The public sector should be a driver of investment in Latin America, according to the OECD. • Semanario Universidad

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The public sector should be a driver of investment in Latin America, especially in public works, which was recommended on Friday by the Organization for Economic Co-operation and Development (OECD), which establishes green and digital transformation as strategic sectors.

Investment is the hero of the 2023 edition of the Latin American Economic Outlook, prepared in collaboration with the Economic Commission for Latin America and the Caribbean (ECLAC), the Regional Development Bank (CAF), and the European Commission.

The report considers it essential to achieve a “more sustainable and inclusive future”, especially when the region has “great potential” by possessing “significant wealth in natural resources, biodiversity and green energy”, but also “structural challenges” such as poverty. (29%) or informal workers (43% of families).

In this sense, the report warns: “With only 20% of GDP, Latin America and the Caribbean has one of the lowest levels of gross investment of all world regions,” partly due to “low national saving rates.” .

He points out that the private sector is the main source of investment, at 78% in 2019, despite its concentration in large companies, so “the public sector must play a decisive role by investing in strategic public infrastructure and mobilizing private investment.”

“To this end, the public sector can support by modernizing investment regulatory frameworks and ensuring that public-private partnerships are well regulated, under solid institutional frameworks,” adds the report, which must be presented on Friday in Santiago.

For the report’s authors, public investment in infrastructure has been at “low levels” since 2008 (1.6% of GDP in 2021) and the main sectors that will need it will be clean energy, sustainable transport, telecommunications and water.

The Economic Outlook report highlights that “high-quality infrastructure in the energy, telecommunications and water sectors can contribute to green and digital transformations that benefit the region’s citizens.”

These recommendations contradict the economic policy announced by the new, ultra-liberal Argentine President, Javier Miley, who announced an austerity program that includes paralyzing public works that have not yet begun, to combat inflation and deficits.

The Economic Commission for Latin America and the Caribbean on Thursday forecast that Latin American economies will reach an average expansion of 2.2% in 2023 and 1.9% in 2024.