Download Presentation by Antonio Prado, Deputy Executive Secretary of ECLAC

A new State-market-society
equation for development
in Latin America
and the Caribbean
ANTONIO PRADO
DEPUTY EXECUTIVE SECRETARY
Seminario Internacional Papel do Estado
no Século XXI: Desafíos para a Gestão Pública
Brasilia, 3 September 2015
“A new State architecture must be created that will allow the
State to play its rightful role as leader of our countries'
development strategies. By casting a critical eye on its
historical performance, we should be able to define that role,
give the State the proper tools and determine its precise place
in conjunction with the market and the citizens, achieving an
optimum balance of this trilogy in the development dynamic.”
ECLAC (2010) Time for Equality
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Contents
• A crossroads and the complex international
context
• The features of the current
State – market –society (citizenry) equation
• Compacts for equality as a tool for building a
new equation
• The new State – market –society (citizenry)
equation
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region is at a crossroads
• The region is facing an economic slowdown after
•
•
•
•
•
several boom years
Not enough was done to increase productivity and
reduce equality
Progress was achieved on the social front, but has come to
a standstill and the region still has the world’s worst
income distribution and other inequalities
There are environmental sustainability challenges as
regards moving towards low-carbon development paths
Stable democracies, but new challenges
Facing variable geometry routes towards integration
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region is facing critical restraints
External
• Slowing international
trade
• End of commodity price
supercycle
• Financial volatility
• Great vulnerability to
climatic phenomena
• Middle-income trap
Endogenous
•
•
•
•
•
•
•
•
•
Disjointed production structure
Informal, low-productivity employment
Little dynamic efficiency
Economic growth slowing and reliant
on consumption
Investment rates are too low
Stalled poverty reduction
Weak natural resources and
environmental governance
Shortage of good-quality public goods
Weak institutions
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
A more complex context
• The global economy has grown less than expected. Within a year,
growth projections for 2015 have been lowered from 3.2% to 2.8%.
• Upturn in growth in the United States (above the initial estimate of
2.8% in 2015) with a positive impact in Mexico, Central America
and the Caribbean through remittances, tourism and trade.
• Fiscal disequilibria and lack of competitiveness in the eurozone,
with high levels of unemployment and growth of just 1.6% in 2015,
are undermining global trade.
• Slowdown in China from 9.2% in 2011, to 7.0% in 2015 with an
impact on natural-resources-exporting countries.
• Uncertainty over the timing of interest rate rise in the United States
and QE in Europe, which could generate more volatile financial
conditions.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Latin America and the Caribbean have seen
growth slow since 2010
Latin America and the Caribbean: year-on-year GDP growth, 2010-2015a
(Percentages, on the basis of constant dollars at 2010 prices)
9
8
7,7
7
6
6,0
6,1
5
4
3,7
2,9
3
2,5
2
2,5
2,3
0,9
1
0,5
0,5
0
I
II
III IV
2010
I
II
III IV
2011
I
II
III IV
2012
I
II
III IV
I
2013
II
III IV
2014
I
2015ᵃ
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.
a Preliminary figures.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Poverty rates have fallen thanks to policies
implemented over the past 10 years, but have stood still
since 2012
Latin America a/: poverty and indigence, 1990 – 2014 b/
(Percentages of the population)
50
48.4
Latin America and other world regions:
Gini coefficient, around 2010
0.60
43.8 43.9
41.9
0.50
40
0.50
0.45
33.5
29.6 28.1 28.1 28.0
30
22.6
20
0.41
0.37
0.40
0.34
0.33
0.34
0.30
18.6 19.3
15.3
12.9 11.6 11.3 11.7 12.0
0.20
10
0.10
0
1990 1999 2002 2005 2008 2011 2012 2013 2014
Pobres
Indigentes
0.00
América Latina y
el Caribe
(18)
Asia Oriental
y el Pacífico
(10)
Asia Meridional
(8)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of data from household surveys conducted in
the respective countries.
a/ Estimate for 19 countries (including Haiti).
b/ Figures for 2014 are projections.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
OCDE
(22)
The crossroads calls for the redefinition of the Statemarket-society (citizens) equation
The past two decades have left lessons for the region in
relation to the equation between State, market and society:
• The market is good at production, but bad at distribution.
Unregulated, it reproduces structures revolving around
activities that are knowledge-unintensive and
environmentally inefficient.
• The State can do much, but not everything.
• Society (citizens) demands transparency, voice,
participation and democracy.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The market in the current State-marketsociety (citizens) equation
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The undeniable role of the private sector as the
central agent in the market
Latin America (12 countries): proportion of gross fixed capital formation corresponding to public a and private
investment, 2013
(Percentages, on the basis of local currency at constant prices)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Economic Survey 2015.
a Public
investment includes State enterprises. For Colombia, State enterprises form part of the decentralized sector, which includes public establishments, industrial
and commercial enterprises, mixed public-private firms, and autonomous universities.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Investment in R&D in the region is lower than in
Europe
Latin America
European Union
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Espacios de diálogo y cooperación productiva: el rol de las pymes, 2015.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region’s productivity levels are very low
Latin America and the Caribbean and other regions: GDP per employed person, by region, 1991-2012
(Dollars at constant 2005 prices)
75000
62500
30000
Developed economies
and European Union
25000
Latin America and the Caribbean
World
50000
20000
East Asia
37500
15000
25000
10000
South-East Asia
and the Pacific
12500
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
0
1991
0
5000
Source: ECLAC, on the basis of data from the International Labour Organization (ILO).
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Structural heterogeneity:
the factory of inequality
Latin America (18 countries): indicators of structural heterogeneity,
around 2009
(Percentages)
Latin America (18 countries):
GDP per employed person, around 2009
(Thousands of dollars)
Source: ECLAC, Structural Change for Equality: An Integrated Approach to Development, 2012.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Income distribution
before taxes and transfers
Latin America and OECD countries: Gini index
Islandia
Dinamarca
Noruega
Países Bajos
República Eslovaca
Suecia
Canadá
República Checa
Eslovenia
Australia
Polonia
Finlandia
Estonia
Bélgica
Luxemburgo
España
Austria
Francia
Alemania
Italia
Estados Unidos
Grecia
Reino Unido
Portugal
Irlanda
OCDE-25
Venezuela (Bol. Rep. de)
El Salvador
Uruguay
Nicaragua
Ecuador
Perú
México
Paraguay
Costa Rica
Colombia
Argentina
Panamá
Chile
Honduras
Republica Dominicana
Brasil
AL-16
47.1
50.7
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Panorama Fiscal de América Latina y el Caribe, 2015.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The State in the current State-marketsociety (citizens) equation
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The State has a key role in correcting the market’s
unequal outcomes ex post
Latin America and OECD countries: Gini index before and after taxes and transfers
Islandia
Dinamarca
Noruega
Países Bajos
República Eslovaca
Suecia
Canadá
República Checa
Eslovenia
Australia
Polonia
Finlandia
Estonia
Bélgica
Luxemburgo
España
Austria
Francia
Alemania
Italia
Estados Unidos
Grecia
Reino Unido
Portugal
Irlanda
OCDE-25
Venezuela (Bol. Rep. de)
El Salvador
Uruguay
Nicaragua
Ecuador
Perú
México
Paraguay
Costa Rica
Colombia
Argentina
Panamá
Chile
Honduras
Republica Dominicana
Brasil
AL-16
-60.0
Variación porcentual
-37.6
47.1
-6.1
-40.0
-20.0
0.0
20.0
Después de impuestos y transferencias
40.0
50.7
60.0
80.0
Antes de impuestos y transferencias
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Fiscal Panorama of Latin America and the Caribbean 2015. Policy space and dilemmas.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Tax collection is low and poorly implemented
in the region
 Low tax burden in
most countries
 Regressive tax
structure
 High rates of evasion
 Widespread
exemptions
 Special treatment
for capital
Selected regions and countries: structure of the tax burden,
2012-2013
(Percentages of GDP)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Fiscal Panorama of Latin
America and the Caribbean 2015. Policy space and dilemmas.
a Organization for Economic Cooperation and Development.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Several countries have made changes to income tax, mainly
to tax capital income
 Argentina (2013)
 Mexico (2013)
 Chile (2014)
 Nicaragua (2012)
 Colombia (2012, 2014)
 Panama (2009-2012)
 Ecuador (2007, 2014)
 Paraguay (2012)
 El Salvador (2009, 2011)
 Peru (2007, 2012, 2014)
 Guatemala (2012)
 Dominican Republic (2012)
 Honduras (2010, 2014)
 Uruguay (2007, 2012-2013)
 Venezuela (Bolivarian Republic
of) (2014)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Fiscal Panorama of Latin America and the Caribbean 2015. Policy space and dilemmas.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Tax revenues have risen from 16 to 21 GDP points, on
average, since 2000, but they are still highly uneven
Tax revenues in Latin America, 2000 and 2013
(Percentages of GDP)
36
34
35
31
27
25
22
20
20
20
19
19
19
19
18
21
18
16
16
15
14
14
13
Guatemala
28
Rep.
Dominicana
30
Venezuela
40
10
5
2013
2000
Source: Economic Commission for Latin America and the Caribbean (ECLAC).
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
OCDE-34
AL-18
El Salvador
Paraguay
Honduras
Perú
Panamá
México
Nicaragua
Ecuador
Colombia
Chile
Costa Rica
Uruguay
Bolivia
Argentina
Brasil
0
Prevent tax evasion and avoidance and control illicit
flows
• Illicit financial flows represent a massive outflow of financial resources
from developing economies
• On average, in 2002-2011 illicit financial flows represented twice as much
as remittances and 14 times ODA in Latin America and the Caribbean
Illicit flows from Latin America and the Caribbean, average for 2002-2011 period
(Billions of dollars)
140
120
113.1
100
84.9
80
63.7
60
50.8
40
20
7.8
0
Flujos Ilícitos
Inversión
extranjera
directa
Flujos
financieros
privados
Remesas
ODA
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
There are serious cracks and gaps in the region’s social
protection systems
Latin America (14 countries): population living in households with no social security and receiving no pensions or
welfare public transfers, by income quintile, 2009
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted by the respective
countries.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Investment is too weak to drive development
 In infrastructure
 In research, science
and innovation
 In development
banking: inclusive
financing
 In environmentally
cleaner production
matrices
Gross fixed capital formation, 1950-2010
(Percentages of GDP on the basis of dollars at constant 2005 prices)
40
35
30
25
20
23.1
22.9
20.1
18.0
18.5
17.9
15
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
10
América Latina
Asia Oriental y el Pacífico
Source: Economic Commision for Latin America and the Caribbean (ECLAC), on the basis of official
figures, and World Development Indicators.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Persistent shortage of economic infrastructure
Electric power generation capacity, 1980-2012
(Megawatts per 1,000 inhabitants)
Density of total road network, 2007 and 2012
(Kilometres per 100 km2)
Source: Economic Commision for Latin America and the Caribbean (ECLAC), Economic Survey 2015.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region has a moderate quality of regulation
World: regulatory quality index, 2013
Source: World Bank, http://info.worldbank.org/governance/wgi/index.aspx#reports
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region has little confidence in justice and compliance
with laws and regulations
World: rule of law index, 2013
Source: World Bank. http://info.worldbank.org/governance/wgi/index.aspx#reports
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region has little control of corruption
World: control of corruption index, 2013
Source: World Bank. http://info.worldbank.org/governance/wgi/index.aspx#reports
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Citizens in the current State-marketsociety (citizens) equation
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Society (citizens) in the current equation
•
•
•
Demand for transparency, accountability and participation
•
Citizens are engaged as bearers of rights of whose fulfilment the
State is guarantor
•
This is expressed in: open government initiatives, open data,
Principle 10, participatory budgeting, the World Charter for the
Right to the City, the Montréal Charter of Rights and
Responsibilities, and the European Charter for the Safeguarding of
Human Rights in the City, among many other participation
instruments originating in civil society.
Democracy in its three dimensions: social, economic and political
Society not only as an object of public policies, but demanding
participation in policy definition and execution
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
The region has lacklustre levels of participation
and accountability
World: voice and accountability index, 2013
Source: World Bank. http://info.worldbank.org/governance/wgi/index.aspx#reports
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Society (citizens) feeling unrepresented
Latin America: sense of being represented by the government or parliament/congress, 2015
(Percentages)
Source: Latinobarómetro 2015.
Q. Do you feel that the government represents you politically? Or the parliament/congress?
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Compacts for equality as a tool for
building a new equation
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
•
•
•
•
Politics and policymaking: the importance
of compacts
The development crossroads the region has reached calls for
revisiting relations between institutions and structures, involving a
wide range of agents in the process
A compact is a political tool for putting into place, within a
democratic framework, medium-term institutional policies and
reforms with a strategic vision, with less risk that they will be
reversed later
A social compact is necessary at a time of changes in relations
between the State, the market and society, with social
effervescence and the emergence of new forms of participation
The citizenry is a party to the compact, as a full bearer of rights,
with the State acting as guarantor of those rights
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Compacts for equality
• New fiscal compacts are badly needed
• Trust and reciprocity between the State and citizens
• Consolidate public spending with a redistributive impact
• Agreements on origin and destination of resources for the State
• Transparency and accountability
• Agreements for better governance of natural resources: taking
advantage of windfall gains
• Investment in productivity: tradables (manufacturing with
innovation) and non-tradables (infrastructure)
• Coordination of macro, industrial, social and environmental policies
• Social consultation and consensus-building with accountability
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Reciprocity as a basis for a fiscal compact: a rightsbased approach to improving spending quality
35
Source: CAF, 2011.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Fiscal compact, stakeholders and reciprocity:
tightening the link with the citizenry
• The CAF survey found that families in Latin America “would pay
more tax” if the Government did its job better
(www.caf.com/investigacion)
–
–
–
–
For eliminating corruption: 11.5% would pay more
For better health and education: 11.5%
For better public safety: 11.4%
For more protection for the poor: 9.2%
• Citizens do not like to pay tax, but when they do pay they feel they
have more right to demand responses from the authorities
– This is the opinion of 72.6% of households in Latin America
• The evidence shows a vicious circle between tax (especially direct
tax), accountability, reciprocity and the quality of public spending
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Recasting the industrial architecture
 Promote structural change mainstreaming environmental
sustainability
 Build new institutions to boost productivity on the basis of explicit
industrial policy
 Link low-productivity sectors with those already on the technology
frontier
 A comprehensive SME support strategy with inclusive financing
that links SMEs with more dynamic sectors
 A more prominent role for science and technology
 Mechanisms for mediation in socio-environmental conflicts
 Land use management and urban planning
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
Good links between social spending and structure help to
boost social spending, productivity and equality
Labour productivity and social spending as a percentage of GDP, around 1990 and 2010, and inequality around 2010
(Constant dollars at 2005 prices and percentages)
100000
United States, 38
Rep. of
Ireland, 33.1
90000
Sweden, 26.9
Finland, 26
Labour productivity
80000
Hong Kong (SAR of
China), 43.1
70000
60000
Denmark, 25.2
Australia, 33.4
Canadá, 32
Singapore, 44.8
New Zealand, 31.7
50000
Rep. of Korea, 31.1
40000
30000
Mexico, 47.2
Chile, 50.1
Uruguay, 45.3
20000
Venezuela (Bol. Rep. of),
44.8
Ecuador, 49.3 Peru, 48.1 Colombia, 55.9 Costa Rica, 50.7
10000
0
0.0
5.0
10.0
15.0
20.0
25.0
Argentina, 44.5
Brazil, 54.7
30.0
35.0
Social spending as a percentage of GDP
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Standardized World Income Inequality Database, version 4.0, September
2013; Organization for Economic Cooperation and Development (OECD), STAN Structural Analysis Database; and World Bank, World Development Indicators.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
•
•
•
•
A new State-market-society (citizens) equation
The public arena as representing collective interests, not merely
public sector or national level concerns
Political accords for a new social and intergenerational contract,
defining responsibilities, ensuring protection of rights and providing
accountability systems
Establishing a culture of collective development based on tolerance
for difference and diversity
Strategic long-term vision built from within, promoting compacts
between industrial stakeholders
– Forums for dialogue between the public and private sectors and
public institutions to dovetail business strategies with
development objectives
– Institutions and policies are needed to coordinate investment
with the local production fabric in sectors that are priorities for
industrial modernization plans
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
• Regulated
• With proper
financing
• Coordination
for
development
strategy
Society (citizens)
• Development
strategy
• Fiscal capacity
• Professional
management
• Transparency
and social
participation
Market
Strong role for the State
A new equation needs long-term compacts
• Stimulus for
stronger
institutions
• Participation
and access to
public policies
• Democracy and
social and
economic policy
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado
“The new development paradigm must be made to do
everything possible to build a model of globalization that
breeds greater collective awareness of global public goods,
awakens democracy across the planet by affording a voice to
the most diverse range of actors in the open concert of global
governance, and provides excluded sectors with the tools
needed to close gaps in capacity, citizens' rights and access to
well-being. The new model of globalization must develop
policies with a long-term vision --but start work on them as a
matter of urgency-- in order to remain one step ahead of the
climate, technological, demographic and cultural scenarios
that current trends are now projecting.”
ECLAC (2010) Time for Equality.
A new State-market-society equation for development in Latin America and the Caribbean
Antonio Prado