Introduction

The previous chapters have offered a mixed picture of the closing of economic and social gaps in Latin America and the Caribbean (LAC). Although high levels of heterogeneity persist, the region has generally achieved relative macroeconomic stability, especially in those countries whose central banks have maintained their independence from other branches of Government. Added to this are significant reductions in poverty rates, driven largely by the commodity super-cycle between 2000 and 2014, and the success of conditional transfer programs. The region has also approached universal levels of school enrollment, with gender equity and even a favorable advantage for women. In addition, several successful payment-for-ecosystem-services (PES) initiatives have been implemented to encourage environmental conservation.

However, the list of pending challenges is still long. According to ECLAC, potential growth in the region ranges between 1.8 % and 2.5 %, depending on the country and subregion (ECLAC, 2022). Chapter 2 revealed that the lag in productivity is alarming. For the sample, average labor productivity in LAC is approximately 40 % of that of the United States. Chapter 3 presented a bleak picture with respect to meeting the Sustainable Development Goals (SDGs) and closing the gaps. Evidence of this is that, on average, 70 % of workers in the region are informally employed, which limits their access to social protection services. It also showed how the region faces persistent levels of inequality and low economic and social mobility, to which must be added that, despite greater access to public education, its quality and relevance continue to be urgent problems. Chapter 4 also raised the alarm about the pending climate action agenda, especially considering that the region accounts for 9 % of the world’s extreme weather events.

In light of this reality, this chapter offers proposals aimed at promoting economic growth and sustainable development at a time of historical upheaval. The current context is marked by growing rivalry between global powers, trade tensions, open conflicts in Europe and the Middle East, the entrenchment of polarization and political uncertainty, the transition to a multipolar world and global challenges such as climate change, the impacts of artificial intelligence and migration crises, which require rebuilding an increasingly fragmented international cooperation. In an increasingly interconnected and technologically advanced world, LAC has some opportunities to take advantage of new avenues for growth and sustainable development.

However, the possibility of taking advantage of technology and the current geopolitical environment does not mean that we should stop working on the pending development agenda. On the contrary, resolving structural challenges is fundamental to enhance any take-off strategy. In this agenda, it is crucial to place emphasis on enabling factors such as investment in digital infrastructure and the design of an appropriate regulatory ecosystem, the reformulation of industrial policy and the provision of quality and relevant education. Likewise, strengthening State capacities and promoting strong institutions are key to this agenda. To ensure policy coherence and maximize resources, especially in countries with territorial differences and unequal administrative capacities, central and subnational Governments must coordinate effectively. Institutions are key to building trust and promoting investment and innovation, but there is no hiding the fact that the region faces major challenges linked to problems of legitimacy and corruption. To boost inclusion and sustainability, it is essential to start by modernizing these institutions, ensuring their representativeness and capacity to regulate natural resources and manage climate risks.

Many of the challenges faced by LAC countries are the same as in other regions and require coordinated efforts among nations, particularly in emissions reduction and energy transition. There are also intertemporal challenges that transcend political cycles and require planning, coordination and strengthening of institutions to ensure the continuity of public policies in the long term. This chapter will conclude by reviewing the role of modern multilateral banking in the region’s development agenda, given that development banks have positioned themselves as key actors that, in addition to providing financing, also offer key public goods such as knowledge and coordination.

In short, LAC is at a crossroads that calls for strategic decisions to take advantage of emerging opportunities, without losing sight of historical challenges. The convergence of external factors, such as geopolitical transformations and technological megatrends, with internal structural problems, calls for the adoption of a comprehensive development vision. This chapter sets out a forward-looking agenda that seeks to adapt and build on the progress achieved.