- International cooperation is in transition and now needs to start producing results rather than promises.
- The example of EU-Latin American relations shows that tackling extreme poverty has been a success but its structural causes need to dealt with.
- GDP cannot be the leading indicator for wealth generation.
- In a world of social protection with numerous informal workers, it is not enough to have donors and beneficiaries who do not speak to each other.
International cooperation and inclusive growth are in transition. While there has been progress in providing overall wealth to smaller traditionally feeble economies, more concrete results need to be achieved.
The march against globalisation and multilateralism may cheer the populists, but they provide no answers to bringing more equitable opportunity and modest prosperity to the poor and lower middle classes. Some of the world’s poorest economies have been in Latin America. There have been great strides made, but still 14 out of 15 countries with the highest levels of income and capital ownership disparity are located in Latin America.
The example of Latin America and its evolving relations with the European Union are instructive. Structural poverty remains a challenge. Financial resources have not been in shorty supply, but the efficiency that comes with development cooperation has been lacking.
Development in transition in Latin America mirrors the painful reality of trying to decisively move from developing to developed country status. International cooperation has too often led to a “development trap”.
Many countries, like the Dominican Republic, which with a 6 % growth rate in 2019 has graduated to “middle-income” country status, have moved to taking an active part in international cooperation.
But that level of growth as in other similar Latin American countries such as Chile, has not been accompanied by a reduction in the structural causes of poverty and inequality. Inequalities continue to widen in key areas of the market. Social cohesion is also fraying.
GDP long used as the misleading yardstick for measuring growth, wealth and its aspirational cousin “opportunity”, does not reliably measure the social gaps that threaten opportunities among the working and extreme poor in society. It also does not provide useful comparisons of wealth and opportunity with more developed countries in the Organisation for Economic Co-operation and Development tables.
In the informal economy, of which up to 50 % of the working population participate in much of Latin America, the donors and beneficiaries aren’t speaking effectively with each other, but past each other.
Some basic social protections exist universally in Latin America, but the international development community needs to be talking more to Latin America on a country-to-country basis – not with governments, but with those civil society organisations and private sector firms that have been on the ground for a long time. Local knowledge and experience needs to be better utilised and not ignored by the EU and other major players.
The EU has to step up more. Sharing many of same historical and cultural values with Latin America, with strong inward investment, is a good start. But this investment stock could be lost through taking it for granted. China looms large in the wings.
Europe and Latin American countries need to move away from looking at indicators like GDP exclusively and pay more attention to stakeholders on the ground. Latin American countries are now neither developed nor developing.