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Conferência Ethos 2012
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Joseluis Samaniego
Chief, Sustainable Development and Human Settlements Division
Succeeding in the present
and losing the future? ETHOS International Conference 2012
June 12th 2012
The international economy is
becoming increasingly fragile
• The euro zone is possibly facing a “lost decade” with
a bleak economic outlook
• The crisis in the euro zone has contributed to the
stagnating of global demand and to the increase of
uncertainty in financial markets (1.6% to 0.5%
between 2011 and 2012)
• The United States will grow 1.5%-2% in 2012
• China’s economic growth slows from 9.5% to 7.5% in
2012.
• Developing countries increase their weight in the
global economy but they still are not the engine of
global growth.
• Global coordination (monetary and fiscal), which was
crucial during the 2009-2009 crisis, is now weaker.
The global economy continues to show two-tier
growth, with developed countries expanding more
slowly than emerging economies
World Economic Growth, 2009-2012
(Percentages)
Source: Economic Commission for Latin America and the Caribbean (ECLAC) on the basis of World Bank Data. e Estimates. P Projections.
The economic power is shifting from the Atlantic to
Pacific and from North to South… with a
realignment of political power at the global level
• In the last decade, economic ties with China and Asia-
Pacific in general were strengthened and South-South links
are growing
• Growth in developing countries is increasingly dependent on china
and India
• South-South trade could surpass North-North trade in 2017
• South-South investments also continue to deploy quickly
• A growing number of trans-Latin and trans-Asian firms with
operations at the global scale
• Two thirds of the world’s middle class will be in the BRICS
• Global Economy governance requires major adjustments in
its main operating mechanisms
• Four years after the onset of the subprime crisis, financial
normalcy can not be restored and the reformist momentum
of the G-20 is diluting
Current global governance does not reflect the growing relative
importance of emerging economies in the world economy
RELATIVE SHARE OF ADVANCED AND EMERGING ECONOMIES IN GLOBAL GDP, 1996-2016
(Percentages)
Source: Economic Commission for Latin America and the Caribbean
(ECLAC), on the basis of IMF (2011).
GLOBAL EXPORTS BY REGION, 1985-2020a (Percentages of world trade)
Source: Economic Commission for Latin America and the
Caribbean (ECLAC), on the basis of official figures. a The figures for the period 2011-2020 are projections based on
long-term linear trends.
The challenges of the new
international scenario
• New global equilibrium: The changing role of China and
the rest of Asia-Pacific in world production, trade and
foreign direct investment
• Increased demand for competitiveness and innovation
for participating in global value chains and the intensity of
technological change
• New patterns of production and consumption with a low-
carbon/ecological footprint are required to tackle climate
change/environmental pressures.
• More selective conditions of access to external financing
and possible restructuring of national and international
financial architecture
• Need for new forms of governance and a redefinition of the
State-market-society relationship to ensure sustainable
development
GLOBAL CONTRASTS
In the 1990s, the world moved along two parallel tracks.
A private economic track: a globalized economy, financial capitalism.
speculative economy, high above the real economy. Trade and financial
openness. Reduced role of the State.
A global normative track: UN world summits towards a development
decade: sustainable development, women, population, social development,
education, and financing for development, and the Millennium Summit.
Results: two decades of light and shadows: commitments but without clear
financial support or effective transfer of technology.
Principle 7 of the Rio Declaration relating to common but differentiated
responsibilities became watered down internationally within the framework of
trade negotiations and is now limited to non‐binding, environmental agreements.
Twenty years later, we are more acutely aware but in a weaker and more
worrying position because time is reducing the margins.
Where is Latin America and the
Caribbean today?
• Learning from the past
• More prudent in macroeconomic terms
• Progressive in social terms
• With economic growth in 2010 but decelerating in 2011 and
2012
• Urgent to rethink a new development agenda centered in
equality and contemplating environmental sustainability
• This requires closing productive and social gaps
• It involves facing the region’s historical and recent
debts
The regions is aiming at a structural change
The regional context: the situation today
is very different from what it was in 1992
LATIN AMERICA AND THE CARIBBEAN: PER CAPITA GDP GROWTH,
CURRENT ACCOUNT BALANCE AND OVERALL FISCAL BALANCE
(Annual growth rates and percentages of GDP)
Fuente: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of
official figures.
In 1992, the region was emerging from a "lost decade" of low growth, high inflation and external debt constraints.
Currently, despite the recent global economic crisis, the region has enjoyed nearly a decade of relatively high growth; inflation is under control in nearly all countries and, in general, stable economic conditions prevail.
Main gaps to be closed
Inequality For the first time in recent history there have been
advances in combating inequality
Investment Investment, at 23% of GDP, is insufficient for development
Productivity Closing the
external gap (with the technological frontier) and the
internal gap (between sectors
and actors)
Taxation Regressive
tax systems;
weak non-contributory
pillar
International linkages
Risk of “reprimarization”
of the export structure, with low value added and little investment in
technology
Environ-mental
sustainabi-lity
Move towards sustainable
production and consumption
patterns
• In order to move towards productive convergence, policymakers must look beyond the price boom: economic policies based on a relevant, long-term, sustainable vision at the macroeconomic, productive and territorial levels.
• To take advantage of the opportunities provided by the international context, exports must have a higher value added and knowledge content, with the focus on diversification of production, integration of sustainable production processes, re-evaluation of global and regional partnerships and strengthening open regionalism.
• Consensus on priorities and respective financing: a fiscal covenant with a redistributive impact – with access to innovation, job security and internalization of externalities.
• New equation: State-market-society.
Two factors that breed inequality: the skills
gap and the productivity gap
LATIN AMERICA AND THE CARIBBEAN (9 COUNTRIES) AND OECD AVERAGE: DISTRIBUTION OF LEVELS OF PERFORMANCE
IN THE PISA READING ASSESSMENT, BASED ON THE HOUSEHOLD SOCIOECONOMIC AND CULTURAL INDEX, 2009
(Percentages)
Source: Economic Commission for Latin America and the Caribbean
(ECLAC), on the basis of special processing of microdata from the
PISA Assessments, 2009.
LATIN AMERICA: PRODUCTIVITY BY SEGMENT, 1990-2008
(Dollars at 2000 prices)
Source: Economic Commission for Latin America and the Caribbean
(ECLAC), on the basis of official figures,.
Opportunities for Latin America and the
Caribbean: closing the infrastructure gap
Energy 33%
Communications 41%
Transport 22%
Water and sanitation 4%
INVESTMENT NECESSARY TO CLOSE THE INFRASTRUCTURE GAP: 5.7% OF GDP
… But to reach the levels of Southeast Asian, it is necessary to invest 8.1% of GDP
Productivity growth and structural
change
LATIN AMERICA (SELECTED COUNTRIES) AND THE REPUBLIC OF KOREA: PRODUCTIVITY AND BREAKDOWN OF INDUSTRIAL VALUE ADDED
(Percentages of industrial GDP in United States dollars at constant 1985 prices)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Industrial Performance Analysis Program (PADI) on the basis of official
figures.
China
India
Federación Rusa
South Africa
Korea
0
1
2
3
4
5
0 10 20 30 40 50 60 70 80 90
R&D investment financed by private sector (%)
R&D
inve
stm
ent
( % o
f GD
P)
Latin America and Caribbean OECD Other emerging economies
Innovation: Latin America and the Caribbean invests less in
R&D, with a small participation of the private sector
INVESTMENT IN RESEARCH AND INVESTMENT (R&D) BY THE PRIVATE SECTOR (Percentages of GDP)
Serious public finance challenges
persist
• The tax system delivers low level of revenue and is poorly
designed
• The tax structure is regressive
• Most countries have a low tax burden
• High level of evasion
• Widespread exemptions
• No environmental friendly incentives
• Social spending with little redistributive impact
• A weak non contributory pillar
• In terms of production, minimum support to SMEs and segmented
access to financing
• Insufficient investment for development:
• In infrastructure
• In research, science and innovation
• In development banking institutions: inclusive financing
• In cleaner environmental matrices
INTERNATIONAL COMPARISON OF THE LEVEL AND STRUCTURE OF THE TAX BURDEN (Percentages of GDP)
The average tax burden of the Latin American countries is almost half
that of the OECD countries and the tax structure is angled towards
non-progressive, indirect taxation
Source: CEPALSTAT for Latin American countries; IMF for Sub-Saharan African countries and developing Asia; OECDStat for OECD
countries.
Subsidies on fossil fuels, high correlation between
economic growth and energy use, and low price-
elasticities prevent a low carbon structural change
LATIN AMERICA (SELECTED COUNTRIES): SUBSIDIES ON FOSSIL FUELS
AND PUBLIC SPENDING ON HEALTH CARE, 2008-2010
(Billions of dollars and percentages of GDP)
Subsidies on fossil fuels Public spending
on health
(billions of dollars) (percentages of GDP) (percentages of GDP)
2008 2009 2010 2008 2009 2010
Argentina 18.1 5.9 6.5 5.5 1.9 1.8 5.3 (2008)
Colombia 1.0 0.3 0.5 0.4 0.1 0.2 1.9 (2009)
Ecuador 4.6 1.6 3.7 8.4 3.1 6.7 1.3 (2006)
El Salvador 0.0 0.0 1.2 0.0 0.0 5.6 3.4 (2007)
Mexico 22.5 3.4 9.5 2.1 0.4 0.9 2.8 (2008)
Peru 0.6 0.0 0.0 0.5 0.0 0.0 1.2 (2008)
Venezuela
(Bolivarian Republic of) 24.2 14.1 20.0 7.8 4.3 5.1 1.8 (2006)
Source: Prepared by author on the basis of the subsidies on fossil fuels published in International Energy Agency (IEA), World
Energy Outlook 2011 [online] http://www.iea.org/subsidy/index.html; Economic Commission for Latin America and
the Caribbean (ECLAC), Official figures of GDP and social expenditure database for public health-care spending.
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from the United Nations
Commodity Trade Statistics Database (COMTRADE). a Relates to subcategories 42 and 53 of the Classification by Broad Economic Category. b Includes the 10 members of ASEAN plus China, Japan and the Republic of Korea.
LATIN AMERICA AND THE CARIBBEAN: INTRAREGIONAL EXPORTS OF PARTS AND COMPONENTS a
Grouping Percentage
Latin America and the
Caribbean 8.1
ASEAN+3 b 27.9
North American Free
Trade Agreement
(NAFTA)
17.4
European Union 14,7
A. Regional total, 2000-2009 (Millions of dollars and percentages of intraregional total)
B. Selected groupings, 2009 (Percentages of intraregional total)
Unlike Asia, the region’s participation in value chains, even
at the intraregional level, is very limited
Intra-subregional trade remains below its historical
peaks, with the highest rate in the Central American Common Market
Source: ECLAC, on the basis of official information from the regional integration schemes. a Does not include Bolivarian Republic of Venezuela. b Does not include Bahamas or Haiti.
LATIN AMERICA AND THE CARIBBEAN: EXPORTS BETWEEN MEMBERS OF REGIONAL GROUPINGS, 1986-2010
(Percentages of the total exports of each grouping)
Grouping Percentage
Andean Community 13.5
CARICOM a 23.0
Central American
Common Market 34.7
MERCOSUR 23.0
LATIN AMERICA AND THE CARIBBEAN: VOLUME OF INTRAREGIONAL
MANUFACTURING EXPORTS, 2010 (Percentages of total manufactures)
Source: ECLAC, on the basis of United Nations
Commodity Trade Database (COMTRADE). a Data for Barbados, Dominica, Grenada, Saint Kitts
and Nevis, Saint Lucia, Suriname, and Trinidad and
Tobago correspond to 2009.
Energy intensity has been declining much
more slowly in Latin America and the
Caribbean than in other regions
ENERGY INTENSITY OF THE ECONOMY
(Kg of petroleum equivalent per US$ 1,000 of GDP at constant 2005 PPP prices)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development
Indicators [online] http://data.worldbank.org/data-catalog/world-development-indicators [date of reference: December 2011].
This is attributable to the region’s production patterns, the fact that environmental and health costs are not factored into policy decisions, the use of hydrocarbon consumption and production subsidies, and the low priority that policymakers have assigned to energy efficiency, among other factors.
Strong correlation among GDP per capita, energy use
and CO2 emissions
Note: The size of the circles is related to the per capita emissions of each country. The colors refer to the region:
Blue, South America; Red, Central America; and Orange, The Caribbean.
Source: ECLAC on the basis of World Bank (World Develoment Indicators).
In summary…
• Current patterns of economic growth in LAC are not
consistent with a sustainable development
• Green technology and taxes are two key elements to
change BAU scenario
• However, they are not enough in LAC under the present
framework
• The magnitude of the effort implies significant modifications
in the current patterns of production, consumption,
distribution, the technological paradigm and the existing
relative price structure
• Cooperation is crucial to accelerate that transition
• Natural resource governance is key to achieve sustainable
development in the LAC region
Why talk about governance of natural
resources?
• The “governance” of natural resources refers to all
countries sovereign policies on the ownership of natural
resources and the appropriation and distribution of profits
from the exploitation of these resources to maximize their
contribution to sustainable development.
• The mechanisms and strategies for such governance
require public policies involving institutional, regulatory, tax,
strategic planning, management and environmental
conflicts management.
• In addition, this governance demands long-term institutional
innovation that provides maximum social benefits to both
present and future generations.
• Some instruments that are of use to States include: public
funds for savings, special purpose investment (education,
innovation) or macro-stabilization funds that are counter-
cyclical.
The region has remarkable assets,
but also weaknesses
Assets • Abundant natural resources:
– One third of the world’s freshwater reserves and 12% of the arable land
– A third of world production of ethanol, around 25% of the production of biofuels and 13% of oil production
– Reserves: 65% of lithium, 49% of silver, 44% of copper, 33% of tin, 32% of molybdenum, 26% of bauxite, 23% of nickel, 22% of iron and 22% of zinc
– 48% of world output of soybean
– 21% of the global area of natural forest and rich biodiversity
Weaknesses • Productive and export structure based on static comparative advantages:
• In many cases (South America): linked to natural resources
• In others, linked to low-wage, labour-intensive manufacturing or services
• Still very few dynamic competitive advantages
• Low investment and lags in innovation, science and technology, education and infrastructure
• Labour market informality
• High cost of violence (7.7% of GDP in Central America) • Asymmetric vulnerability to climate change
Trends and developments of the decade
• Thirteen countries in the region are among the 15 largest world
producers
• Chile and Peru are at the top
• Chile, since 1982 is the largest producer of copper
Brazil, until 2006 was the largest producer of iron, displaced by
China in 2007 and Australia in 2008
• Brazil is among the three largest producers of iron
• Mexico is the largest producer of silver and fifth in molybdenum
and lead in mine
• Bolivia is the fourth largest producer of tin and the sixth for silver
• Colombia is the seventh largest producer of refined nickel and
Cuba is the eight for nickel mine
• Jamaica is the seventh largest producer of bauxite
The rise in prices of metals and hydrocarbons began in
2003 and continued in 2010-11 after correction for the
global financial crisis
0
50
100
150
200
250
300
350
400
450
500
Petróleo, gas natural y carbón Metales
Source: Econoic Commissions for Latin America and the Caribbean (ECLAC), on the basis of information from the International Monetary Fund.
This rapid recuperation and persistence points to the importance of structural
factors (Asian demand) in the actual price cycles
PRICE INDEX OF RAW MATERIALS , 2003-2011
(Index January 2003=1)
PROFIT FROM MINING SECTOR BY MAJOR MINING REGIONS, 1980-2009
(In millions of US$ from 2005)
Source: Econoic Commissions for Latin America and the Caribbean (ECLAC), on the basis of World Bank, World Development Indicators.
Note: *The data for 2009 for East Asia and the Pacific corresponds to the year 2006.
The price increase also leads to an increase in economic
profit of the mining sector worldwide, and particularly in
LAC
0
10.000
20.000
30.000
40.000
50.000
60.000
70.000
80.000
90.000
1970 1975 1980 1985 1990 1995 2000 2004 2009
Norteamerica Asia del Sur Europa y Asia central Asia del Este y el Pacifico América Latina y el Caribe
LATIN AMERICA & THE CARIBBEAN: RETURN ON ASSETS FORT HE 500 LARGEST BUSINESSES IN THE
REGION, 2010
(In percentages)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of statistical information from América Economía, December 2011
(http://www.americaeconomia.com/).
The profitability of mining in LAC
reached historically unprecedented levels
Economic rent in the mining sector in LAC, estimated by the World
Bank, exceeded 75,000 million dollars in 2009
In relation to the world total, regional participation in the consumption
of hydrocarbons and oil reserves has grown, but the importance of gas
reserves and oil production has decreased
Source: Econoimc Commission for Latin America and the Caribbean (ECLAC), on the basis of BP2011.
RESERVES, PRODUCTION AND CONSUMPTION OF HYDROCARBONS:
LATIN AMERICA AND THE CARIBBEAN PARTICIPATION IN THE WORLD TOTAL (In Percentage)
4,8%
8,0%
4,8%
12,0%
6,0%
13,0%
5,3%
9,0%
5,3%
14,0%
5,2%
12,0%
6,0%
8,5%
6,0%
13,0%
4,7%
9,9%
7,0%
9,2%
7,0%
12,0%
4,7%
14,9%
0,0% 2,0% 4,0% 6,0% 8,0% 10,0% 12,0% 14,0% 16,0%
Consumo de gas natural
Consumo de petróleo
Producción de gas natural
Producción de petróleo
Reservas de gas natural
Reservas de petróleo
2006-2010 2001-2005 1996-2000 1991-95
Worrying decline in the reserve / production ratio of hydrocarbons, with
the exception of the Bolivarian Republic of Venezuela
0
10
20
30
40
50
60
70
80G
as N
atur
al
Pet
róle
o
Pet
role
o&G
asN
atur
al
Gas
Nat
ural
Pet
róle
o
Pet
role
o&G
asN
atur
al
Total ALC Total ALC s/Venezuela
1995
2000
2005
2009
2010
4 veces en GN
2.5 veces en PE
VEN VEN
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of BP2011.
RATIO OF RESERVES/PRODUCTION OF LATIN AMERICA & THE CARIBBEAN (years)
Risk of “reprimarization”,
especially in South America
LATIN AMERICA AND THE CARIBBEAN: CHANGES IN THE STRUCTURE OF EXPORTS TO THE WORLD SINCE THE EARLY 1980S
(Percentages of regional total)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from United Nations
Commodity Trade Statistics Database (COMTRADE).
The increase in international prices for energy and food
has impacted inflation in countries in the region
LATIN AMERICA: CONTRIBUTIONS TO INFLATION, JANUARY 2007-FEBRUARY 2012 (Inflation during 12 months, simple average)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of oficial figures.
-2%
0%
2%
4%
6%
8%
10%
12%
14%
Ener
o
Feb
rero
M
arzo
A
bri
l M
ayo
Ju
nio
Ju
lio
Ago
sto
Se
pti
emb
re
Oct
ub
re
No
viem
bre
D
icie
mb
re
Ener
o
Feb
rero
M
arzo
A
bri
l M
ayo
Ju
nio
Ju
lio
Ago
sto
Se
pti
emb
re
oct
ub
re
no
viem
bre
d
icie
mb
re
Ener
o
Feb
rero
M
arzo
A
bri
l M
ayo
Ju
nio
Ju
lio
Ago
sto
Se
pti
emb
re
Oct
ub
re
no
viem
bre
d
icie
mb
re
Ener
o
Feb
rero
M
arzo
A
bri
l M
ayo
Ju
nio
Ju
lio
Ago
sto
Se
pti
emb
re
Oct
ub
re
no
viem
bre
d
icie
mb
re
Ener
o
Feb
rero
M
arzo
A
bri
l M
ayo
Ju
nio
Ju
lio
Ago
sto
Se
pti
emb
re
Oct
ub
re
no
viem
bre
d
icie
mb
re
Ener
o
Feb
rero
2007 2008 2009 2010 2011 2012
Alimentos Subyacente Otros
This increase has resulted in almost continuous appreciation, jeopardizing the competitiveness of other tradable goods outside the
natural resources sector
LATIN AMERICA & THE CARIBBEAN: REAL EFFECTIVE EXCHANGE RATE EXTRA-REGIONAL, JANUARY 2008 – JANUARY 2012
(Indexes, Average from 1990-2009 = 100)
Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of oficial figures.
80
84
88
92
96
100
en
e-0
8
ab
r-0
8
jul-0
8
oct-
08
en
e-0
9
ab
r-0
9
juL
io0
9
oct-
09
en
e-1
0
ab
r-1
0
jul-1
0
oct-
10
en
e-1
1
ab
r-11
jul-11
oct-
11
en
e-1
2
América Latina y el Caribe
América del Sur
Centroamérica, México y Caribe
LATIN AMERICA & THE CARIBBEAN: REAL EFFECTIVE EXCHANGE RATE TOTAL, FEBRUARY 2012 VS AVERAGE
1990-2009 (Percentages)
0
50
100
150
200
250
300
350
400
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Precio Cu (BML) Costo de producción (promedio América Latina)**
Precio del cobre refinado en la Bolsa de Metales de Londres y costos de producción
promedio de cátodos de cobre en América Latina* (En centavos de dólar por libra)
Fuente: Elaboración propia sobre la base de datos de COCHILCO.
Notas: * Se refiere a los costos totales, C3 de acuerdo a la terminología de Brook Hunt. ** Los costos para el período 1992-1996 son sólo de Chile.
El aumento del precio internacional por sobre los costos de
producción, determina un aumento importante de las rentas del
sector minero a partir de 2004
Enforcement mechanisms
Key Fiscal Instruments
Mechanism Advantages Disadvantages
Royalty Fixed payment per unit of production or a percentage of
the production or gross income. Provide an early and
fiscally stable minimum payment for the resources used
and are relatively easy to administer.
Can distort investment and production decisions, as they
are insensitive to costs. Are regressive.
Taxes based
on revenue
They are less distorting because are based on revenue
less costs. Foreign investors appreciate the fact that
foreign tax credits can be applied.
Are relatively complexes to administer. Revenues also are
delayed: since depend on the depreciation of capital, which
are often generous to attract investment (i.e., provide a
faster return on investment).
Taxes based
on profit
They are neutral because the payment is only required
when the investor generate returns.
They are more effective but are also the most difficult to
manage. The risk balance is biased towards the
government.
State assets Allows the government to increase their participation and
thus increases the sense of national belonging.
Capital "paid" requires the government to contribute to the
cost of initial capital, and often leads to conflicts of interest
derived from the government's role as a regulator.
Export
duties
They are not very common. Export duties are relatively
easy to administer.
Distort the decision to sell crude oil in the foreign country
and are insensitive to costs.
Import duties
Provides income (even before royalties) during the project
development due to import requirements.
Full or partial exemptions for are often provided to mitigate
the negative impact on investors.
Others
Include: Company and production bonuses, land lease
payments, withholding taxes on interest, dividends and
services, and the value added tax (VAT)
Institutional strengthening to achieve…
• More progressiveness in state participation in the rent-
seeking by exploitation of natural resources during
boom cycles, particularly given the magnitude and
persistence of the current cycle of international prices of
primary goods ...
• ... while preserving the dynamics of investment in the
present natural resource sectors and avoiding tax
competition between countries.
• Efficient public investment income from natural resources
in education, health, infrastructure, innovation and
technological development, and equitable distribution
among levels of government and social groups.
• Institutionalize countercyclical macroeconomic
management against volatility of international price cycles
and capital flows.
Innovation and productive
convergence
• Ties must be forged between low-productivity sectors and
those already at the technological frontier
• Co-evolution of macroeconomic and productive development
policies
• Reforming the long term institutional architecture for
development:
• An explicit and integrated productive development policy
• Higher priority for science and technology
• Strengthening educational and health infrastructure
• Development banking for building production capacity and
promoting innovation and internal convergence
• Integrated strategy to provide financial support to SMEs
and link them to more dynamic sectors (+certification,
traceability, carbon footprint)
Some economies have been able to make virtuous structural changes that
combine high rates of productivity growth and employment.
Lessons for countries seeking to accelerate their development are :
• Economic development means changing comparative
advantage and the allocation of resources to technology-intensive
sectors with strong growth in demand.
• A country that is moving toward a structure dominated by dynamic
efficiency over time reduces the external constraint on growth
by allowing higher rates of export growth thug allowing the
expansion of imports.
• The desirable structural change is defined and evaluated based
on their aggregate effects on the economic system, including
employment.
• The structural change requires industrial policies combined with
macroeconomic policy (high exchange rate, low interest rates
and low volatility) to produce the necessary incentives.
At the center of this proposal is the State action. The question is no
longer to have more State or more market, but to opt for a better
State and more efficient and equitable market.
Guidelines for achieving sustainability
Create synergies between inclusion, social protection, human
security, empowerment of people, disaster risk reduction and
environmental protection
• Public transport
• Treatment of wastewater
Measure the sustainability of development
• Adoption of green net domestic product and/or the United
Nations System of Integrated Environmental and Economic
Accounting (SEEA)
Internalize the environmental and social costs and benefits of public
and private economic decisions
• Pricing of activities that pollute or cause environmental
degradation
• Eliminate direct or indirect subsidies for activities that damage
the environment
• Apply mechanisms such as royalties to channel resources into
human capital to facilitate transformation of production structure
Rio + 20 expected outcomes
Improve international governance for sustainable development
(consistency, coherence, efficiency and effectiveness), particularly
around natural resources: Strengthen the Economic and Social
Council to ensure that the three pillars are integrated
Comply with ODA commitments
SDGs on production and consumption patterns: subsidies, and
pricing of externalities.
Improve international cooperation to allow access to new
technologies (technological weaknesses and the world intellectual
property system limit such transfers)
Process to adopt national wealth indicators beyond GDP to properly
count human and natural patrimonies.
Joseluis Samaniego
Chief, Sustainable Development and Human
Settlements Division
