Regional Agenda World Economic Forum on Latin America Advancing through a Renovation Agenda

Riviera Maya, Mexico 6-8 May 2015

LA15_Report.indd 1 12.05.15 10:41 Contents

3 Preface 6 Riviera Maya Highlights 8 Strengthening the Foundations 14 Renewing the Framework 20 Modernizing for Tomorrow 28 Acknowledgements 29 Digital Update 30 Upcoming Meetings

World Economic Forum 91-93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0)22 869 1212 Fax: +41 (0)22 786 2744 Email: [email protected] www.weforum.org

World Economic Forum®

© 2015 – All rights reserved. No part of this publication may be reproduced or Transmitted in any form or by any means, including Photocopying and recording, or by any information Storage and retrieval system.

REF 110515

LA15_Report.indd 2 12.05.15 10:41 Preface

The 10th World Economic Forum on As a first step in this transformation, the Latin America took place in Riviera Maya, focus should be on strengthening the Mexico, and brought together over 800 foundations of Latin America’s society. leaders of 45 nationalities from industry, Modern, efficient and transparent government, academia and civil society. institutions are needed to deliver long- Among the participants were 3 heads term prosperity. Latin America’s youth of state and government, and more and its larger and more demanding than 50 government figures from almost middle class are the cornerstone to every Latin American nation and beyond. driving positive societal change. Quality Under the theme “Advancing through educational systems will provide young a Renovation Agenda”, participants people with the skills they need to play a explored a range of issues affecting Latin part in the region’s economic regeneration America as it undertakes critical reforms and help boost productivity. to ensure sustainable and inclusive growth, and continued social development Headwinds produced by global and local in a more challenging global context. conditions will require a renewal of Latin Marisol Argueta de Barillas America’s economic framework. Better Senior Director, The meeting took place with the full financial regulations, fiscal discipline and Head of Latin America support of the Government of Mexico, reforms in key sectors including energy, and coincided with the country’s infrastructure and labour markets are presidency pro tempore of the Pacific required to ensure sound macroeconomic Alliance. Mexico, one of the leading fundamentals and to continue attracting economies in Latin America, has made foreign and local investment. The role of strides on a variety of critical reforms – business – from small local enterprises including important changes to education, to large multinationals – is increasingly energy, fiscal and telecommunications being recognized as central in improving legislation – which are already opening productivity and securing inclusive growth. new opportunities. Several other countries in the region are also undergoing Ultimately, the region’s leaders will need to important transformations towards a more stimulate innovation and entrepreneurship prosperous future. Colombia’s quest for if Latin America is to modernize for peace and Cuba’s update of its economic tomorrow. To secure social and financial model are just two of many examples. inclusion, reduce poverty and protect the environment, the region will need to In spite of the global financial crisis, Latin invest in cutting-edge research, emerging America has lived through a decade of technologies and innovative business diligent economic management, financial models. resilience and steady social progress. But now it is at a crossroads. If the region By bringing together leaders from so is to preserve its social and economic many different backgrounds, this meeting achievements and continue along its provided an ideal platform for setting positive trajectory, structural issues must a bold renovation agenda and taking be addressed. Slower growth prospects, the initiative on the new generation of volatility in the price and external demand investments and transformational projects. of commodities, high crime rates and We hope this unparalleled opportunity for inequality pose diverse challenges. To multistakeholder dialogue will influence the keep advancing, leaders across the region future course of the region by creating a need to improve productivity, continue solid renovation agenda. diversifying their economies, promote further innovation, and develop institutions that are agile in responding to the needs of citizens.

Advancing through a Renovation Agenda 3

LA15_Report.indd 3 12.05.15 10:41 Co-Chairs

Carlos Brito Chief Executive Officer Anheuser-Busch InBev USA

Angelica Fuentes President Angelica Fuentes Foundation Mexico

Eduardo Leite Chairman of the Executive Committee Baker & McKenzie USA

Ignacio Sánchez Galán Chairman and Chief Executive Officer Iberdrola Spain

Carlos Slim Domit Chairman América Movil Mexico

Joseph E. Stiglitz Professor School of International and Public Affairs (SIPA) Columbia University USA

4 World Economic Forum on Latin America

LA15_Report.indd 4 12.05.15 10:41 The meeting in numbers

850+ Participants from 45 countries 35+ Official sessions

100 Reporting 50+ press Government figures

500+ Business leaders 35 Media leaders

Advancing through a Renovation Agenda 5

LA15_Report.indd 5 12.05.15 10:41 Riviera Maya Highlights

Travel & tourism: Celebrating agents A sector on the rise of social change

As the wider economy struggles to get back on track, the The work of six social entrepreneurs was recognized at travel and tourism sector is going from strength to strength. an awards ceremony in Mexico, when they were named These are the findings of the Forum’s Travel and Tourism Latin America Social Entrepreneurs of the Year. The social Competitiveness Report, unveiled in a press conference in entrepreneurs, who come from across the region, were Mexico. The industry, which already accounts for one-tenth chosen by the Schwab Foundation, which oversees a of global GDP, is set to grow by 5.2% per annum over the network of more than 320 social enterprises operating in 70 next five years. countries.

The report ranks 141 countries across 14 indicators to Social entrepreneurs use innovative, practical and establish how well their travel and tourism industries are sustainable business models to tackle some of the most performing. Spain comes out on top, largely thanks to pressing global challenges and bring about social change. its world-class cultural resources, solid infrastructure and The awardees – Carolina Escobar Restrepo, Eduardo willingness to embrace changing consumer habits. Bontempo, Claudio Sassaki, Gonzalo Muñoz, Carlos Orellana Aguilar and Javier Okhuysen Urrutia – are working Although the rest of the top 10 is made up of developed on a range of social issues, including increasing accessibility nations, several emerging economies make it into the top to high-quality education and healthcare, improving the lives 30, showing that regardless of wealth, a strong travel and of young mothers and infants living in extreme poverty, and tourism industry can create economic growth and social making it easier for people to recycle. benefits for all. As members of the Schwab Foundation, social Countries wanting to capitalize on these opportunities will entrepreneurs become part of the wider Forum community, have to adapt to new trends. These include a growth in allowing them to increase their visibility and credibility, and tourism from emerging markets, an increasing number of opening up opportunities for financing and partnerships. both older and millennial travellers, and the rising importance of online services and marketing. Find out more about the Schwab Foundation for Social Entrepreneurs at http://www.schwabfound.org/ Read the full report at: http://reports.weforum.org/travel- and-tourism-competitiveness-report-2015/

6 World Economic Forum on Latin America

LA15_Report.indd 6 12.05.15 10:41 Riviera Maya Highlights

For session highlights, videos and meeting-related documents, plus Forum insights, visit https://toplink.weforum.org/

Inspiring public-private Forging alliances in collaboration the region and beyond

Some of the most influential business leaders from Latin At not even three years old, the Pacific Alliance has already America took part in the Regional Business Council meeting gone a long way towards integrating the economies of Chile, in Riviera Maya. The meeting formed part of a wider Colombia, Mexico and Peru, its four members. It was against programme for the Forum’s Regional Partners. The council’s this backdrop that ministers and business leaders in Mexico main role is to stimulate collaboration between the business gave an update on the state of the alliance. world and the public sector, and to ensure that the Forum’s mission and values are being lived out in the region. Ricardo As part of the alliance, tariffs on 92% of products traded Villela Marino of Itaú Unibanco is the council’s first chair, among the countries are to be removed; tariffs for most of and Enrique Ochoa Reza from the Comision Federal de the rest will be phased out over the next seven years. But Electricidad is its vice-chair. it is about more than just free trade: under the agreement, capital markets across the bloc have been integrated and After discussing some of the transformations taking place visa restrictions have been scrapped, boosting both cross- in Latin America, participants heard from Cuban ministers border investment and tourism. about the economic changes happening in the country, and the investment opportunities set to open up. The leaders spoke of their hope to expand membership: “There is no limit to the countries that can join; we are not Council members also explored areas of common interest a closed bloc,” said Ildefonso Guajardo Villarreal, Secretary and priority issues for the region where collaboration could of Economy of Mexico. Thirty-two countries – including help drive progress. They will continue these discussions Germany, Japan, the United States, Israel and New Zealand throughout the year on TopLink: https://toplink.weforum.org/ – have observer status, with many working to become fully community/regional-business-council-latin-america fledged members.

Advancing through a Renovation Agenda 7

LA15_Report.indd 7 12.05.15 10:41 Strengthening the Foundations

Stronger building blocks for stronger societies

Efficient and transparent government institutions are key to resolving some lingering challenges in Latin America. The economic growth and positive social policies of the past decade empowered citizens, who now have higher expectations from public institutions. Even while economies contract, governments must strengthen their institutions and make them more credible, transparent and agile in responding efficiently to the needs of citizens.

Growth experienced in the past “People have lost the sense that’s enough accountability, is decade raised living standards of the bright future they had over; younger people believe across the continent and a few years ago,” noted in on-time accountability,” said expanded the middle class. Ernesto Talvi, Academic Salil Shetty, Secretary-General A high tide of expectations Director at the Centre for of Amnesty International. From swept onto Latin American the Study of Economic and many sectors of society, the shores. Nevertheless, the more Social Affairs. But in spite demand for transparency and challenging times ahead could of this changing economic accountability is growing more expose weaknesses in public climate and worries for what intense. institutions in the region, the future holds, the public which need to be addressed still expects more and better Corruption remains a concern promptly. The economic services from governments. in Latin America. Incidents slowdown is adding to the They not only expect more involving alleged misuse of pressures governments face in terms of what is delivered, public funds have dominated in maintaining and delivering they are also demanding more headlines in recent months in public goods. accountability. “The traditional various countries in the region, notion that once you’re elected, a sign of institutional fragility.

“This era requires more collaboration and co-responsibility than ever before.”

Carlos Slim Domit Chairman, América Movil, Mexico

8 World Economic Forum on Latin America

LA15_Report.indd 8 12.05.15 10:41 Strengthening the Foundations

“Young people will help us transition to a more equal society.”

Angelica Fuentes President, Angelica Fuentes Foundation, Mexico

Inequality: poor include countercyclical than half of all workers – earn A policy challenge fiscal measures and far less than those in the conditional cash transfers formal sector and have no that give money to poor social safety nets. Integrating Of the 15 most unequal families who keep their these people into the formal countries in the world, 10 children in school and take sector could benefit society are in Latin America. But them for regular health at large. “By having less it’s a trend that can be check-ups. It costs just 0.4% informality, we will have reversed by institutions and of GDP but benefits 125 better politicians; people the policies they implement. million people in the region, will say: give me back what “Inequality is not inevitable; it Bárcena Ibarra said. I’m paying you in taxes,” can be addressed by public The challenge is to sustain said Lorenzo A. Mendoza, policies,” said Alicia Bárcena these policies at a time of Chief Executive Officer of Ibarra, United Nations economic austerity and help Empresas Polar. “Once we Executive Secretary of the those already lifted from raise wages and families are Economic Commission poverty to achieve their own able to consume and get for Latin America and the sustainable progress. their children educated, it’s Caribbean. good for business,” agreed Informal sector workers – Isabel Cecilia De Saint Malo Policy tools for narrowing who in many countries in de Alvarado, Vice-President the chasm between rich and Latin America make up more of Panama.

Advancing through a Renovation Agenda 9

LA15_Report.indd 9 12.05.15 10:41 But the fact these cases are public and have sparked investigations and the creation of new legislation demonstrates some progress is being made.

“Everything we’re seeing is a strong sign democracy is consolidated in the region,” said Eduardo Leite, Chairman of the Executive Committee at Baker & McKenzie. Combating corruption can only occur when the press operates freely, civil society demands transparency, and judicial institutions – the Mexico’s telecommunications. In prosecutor, police and judiciary doing so, it could eventually – are independent. “Forty reform rush contribute to bridging years ago we wouldn’t have the income gap. “It spurs heard anything of what we are Mexico is a showcase of economic growth and hearing today,” Leite said. Latin America’s efforts to lowers costs,” Joseph E. advance its economies Stiglitz, Professor in the A collaborative approach, with through reform in the face School of International and public-private cooperation at its of challenging economic core, could help governments Public Affairs at Columbia conditions. It is implementing provide public services, University, explained in a raft of restructuring in improve the quality of public the closing plenary. “If you areas including competition, goods, and ensure they are lower costs, you increase education, energy, delivered effectively and to all standards of living.” labour, public finance, those who need them. “Public- telecommunications, rule of private alliances must work President Peña Nieto law and transparency. The for institutional infrastructure, acknowledged that it will goals: to bolster sustainable too,” said Daniel Zovatto, take time to implement Director of Latin America and economic growth, boost the reforms fully and for the Caribbean at International productivity, address citizens to truly benefit. IDEA. Public-private alliances inequality, and strengthen “As time goes on, we will are understood to mean that security, civil rights and feel the effects on Mexican governments and the private democracy. families,” he remarked. sector – including businesses, “But we have shown that, civil society and academia – Mexico’s reform programme through democracy and work together. If civil society has helped build trust in the country’s diversity, we and academia aren’t involved, the government among have dared to break with the public may suspect investors and the public. collusion or cronyism, as one paradigms that we thought Take its competition policy. business representative noted were impossible to change It’s already received a lot of in a session on the role of and to make structural praise because it can level business in society. changes that will lead us to the playing field by reducing a better future.” the power of dominant Collaboration should not just players in such sectors as be cross-sectoral but also

10 AnnualWorld Economic Meeting of Forum the New on LatinChampions America 2015

LA15_Report.indd 10 12.05.15 10:41 among different levels of Gutiérrez Candiani, President vision” for education government. “When we see of the Business Coordinating that reinforces training in change happen at scale – Council, an association of competitive skills, benefiting whether it be in education, leading Mexican businesses. workers, companies and the homelessness, access to country, President Varela said. healthcare – it’s when sectors That’s good news for a region “The message sent to the at the local and federal levels with the highest homicide lower income quarters of the get together and agree rate per capita in the world, country is that education is that they’re going to create and where the issue of everyone’s issue,” he added. inclusive growth and work out public security is still high on strategies together,” said Brian the agenda. It’s clear that That message is echoing Gallagher, President and Chief unless a comprehensive across the region. In Haiti, Executive Officer of United Way approach is taken to address state schools are acting as Worldwide. the problem, with innovative the proving ground for the prevention programmes, argument that better, more Mexico offers a leading effective enforcement and transparent public institutions example of designing rehabilitation opportunities, it and services help build trust. collaboration across sectors could undermine all the “We are creating trust by and levels. Nearly three years advances being made providing access to education,” ago, shortly after the election of elsewhere. said President Michel Joseph President Enrique Peña Nieto, Martelly of Haiti. In the past, negotiations began between It’s not just in Mexico that Haiti’s state schools served the three leading political public-private cooperation is only a minority of children. The forces to reach agreement helping improve the quality government levied new taxes on public policies that would of services governments can to pay for tuition so that all promote growth, employment offer citizens. In Panama, children can attend. and competitiveness. Their 150 private businesses are talks produced the “Pacto remodelling 400 schools As Greg Stanton, the Mayor por México”, a consensus that serve half the nation’s of Phoenix, USA, noted in a supporting 95 policies that youngsters. What would take session that explored how to resulted in a historic set of the public sector six months improve public services: “The reforms. to complete, collaboration challenge to politicians is to with corporations can deliver listen to their citizens with an The Mexican private sector in 40 days, said President open heart and mind and to participated in this process Juan Carlos Varela Rodríguez implement their ideas.” Latin after agreeing three years ago of Panama. America’s leaders have been on an agenda to strengthen listening and are ready to start and modernize the country’s Private sector engagement in putting in place the building economy. It is now also education will be continuous, blocks needed for stronger, working with government to and will strengthen public more inclusive societies. improve security, said Gerardo institutions with a “state

“All economic issues – from innovation to inclusion – depend on the right leaders.”

Eduardo Leite Chairman of the Executive Committee, Baker & McKenzie, USA

Advancing through a Renovation Agenda 11

LA15_Report.indd 11 12.05.15 10:41 01: Trade and Investment 01 Outlook 02: Klaus Schwab, Founder and Executive Chairman, World Economic Forum; Michel Joseph Martelly, President of Haiti; Enrique Peña Nieto, President of Mexico; Juan Carlos Varela Rodríguez, President of Panama 03: Tim Groser, Minister of Trade and Minister of Climate Change Issues of New Zealand 04: José Manuel Salazar Xirinachs, Assistant 03 Director-General for Policy, International Labour Organization (ILO), Geneva 05: Miguel Ángel Mancera Espinosa, Mayor of Mexico City 06: Ana María Baiardi Quesnel, Minister for Women’s Affairs of Paraguay 07: Stefan Selig, US Undersecretary for International Trade 08: Juan Carlos Varela Rodríguez, President of Panama 09: Reclaiming the Role of Business 10: The Challenge: Gender Parity

02

04

05

06 07 08

09

10

12 World Economic Forum on Latin America

LA15_Report.indd 12 12.05.15 10:41 01: Enrique Peña Nieto, President of Mexico, 01 Young Global Leader Alumnus; Klaus Schwab, Founder and Executive Chairman, World Economic Forum 02: Luis Alberto Moreno, President, Inter-American Development Bank, Washington DC 03: Alicia Bárcena Ibarra, Executive Secretary, United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Santiago 04: Anibal Gaviria Correa, Mayor of Medellín, Colombia 05: The Challenge: Water Security 06: Sergio Sarmiento Editor-in-Chief and Vice- President, Editorial Board TV Azteca SAB de CV, Mexico 07: Adriana Noreña, Managing Director, Spanish Speaking Latin America, Google Latin America, Brazil 08: Magali Silva, Minister of Foreign Trade and Tourism 02 03 04 of Peru 09: Carlos Rodriguez- Pastor, Chairman, Intercorp, Peru

05 06

07 08 09

Advancing through a Renovation Agenda 13

LA15_Report.indd 13 12.05.15 10:41 Renewing the Framework

Preparing for the economic challenges ahead

Latin America’s economies enjoyed strong tailwinds for nearly a decade: high commodity prices and cheap capital made growth easier. Now, with volatile prices and China’s demand for commodities slowing, together with the possibility of tighter monetary policy in the United States, the risks – and the opportunities for pro-growth reforms – are increasing.

The challenges to Latin Brazil unfortunately entered American economies are clear. this cycle with unbalanced Lower commodity prices and government accounts, but it lower demand are hurting is moving swiftly to correct corporate and government the excesses of the past. revenues, while capital outflows The country also has a tightly from emerging markets may be regulated, rock-solid banking even greater than those seen system that will protect it from during the 2008-2009 global any financial crisis. “Reforms are financial crisis. the foundation Although some developed for building a But countries are proving that nations may have room for a better country.” if you enter tough times with less strict fiscal policy, Latin solid fundamentals, foreign American countries do not investment will continue. Chile, have that luxury. International Enrique Peña Nieto Colombia, Mexico and Peru all investors, with their current President of Mexico have budget deficits and short- sceptical view of emerging term debt at very manageable markets, prefer those countries levels, and both global markets that keep to long-standing and corporate investors are rules for budgets and inflation rewarding them. Chile and targets. Colombia even have the fiscal space for stimulus spending. Even in this era of fiscal restraint, many Latin American

14 World Economic Forum on Latin America

LA15_Report.indd 14 12.05.15 10:42 Renewing the Framework

Connecting to The Pacific Alliance, which Participants debated the was launched in 2012, looks value of the TPP for the global value chains set to change that. Along region, with critics particularly with agreements on free pointing to problems related About 20% of Latin trade and the movement of to intellectual property. American exports go to people, other cooperative Despite concerns, supporters countries within the region, measures are in the works in argued that it will help Latin compared to around 60% sectors including education, America better integrate into for Europe and 50% for human resources and the global economy. “It will Asia-Pacific. Unlike in Asia, tourism. facilitate the transformation of where countries are part trade into value chains,” said of the China-based value All four members are either Ildefonso Guajardo Villarreal, chain, “Latin American engaged in or are interested Secretary of Economy of economies, with the big in joining the talks for the Mexico. “It will make it easier exception of Mexico, which Trans-Pacific Partnership for a company in Santiago is plugged into North involving 12 Pacific to plug into value chains. It is America, are not plugged economies, including the going to be a Pacific century into any value chains,” US. The TPP is an ambitious so we want to make friends Andrés Velasco, Professor trade negotiation covering in that part of the world,” of International Practice in a wide range of issues such concluded Velasco. International Development as regional supply chains, at Columbia Global state-owned enterprises and Centers Latin America, told transparency. participants.

Advancing through a Renovation Agenda 15

LA15_Report.indd 15 12.05.15 10:42 countries are finding ways to avoid cuts in productive investment and in successful anti-poverty programmes. No country can grow sustainably if it fails to increase competitiveness and expand the middle class.

Public-private partnerships are one way to keep investment levels high without breaking the federal budget. Instead of governments borrowing the huge sums needed to Latin America after Chile started a stabilization renew infrastructure, it creates fund when prices of copper, incentives for the private sector the commodities its main commodity product, to tap the capital still available boom were high. With the cushion around the world at low interest that this fund provides, rates. Chile has been able to keep Countries in Latin America up government spending This cooperation can be must ensure against the without straining finances, applied throughout the vulnerabilities derived from even now, when copper economy. Instead of only a growth model dependent prices are low. using cash transfers to reduce on commodities exports. As poverty, governments can reform tax, labour, education participants heard in Mexico, Colombia, in turn, and energy laws to stimulate several countries are already has strengthened its leading the way. the creation of jobs and bring fundamentals by reducing people out of poverty. “The fiscal deficits, encouraging Two concrete measures are fight against poverty will domestic investment to depend less on government the creation of a stabilization levels approaching 30% fund when commodity prices and more on the market,” of GDP, creating space Mauricio Cardenas, Minister of are high, and government for currency depreciation, Finance and Public Credit of policies to diversify the and actively boosting the Colombia, said. economy. non-commodity exporting sectors of its economy. Chile last year implemented Mexico, for example, has a tax reform, covering nearly successfully diversified The success of countries 3% of GDP, to finance an away from petroleum into across the region, including overhaul of the education manufacturing. The vast Brazil, Peru and Colombia, system. Colombia has already majority of Mexican exports in growing the middle cut payroll taxes to stimulate today are manufactured class has created a strong on-the-books employment, and it is moving to further goods. The country is now domestic consumer market increase the tax base and also creating a stabilization that also helps insulate thereby reduce the burden on fund for the day when national economies from the petroleum prices rise again. business. Brazil’s government international commodities is starting to react to popular cycle.

16 World Economic Forum on Latin America

LA15_Report.indd 16 12.05.15 10:42 “I’m very optimistic that the reforms in Mexico really will spur economic growth.”

Joseph E. Stiglitz Professor, School of International and Public Affairs (SIPA), Columbia University, USA

pressure to fight corruption reforms. In good times, leaders to further strengthen their and improve the efficiency of see little reason to take painful justice systems. “It’s not just government services. steps, and during crises, they a matter of having the laws, must devote their attention to it’s a matter of enforcing the Mexico has pushed through immediate problems. rule of law,” Ricardo Villela a reform of its energy Marino, Executive Vice- sector that a few years ago Now, even without a crisis, President abd Member of was considered politically most Latin American the Board of Directors at Itaú impossible. This reform will electorates are pushing their Unibanco, said. In Brazil, the increase competition and leaders for change. “These are recent aggressive action of foreign investment. As Ignacio the times when the politically courts, public prosecutors Sánchez Galán, Chairman impossible becomes the and the national police against and Chief Executive Officer politically inevitable,” Ernesto corruption is a positive sign. of Iberdrola, noted: “Mexico’s Talvi, Academic Director at energy reform is a real the Centre for the Study of As for the timing of reforms, revolution.” His company Economic and Social Affairs, the answer from leaders across is planning to double its said. the region is: as quickly as investment in the country by possible. the end of this decade. Peru, which along with its fellow Pacific Alliance members “You should do reforms at Since production costs for is moving aggressively to the beginning of the political Mexico’s oil, at $24-$25 a open up its economy, has cycle,” Luis Videgaray Caso, barrel, remain highly attractive, found that freer trade, by Mexico’s Minister of Finance even at current global prices, increasing competition, forces and Public Credit, said. “Do output could easily double governments and companies them immediately after the in the next five years. The to work more efficiently. “Trade election, and don’t think about electricity sector’s reform agreements not only help Peru the business cycle. These are should drive down prices, increase exports, they oblige us structural reforms, the effects which will increase disposable to make the reforms needed to will be felt in the coming 5, 10, income for Mexican consumers improve our economy,” Magali 20 years.” and attract industry. Silva, Minister of Foreign Trade and Tourism of Peru, said. Latin America’s average growth is likely to slow to around 3% Mexico has already shown from the pace of over 6% seen that a reputation for respecting in the recent past, but as many and enforcing contracts will panellists noted throughout the spur foreign investment and meeting, moderate growth is growth, and most countries the ideal scenario for structural in the region are taking steps

Advancing through a Renovation Agenda 17

LA15_Report.indd 17 12.05.15 10:42 01 02

03 04

05

06 07 08

01: Enrique Martínez y 06: Andrés Velasco, 09 10 Martínez, Secretary of Professor of International Agriculture, Livestock, Practice in International Rural Development, Development, Columbia Fisheries and Food of Global Centers Latin Mexico America, Chile 02: Waldir João Ferreira 07: Michel Joseph da Silva Júnior, Head of Martelly, President of Haiti the Office of Inspector- 08: Sandeep Dadlani, General, Office of the Executive Vice-President Comptroller General of and Global Head, Retail, Brazil (CGU) CPG and Logistics, 03: Oscar Adolfo Naranjo Infosys Ltd Trujillo, Minister of Post- 09: Stanley Motta, Conflict, Human Rights President, Copa Holdings, and Security of Colombia Panama 04: Casimira Rodriguez, 10: Philipp Rösler, Founder, National Member of the Managing Federation of Household Board, World Economic Workers of Bolivia, Forum; Young Global Bolivia Leader 05: Thomas A. Shannon Jr, Counsellor of the US Department of State

18 World Economic Forum on Latin America

LA15_Report.indd 18 12.05.15 10:42 01: Lorenzo A. Mendoza, Chief Executive Officer, 01 Empresas Polar, Venezuela; Young Global Leader 02: Alejandro Ramírez, Chief Executive Officer, Cinepolis, Mexico; Joseph E. Stiglitz, Professor, School of International and Public Affairs (SIPA), Columbia University, USA 03: John Santa Maria Otazua, Chief Executive Officer, Coca-Cola Femsa, Mexico 04: Armando Senra, Managing Director; Head, 02 Latin America and Iberia Region, BlackRock, USA 05: Rich Lesser, Global 04 Chief Executive Officer and President, The Boston Consulting Group, USA 06: Emilio Lozoya, Chief Executive Officer, Pemex - Petroleos Mexicanos, Mexico; Young Global Leader 07: Gillian R. Tett, US Managing Editor, Financial Times, USA 08: Alvaro Rodriguez Arregui, Co-Founder and Managing Partner, Ignia Partners, Mexico 09: José María Moratalla, 03 Representative, Fundación Salvadoreña Educación y Trabajo, El Salvador 05 06 10: Carlos Alzugaray Treto, Editor, Temas, Cuba

07

08 09 10

Advancing through a Renovation Agenda 19

LA15_Report.indd 19 12.05.15 10:42 Modernizing for Tomorrow

Innovating for sustainable growth

To modernize for the future, Latin American economies should pursue structural reforms that will not only grow the ranks of the middle class but also enable those that rise to stay there. This will require policies that promote inclusion, gear education towards providing young people with the right skills, and stimulate entrepreneurship, innovation and the use of technology for enhanced social impact.

For Latin American countries middle class but also to enable that is increasingly inclusive to push forward renovation them to stay there.” and cohesive,” said Salomon agendas aimed at modernizing Chertorivski Woldenberg, their economies, having a Structural reforms must Secretary of Economic thriving and engaged middle promote inclusion and equality, Development of the Federal class will be the key. “This greater productivity and District of Mexico. “If we want is the only way to achieve sustainability, with special to be a cohesive society, sustained growth,” said Claudia focus on young people and nobody can stay behind, Ruiz Massieu, Secretary of women, who are essential nobody can lag.” Tourism of Mexico, in a session drivers of change in the that looked at the growing region. “We need to generate With half the region’s middle class. “We need long- citizens who participate population below 27 years term policies for social mobility actively, demand quality and of age, young people need not only to increase the fight to be part of a society a good education and job number of people joining the

“We have a responsibility to give our future generations a better world.”

Ignacio Sánchez Galán Chairman and Chief Executive Officer, Iberdrola, Spain

20 World Economic Forum on Latin America

LA15_Report.indd 20 12.05.15 10:42 Modernizing for Tomorrow

01

01: Cuba’s Economic and Investment Update: Marisol Argueta de Barillas, Senior Director, Head of Latin America, World Economic Forum, USA; José Antonio Meade Kuribreña, Secretary of Foreign Affairs of Mexico; Lina Pedraza Rodríguez, Minister of Finance and Prices of Cuba; Deborah Rivas Saavedra, General Director, Foreign Investment, Ministry of Foreign Trade and Foreign Investment, Cuba; Ildefonso Guajardo Villarreal, Secretary of Economy of Mexico

Cuba: Opportunities for investment in a Forum regional meeting. are enormous, whether in The session closed with a Open for business agriculture, where productivity guarantee that the Forum could grow rapidly, or in would support the country in In a historic business briefing, biotechnology, tourism and its transformation: “We are senior Cuban officials told healthcare, where Cuba pleased to offer our global participants in Mexico that already has competitive platform to help the Cuban the government is eager to advantages. government in its process receive FDI and has put in of updating its economic place measures to make Lina Pedraza Rodríguez, model and attracting foreign the country an attractive Cuba’s Minister of Finance investment,” said Marisol investment destination. and Prices, said that Argueta de Barillas, the “We want to make policy they especially need Forum’s Head of Latin transparent and provide legal investment from the US, America. certainty to foreign investors,” in order to modernize the said Deborah Rivas economy and preserve the Saavedra, General Director Cuban Revolution’s social of Cuba’s Ministry of Foreign achievements. “We need Trade and Investment. US companies to operate in Cuba,” she said. Recently passed laws ensure that foreign investors can This was the first time senior own businesses, sell property representatives from the and repatriate profits freely. Cuban government took part

Advancing through a Renovation Agenda 21

LA15_Report.indd 21 12.05.15 10:42 opportunities. “The big the Caribbean at DuPont Director at Grupo GH7, told challenge is to inspire our Mexico agreed: “Latin America participants in a session on young people to work for the is a fertile land filled with a new financial innovation how her future of their country,” said generation that is willing to company created the first Juan Carlos Varela Rodríguez, learn and collaborate.” mobile payments platform President of Panama, in the in the Dominican Republic, opening plenary. “Young Vocational training is crucial, where 70% of the population people have a true feeling of especially in a country such is outside the banking system. gender equality, an outrage for as Haiti where essential skills “Every challenge brings an disrespect of the environment for development are lacking. opportunity,” she noted. and true consciousness of the “Haiti must change completely need to conquer inequality,” and it is only through adequate Whether adopting technology added his Vice-President, training of young Haitians that to tackle a social problem, Isabel Cecilia Saint Malo De we can do it,” said Michel taking the decision to raise Alvarado, in a session on Joseph Martelly, the President the minimum wage to bridge addressing poverty. of Haiti, in the opening plenary. income gaps, or developing sectors with employment Efforts to bring more women Young people need the multiplier effects, such as into the workplace are also enabling environment that tourism, Latin America will essential, though recent would allow them to start have to rely on public-private progress has been impressive. businesses and be creative. cooperation that involves Between 2000 and 2010, the “Entrepreneurs are the drivers all stakeholders. “Working labour participation of women of innovation,” said Pablo together in a public-private in Latin America and the Salazar Rojo, Managing partnership will enable us to Caribbean rose by 15%, with Partner at NxtpLabs, in a move forward and is the most most countries now above the briefing on innovation. “We important tool for achieving an 50% mark. If the participation would like to see more capital equitable solution,” concluded of women equaled that of men, going to entrepreneurs.” President Varela Rodríguez. the GDP of the region would An encouraging sign: it is increase by 17%, Angelica becoming less of a stigma Fuentes, President of the when an entrepreneur fails. Angelica Fuentes Foundation, “Now we are embracing told participants in the closing failure and that is a formula for plenary. “We need the public successful entrepreneurship,” policies to reduce barriers. Salazar Rojo added. Equal pay for equal work must be a rule that is set in place,” Latin America is also she added. embracing digital and other emerging technologies Education has to be a priority to address the social and for all countries. “We need economic challenges of talent,” said Blanca Treviño, modernization. For example, “We need to President and Chief Executive the spread of mobile phones fight inequality Officer of Softek, in a session and the development of mobile and poverty – on doing business in Latin applications are creating and not in 15 America. “Businesses need to disruptive innovations that years, but now.” work closely with universities to are giving millions their first define the skills they will need.” access to payments and other Claudia Jañez, President of financial services. Carla Prieto, Isabel Cecilia Saint Malo De Alvarado Mexico, Central America and Strategic Planning and Finance Vice-President of Panama

22 World Economic Forum on Latin America

LA15_Report.indd 22 12.05.15 10:42 01

01: Financial Innovation: Carlos Mota, Columnist, El Financiero, Mexico; Gilberto Caldart, President, Latin America and Caribbean (LAC), MasterCard, USA; Carlos Danel, Chairman and Co-Founder, Gentera, Mexico; Sharath Dorbala, Vice-President and Head, Product, Sales, Marketing and Mobile Financial Services, Amdocs Management, USA; Jaime Gonzalez, President, National Banking and Securities Commission (CNBV), Mexico; Carla Prieto, Strategic Planning and Finance Director, Grupo GH7, Dominican Republic

Latin America’s entrepreneurs through the services such as healthcare, internet, physical knowledge to real-time feedback on the tech advantage clusters such as Silicon Valley performance of teachers and may no longer be needed. students. Latin America is in a “Most of the components strong position to benefit for innovation are moving “The internet is becoming from the expansion of online,” explained Sebastian embedded in our lives and broadband internet and Bellagamba, Latin America businesses,” said Arroyo. mobile technology. “When Bureau Director at the “This is driving a more you look at the number of Internet Society. collaborative and sharing people and things connected economy.” Latin America will to the internet, and the Latin American companies benefit because it can adopt explosion of the mobile are already looking beyond the latest technology. But network, this will create their domestic markets it has to prepare the right opportunities to disrupt and are using technology regulatory framework and businesses and society,” to do so. “They don’t trust digital security standards. It said Thaddeus Arroyo, Chief their own markets – they also has to make it easier to Executive Officer at both trust global markets more. register patents. This shift to Iusacell and AT&T Mexico. The internet allows them a tech-enabled stakeholder “Advancements will continue to do this,” Bellagamba environment “is working in at a rapid pace in Latin noted. According to Claudio Latin America”, concluded America.” Sassaki, Co-Founder of Bellagamba. “We’re creating Geekie, there are many a trust network among With information and enterprises in Brazil that all stakeholders. Broad research, skills and expertise, combine business and social consensus is the only way for and even funding and purpose, providing everything this to grow.” mentorship available to from a directory of free

Advancing through a Renovation Agenda 23

LA15_Report.indd 23 12.05.15 10:42 01: Claudia Ruiz Massieu, Secretary of Tourism of 01 02 Mexico 02: Mauricio Cardenas, Minister of Finance and Public Credit of Colombia 03: Tomas González Estrada, Minister of Mines and Energy of Colombia 04: Alejandro Baillères, Chief Executive Officer, Grupo Nacional Provincial, Mexico; Klaus Schwab, Founder and Executive Chairman, World Economic Forum 05: The Transformation Hub 06: Enrique Ochoa Reza, Chief Executive Officer, Comision Federal de Electricidad (CFE), Mexico 07: Gerardo Gutiérrez 03 03 Candiani, President, Business Coordinating Council (CCE), Mexico 08: Latin America Today

04

05 06 07

08

24 World Economic Forum on Latin America

LA15_Report.indd 24 12.05.15 10:42 01: Carlos Danel, 08: Jin-Yong Cai, 02 Chairman and Co- Executive Vice-President Founder, Gentera and Chief Executive 02: José Antonio Meade Officer, International Kuribreña, Secretary of Finance Corporation (IFC), Foreign Affairs of Mexico Washington DC 03: Participant testing a virtual reality headset 04: Deborah Rivas, General Director, Foreign Investment, Cuba 05: Colombian Delegation 06: Héctor Rodríguez, Chief Executive Officer, Yachay Ciudad del Conocimiento, Ecuador 07: Lina Pedraza Rodríguez, Minister of Finance and Prices of 01 Cuba

03 04

05 06

08

07

Advancing through a Renovation Agenda 25

LA15_Report.indd 25 12.05.15 10:42 01 02 03

04 05

01: Daniel Marteleto Godinho, Secretary of 06 07 Foreign Trade, Ministry of Development, Industry and Foreign Trade of Brazil 02: Ricardo Hausmann Director, Center for International Development, Harvard Kennedy School of Government, USA 03: Patricia Menendez- Cambo, Vice-President and Chair, Global Practice Group, Greenberg Traurig LLP 04: Salil Shetty, Secretary- General, Amnesty International, United Kingdom 05: Closing Plenary: A Roadmap for Transition 06: Thaddeus Arroyo, Chief Executive Officer, Iusacell; Chief Executive Officer, AT&T Mexico, 08 09 AT&T, Mexico 07: Luis Videgaray Caso, Minister of Finance and Public Credit of Mexico 08: Manuel A. González Sanz, Minister of Foreign Affairs of Costa Rica 09: Jose Augusto Coelho Fernandes, Director of Policy and Strategy, Confederação Nacional da Industria (CNI), Brazil

26 World Economic Forum on Latin America

LA15_Report.indd 26 12.05.15 10:42 01

01: Opening Plenary: 02 03 Advancing through a Renovation Agenda 02: Ildefonso Guajardo Villarreal, Secretary of Economy of Mexico 03: Eric Parrado, Superintendent, Superintendency of Banks and Financial Institutions of Chile 04: Millennial Transformation 05: Ricardo Villela Marino, Executive Vice-President, Member of the Board of Directors, Itaú Unibanco SA, Brazil 06: Latin America in Context

05

04

06

Advancing through a Renovation Agenda 27

LA15_Report.indd 27 12.05.15 10:43 Acknowledgements

The World Economic Forum wishes to Strategic Partners Strategic Technology Partner thank the Government of Mexico for its support of the World Economic Forum A.T. Kearney Salesforce on Latin America. The Forum would also Accenture like to thank all of the entities that have Adecco Group supported the Government of Mexico ArcelorMittal Strategic Partner Associates on the 2015 World Economic Forum on AUDI AG Centene Corporation Latin America. BlackRock UPL Ltd. Bombardier

The World Economic Forum wishes to The Boston Consulting Group recognize the support of the following BT companies as Partners and Supporters CA Technologies Regional Partners of the World Economic Forum on Latin Cisco Gentera America. Deloitte Intercorp Deutsche Post DHL Group The Dow Chemical Company DuPont Regional Associates Fluor Corporation GE Banco Bilbao Vizcaya Argentaria (BBVA) General Motors Company Comision Federal de Electricidad (CFE) Goldman Sachs Goldcorp Inc. Hanwha Group Greenberg Traurig LLP Heidrick & Struggles Grupo Multimedia Lauman Huawei Technologies The Inter-American Development Bank Infosys Interprotección Itaú Unibanco KIO Networks KPMG International OHL México Kudelski Group Omnilife-Angelíssima Group Lazard ManpowerGroup Host Broadcaster Marsh & McLennan Companies (MMC) MasterCard El Financiero|Bloomberg Mitsubishi Corporation Morgan Stanley Service Provider PepsiCo Comtelsat Petroleo Brasileiro SA - PETROBRAS Renault-Nissan Alliance SABMiller Siemens Swiss Re UBS UPS Visa Inc. Volkswagen AG WPP Zurich Insurance Group

28 World Economic Forum on Latin America

LA15_Report.indd 28 12.05.15 10:43 Digital Update Contributors

The event page of the World The report was written by Lucy Conger, Economic Forum on Latin America Dan Horch and Alejandro Reyes. The provides access to a richer level of Forum would also like to thank them content from the meeting, including for their work at the World Economic videos, photographs, session Forum on Latin America. summaries and webcasts of selected sessions. Editing and Production Stéphanie Thomson, Editor http://wef.ch/la15 David Bustamante, Senior Manager, Production and Design

Photographers Jacob Polacsek Benedikt Von Loebell

Regional Agenda World Economic Forum on Latin America 2015 Advancing through a Renovation Agenda

Riviera Maya, Mexico 6-8 May 2015

This report is also available to download: http://wef.ch/la15report

Advancing through a Renovation Agenda 29

LA15_Report.indd 29 12.05.15 10:43 Upcoming Meetings

World Economic Forum on the Middle East and North Africa Dead Sea, Jordan 21-23 May 2015

At a decisive time for the region and with the full support and presence of Their Majesties King Abdullah II and Queen Rania Al Abdullah, the World Economic Forum is convening over 800 key leaders from government, business and civil society to support a forward-looking vision for prosperity and peace. The programme will be based on the Forum’s Transformation Maps, an innovative analytical tool to inform decision-making on the region. Reflecting the Forum’s status as an International Institution for Public-Private Cooperation, the meeting will integrate ongoing, impact- oriented initiatives such as the New Vision for Arab Employment, Arab Economies in Transition and the Global Strategic Infrastructure Initiative. For more information, email: [email protected]

World Economic Forum on Africa Cape Town, South Africa 3-5 June 2015

In 2015, the World Economic Forum on Africa will mark 25 years of change in Africa. Over the past decade and a half, Africa has demonstrated a remarkable economic turnaround, growing two to three percentage points faster than global GDP. Regional growth is projected to remain stable above 5% in 2015, buoyed by rising foreign direct investment flows, particularly into the natural resources sector; increased public investment in infrastructure; and higher agricultural production. For more information, email: [email protected]

Annual Meeting of the New Champions 2015 Dalian, People’s Republic of China 9-11 September

Established in 2007 as the foremost global gathering on science, technology and innovation, the Meeting convenes the next generation of fast-growing enterprises shaping the future of business and society, and leaders from major multinationals as well as government, media, academia and civil society. Join us next September in Dalian as part of a community of more than 1,500 participants from 90 countries for a true global experience addressing today’s unprecedented set of intertwined global challenges – economic, political, societal and environmental. For more information, email [email protected]

Summit on the Global Agenda 2015 Abu Dhabi, United Arab Emirates 25-27 October 2015

The annual Summit on the Global Agenda – the world’s largest brainstorming event – brings together the most relevant thought leaders of the World Economic Forum’s Network of Global Agenda Councils, comprising experts from academia, business, civil society, international organizations and government. The 2015 edition of the summit will provide the network’s members with a unique convening platform to connect with one another, identify the latest trends and risks, explore interconnections among issues and collectively develop solutions to address the most pressing issues shaping our present and future global, industry and regional agendas. For more information, email: [email protected]

30 World Economic Forum on Latin America

LA15_Report.indd 30 12.05.15 10:43 LA15_Report.indd 31 12.05.15 10:43 The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.

Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations.

World Economic Forum 91–93 route de la Capite CH-1223 Cologny/Geneva Switzerland Tel.: +41 (0) 22 869 1212 Fax: +41 (0) 22 786 2744 [email protected] www.weforum.org

LA15_Report.indd 32 12.05.15 10:43