achieve a measure of macroeconomic stability and to open up markets to trade. Chile is the best example of a country that has combined all three factors to achieve the highest per capita income growth in the region in the past 25 years.
For Martín P. Redrado, President of the Central Bank of Argentina, the main object of reforms must be to ensure that Latin America can weather shocks to its financial system and achieve fiscal order and macroeconomic stability.
"This is one of the biggest challenges – how to create permanent public policies that will make all cycles transitory, and how to mitigate the volatility that we have suffered in past years," he said.
Summing up, session Chair Pamela Cox, Vice-President, Latin America and the Caribbean, World Bank, Washington DC, outlined the key points of the emerging Santiago Consensus. She stressed the need to address inequality as the region aims to achieve and sustain higher growth. "We really need to build in social policies into the region."