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Session 1: “Getting out of the Social Vulnerability Trap in the Age of New

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Session 1: “Getting out of the Social Vulnerability Trap in the Age of New Session 1: “Getting out of the social vulnerability trap in the age of new technologies” Today, most Latin America and the Caribbean (LAC) countries are middle-income countries, with high heterogeneities across different development indicators. As in other emerging economies around the world, LAC countries still face high inequalities in terms of income, well-being outcomes and access to public services, both across country population and subnational regions, a pattern that has persisted despite the positive per capita GDP performance in the past decade. Moreover, different symptoms suggest that LAC LAC inequalities at-a-glance countries are facing a number of “new” development Income inequality in LAC is 47%, traps that stand in the way of further inclusive and significantly higher than Asia- sustainable development. The traps themselves are self- Pacific (36%) and Africa (42%).3 reinforcing dynamics and result from longstanding weaknesses, but progress towards higher income levels The richest 10% of the LAC is surfacing – as well as creating – new development population holds 71% of the challenges. wealth. 4 One of the “new” development traps is the social Regional economic disparity is 4 vulnerability trap. Income growth paired with strong times higher than in OECD social policies since the beginning of the century have countries. 5 significantly reduced poverty in the region. Yet, most of those who escaped poverty are now part of a new Sustainable Development Goal10: vulnerable and diverse middle class that represents 40% “Reduce inequalities within and of the LAC population, facing low-quality jobs, low social among countries” is one of the 7 protection and volatile income. Because of these goals with lowest coverage in LAC. 6 circumstances, they do not invest in their human capital, or lack capacity to save and invest in an entrepreneurial In 2017, 29.4% of women in LAC activity. 1 were not receiving any income of their own, compared to 10.7% of By 2021, the richest 1% in Latin America will have men. 7 accumulated more wealth than the remaining 99% 2 . However, inequalities are not only related to income and wealth, they are much more multidimensional and complex in reality. Discrimination is also among the factors that intensifies inequalities, which limit opportunities, particularly of women, indigenous people and people of African descent, who show below-average development indicators, both in terms of income and access to education. The Development in Transition approach presented in the recent Latin American Economic Outlook 1OECD/CAF/ECLAC/EU (2019), Latin American Economic Outlook 2019: Development in Transition, OECD Publishing, Paris 2 According to Oxfam’s calculations 3 As measured by the Gini coefficient 4 World Economic Forum (2016) 5 Bartolini, D., S. Stossberg and H. Blöchliger (2016), “Fiscal Decentralisation and Regional Disparities”, OECD Economics Department Working Papers, No. 1330, OECD Publishing, Paris. 6 Comisión Económica para América Latina y el Caribe (CEPAL 2018), Segundo informe anual sobre el progreso y los desafíos regionales de la Agenda 2030 para el Desarrollo Sostenible en América Latina y el Caribe (LC/FDS.2/3/Rev.1), Santiago 7 ECLAC (2017), “People without incomes of their own” indicator, Gender Equality Observatory for Latin America and the Caribbean, ECLAC, Santiago 2019 presents fresh and revised policy-recommendations to overcome development traps and how international cooperation can play a more adapted role of facilitator to the region. 8 The digital transformation holds the potential to reduce these inequalities and improve opportunities and perspectives for all LAC citizens. New technologies, for instance, can increase access to public services, citizen participation in public life and improve job quality. Although, in order to make the digital transformation work for all and make it a driver of further equality, stronger efforts are needed. Policies have to be designed and implemented in a flexible, forward-looking and integrated framework. This means increasing access to new technologies and fostering greater mobility and connectivity within countries to reduce spatial inequalities. It also means greater investment in digital and telecommunications infrastructures to promote better integration in global value chains, which would lead to stronger labour productivity and social inclusion. Still, harnessing the potential of the digital transformation requires addressing its impact in a number of dimensions, including the use, innovation, trust, jobs, society and market openness. All of these “building blocks” are integrated in the OECD Going Digital Framework, bringing together policies that shape a common digital future improving lives and well-being while boosting economic growth. Nevertheless, this cannot be achieved by governments alone. The private sector is also key in ensuring sustainable and inclusive development, and entrepreneurs can play a fundamental role in reorienting traditional investments towards more inclusive and innovative productive models. Substantially higher private investment in R&D and entrepreneurship, alongside greater and better public sector support are necessary to boost innovation and therefore, enhance the state’s capabilities to develop more rigorous and long-term sustainable development strategies. 10 Addressing the social vulnerability challenges will require policymakers to provide citizens with better socio-economic opportunities and public services. Ensuring access to formal and stable jobs, better social protection systems, investments in education and skills, tackling corruption and reaping the benefits and new opportunities offered by the digital era will be crucial to allow the region to develop its full potential in an inclusive and sustainable manner. 3 Questions for the discussion How can public policies help reinforce inclusive growth and make development needs benefit from the region’s economic prosperity? How can current technological trends be supportive of these efforts? 8 OECD/CAF/ECLAC/EU (2019), Latin American Economic Outlook 2019: Development in Transition, OECD Publishing, Paris 9 OECD (2016), Promoting Productivity for Inclusive Growth in Latin America, Better Policies, OECD Publishing, Paris, 10 OECD/CAF/ECLAC/EU (2019), Latin American Economic Outlook 2019: Development in Transition, OECD Publishing, Paris .
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