“There is no trade-off between equality and economic efficiency. They are mutually reinforcing and interacting with each other,” Alicia Bárcena, Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), stated today during a high-level event organized by the United Nations Department of Economic and Social Affairs (DESA).
The senior UN official exchanged views with prominent international experts, such as Columbia University Professor and Nobel Prize winner in Economics Joseph Stiglitz; two other professors from the same university, Jeffrey Sachs and José Antonio Ocampo; former President of Chile Ricardo Lagos; and other renowned panelists, during the launch of a new publication by the United Nations High-level Advisory Board (HLAB) on Economic and Social Affairs.
At the event entitled Recover Better: Economic and Social Challenges and Opportunities, Alicia Bárcena pointed to equality as a key instrument in the recovery following the COVID-19 pandemic.
“Recovering better in Latin America and the Caribbean means recovering with equality, but equality considered as an objective of economic development,” she stressed. “The impact of equality should be seen in productivity, growth and economic diversification by means of an expansion of human capabilities.”
In her remarks, Bárcena indicated that equality is also necessary for formulating policies since it constitutes a pillar for institution building. “The pandemic has shown us that in our region, we face the urgency of implementing structural change and catching up technologically. It has also shown very clearly that State intervention is crucial for social protection and inclusion, because the market is not going to help us equalize society,” she stated.
ECLAC’s Executive Secretary recalled that, as the United Nations Secretary-General (António Guterres) said recently in his speech on Nelson Mandela International Day, we need a new political and social compact that may be carried out on a national, regional and international level.
Furthermore, she indicated that the pandemic has also exposed the vulnerabilities of the globalization model and the fragmentation of production value chains. “We were coming from a world that was already more unequal, with multilateralism weakened by geopolitical rivalry, which was compounded by climate change and a fossil fuel-based economy. Also, in Latin America and the Caribbean we are coming from a society that has less trust in its governments, which has affected the legitimacy of democracy,” she sustained.
In her presentation, Bárcena recalled that the region’s experience in the decade of the 2000s was positive in terms of poverty reduction: nearly 60 million people were able to get out of poverty. “But now due to the pandemic crisis, we are on the other side,” she said, explaining that calculations show 45 million people will end up living in poverty again, amid an extremely pronounced economic downturn.
Alicia Bárcena insisted that what is currently needed is to move towards a structural change to diversify and increase the technological intensity of the Latin American productive structure, along with more multilateral cooperation, since the greatest risk the region runs is going back to a reprimarization of its economies, fossil fuel use and extractive industries.
“Industrial policies are essential for selecting some sectors. This pandemic offers us opportunities to overcome old patterns of specialization and move towards an energy transition, for example, which in turn could have an impact on import substitution,” Bárcena said.
To achieve greater equality, universal social protection is needed, ECLAC’s Executive Secretary continued. “That is a key point,” she stressed, and she pointed to the example of some countries in the region – such as Costa Rica, Uruguay and Cuba – that have managed to implement more inclusive health systems.
In addition, Alicia Bárcena emphasized the importance of having more progressive and universal taxation and income redistribution systems. “In sum, we need a stronger role for the State to achieve fiscal reform. This is a region (Latin America and the Caribbean) that is not taxing enough; we have a 22% average tax burden, which is very low compared to OECD countries. The rich should pay more,” she said.
In this sphere, she stressed the need to have expansive fiscal policies and to fight tax evasion. “And above all, we need more regional integration. That is essential. The post-pandemic world is going to be a world of regions and blocs. That is why we must move together in our region,” she concluded.