GLOBAL TRENDS AND LATIN AMERICA´S FUTURE, SERGIO BITAR. August 11, 2014 - Wilton Park, UK
Today I will speak about the linkage between forecasting, politics and government policies. As a leading developed country, you are accustomed to a close relationship between these activities. You began a long time ago to produce geopolitical and military studies, which were later extended as a practice to multinational enterprises as well as other political organizations in the global stage.
This has not been the case for other regions of the world and, in particular, for Latin America (LA), where these practices are only now beginning to emerge. The region’s achievements of economic growth, social progress and democratic practices have created more stability and self confidence, and opened a space for long term thinking.
I want to address the LA case as an example on how to expand the practice of forecasting and increase its influence on policy making.
L A is arriving late to the field of strategic thinking. Long term studies have been developed sporadically and systematic analysis of global trends (GT) are almost inexistent. Governments are still lacking the necessary mid and long term perspective for designing better programs. There is a disconnect between the few that do foresight and those who design and apply policies.
In electoral campaigns leaders usually articulate a long term narrative and a government program. These are steps in the right direction, but the effort generally lacks continuity and depth. How can we overcome these insufficiencies and improve governance? This is a critical matter for political leaders.
Latin American countries can improve their long term thinking by tapping existing knowledge in developed countries and may use it to implement better policies. At the Inter American Dialogue (IAD) in Washington we have been exploring the interaction between GT and those strategic objectives stated by almost all LA governments. Additionally we have selected almost 800 global, regional, sectorial and country-specific LT studies. This registry will be available this year and will be updated annually. ECLA is also moving forward on promoting prospective work and providing new ideas to Planning Ministries across the region, training people and generating debates on the future.
I. What are LA’s advantages and challenges?
A first step is for politicians and governments to understand that global analyses are essential to assess Latin America’s strategic position in a new multipolar world and are also indispensable for designing viable national strategies. LA’s position in the world may be characterized as follows.
- A region of peace (interstate)
- Democracy (consciousness of rights, and continuing improvement
- Demography that provides a mild “dividend" (population still growing but moderately, ageing not a major issue)
- Abundant natural resources (energy, water, food, minerals) and time and space for protecting nature and biodiversity
- Still fragile institutions (violence in some countries, lack of participation, power concentration)
- Inequality (exclusion, poverty)
- Low productivity (low levels in education, innovation, infrastructure, science, technology)
- Weak regional economic integration
II. Two new important trends for the next decade
In addition to those fundamental trends that will shape LA future development (demography, middle classes, immigration, empowerment of citizens, disruptive technologies, pressure over natural resources, urbanization, climate change, see my IAD publication), two new are worth mentioning for the coming decade:
The end of the natural resources boom (as well as the so-called supercycle of price increases) that propelled most LA economies during the last decade. This new reality will create new challenges for countries aiming to escape the “middle income trap”. These circumstances will probably trigger major efforts of diversification, specialization and increased productivity. Depending on strategic choices, natural resources could be a curse or a blessing.
A new phase of democratic development and institutional changes. All countries will experience, in different degrees, increased social mobilizations, demands for participation and higher expectations for more equality. The emergence of larger middle classes will require new institutional reforms in order to foster participation and ensure democratic governability.
III. Five Main LAC Drivers: Opportunities, Risks and Possible Scenarios.
In this coming decade, I anticipate that most efforts to deal with global change and national priorities will focus on five main areas:
Democratic institutions and peace as global advantages. These qualities should continue to strengthen in the future, for which reforms need to be promoted to improve democratic practices, going beyond elections (combat indefinite reelections, corruption, organized crime, economic concentration, inequalities, and abuses by large companies and control of the media). Governability will require institutional change to enhance participation, expand rights and transparency and reduce inequality. Aspirations for acquiring new rights will gain strength (women, indigenous people, equality, better public goods). Failing to respond may become a source of instability, internal conflicts and delay growth.
Efficient and sustainable production of natural resources will be enhanced in order to achieve productive diversification and for financing social policies. Demand for natural resources (especially food, water and land) will continue (China, Asia) but prices will not jump and costs may grow. LAC countries will tend to improve efficiency through innovation, technology and management. Also governments will attempt to capture larger proportions of profits. Countries may channel larger funding towards research (biotech, ICT, nanotech), education (preschool, technical, for life), diversification and specialization in new areas. Inefficient exploitation of natural resources, maintaining enclaves instead of diffusing technical progress in the rest of the economy or damaging the environment will affect growth and wellbeing.
Emphasis toward greater political and economic integration. LA is the least integrated region in the world in terms of trade and investment. In a multipolar world, regional integration becomes fundamental, including economic and security agreements. LAC countries will probably follow this trend to integrate further, by developing new projects in infrastructure, energy, investment and education, and coordinating more closely on international matters (CELAC, other). Intra LA FDI may become a relevant driver for integration.
Asia will be the major partner and its linkages with LA will expand. The Pacific Alliance (Alianza del Pacifico) and Mercosur will become more collaborative. In spite of the differences existing among countries the challenge will be to manage convergence amidst diversity. Common language, culture and religion are positive factors for new projects and unified actions.
LA countries have increased their autonomy vis-a-vis the US, especially in South America where new sources of growth (Asia, China and India, and also Africa) are available to them. The region will probably strengthen ties with the US and the EU in education, research, technology and FDI.
However, if this momentum is delayed, the region’s growth and political influence will suffer.
LA cities as focus of growth and better quality of life. LA is the most urbanized region in the world. A major challenge is to improve quality of services, which drives competitiveness and innovation. This will require higher investment in infrastructure, energy, connectivity, education, public transportation, financial health, and culture and security services. A new political phenomenon is arising in larger cities, where social mobilization becomes a relevant factor, enhanced by the proliferation of social networks. If embraced appropriately through institutional reform, this may be a force for stability and growth. A disregard of this new power may derive in conflict, instability, lack of social cohesion and degradation of security and peace.
Improving education is perceived as the key for progress. There is a shared conviction that education will influence all areas. Therefore, higher fiscal investment will be devoted for training teachers, creating new technical careers, using new technologies to enhance open education and for-life education, and increasing coverage in preschool for low income families. LA is currently lagging in education and technological innovation, and the existing gap with Asian countries is growing. Most probably this will be addressed to avoid a long term loss of competitiveness.
IV. How Prospective Studies can benefit Politics
Are these scenarios a source of motivation for politicians and governments? How to persuade them to do foresight?
Forecasters must address the issue of how to influence the political sphere.
Five arguments could help to attract attention of political leaders and policy makers:
First, if the essence of politics is to build a better society, a vision, a narrative are powerful instruments for leadership. Prospective studies should provide attractive elements for a narrative. And these elements must relate to the most relevant strategic issues. Second, future studies can facilitate building a convergent vision and therefore enhance social and political agreements. Such outcomes constitute a force for change and could favor good governance.
Third, citizen’s participation, open and transparent debates that inform and educate public opinion, may help solving recognized complex problems.
Fourth, good governance requires satisfying social demands and also winning electoral support. Therefore, prospective studies and strategies should provide inputs for improving policies and delivering results.
Fifth, science and technology is evolving so rapidly that no government can exclude their effects. A closer relation has to be established between scientists and public leaders.
V. How should Latin America prepare for these challenges?
Governments should create organizations in order to foster the use of foresight studies and strategic thinking. Institutions and coordination must be developed in 4 fronts:
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- Strategic planning groups in every government, close to the president.
- Future Studies Units in Parliaments.
- Autonomous centers and groups in Universities, companies, social organizations.
- A network of governmental and non-governmental groups dealing with forecast in Latin American countries. Thinking together helps sharing views and acting together.