From 2005 to 2020, Luis Alberto Moreno led the Inter-American Development Bank (IDB), the largest source of development financing to Latin American and Caribbean countries. With that wealth of experience under his belt —plus several years as Minister of Economic Development in his native Colombia and a post as ambassador in the US — Moreno took a long, honest look at the region.
Nearshore Americas had the opportunity to talk to the former IDB chief about his new book, ¡Vamos! Siete ideas audaces para una América Latina más próspera, justa y feliz. The book covers some of the most pressing challenges that Latin America and the Caribbean are facing while maintaining a clear sense of optimism and hope for the region’s future.
“I wanted to end a cycle after 25 years of public service by reflecting on some of the issues I am seeing in Latin America. I wanted to do it through personal stories instead of relying on the density of theoretical and economic models that some of these texts usually use,” said Moreno.
“One of the things that strikes me in Latin America’s public debates is how we have an inclination to talk about failure,” he added. “Somehow, talking about the negative aspects of any policy or historical moment generates a lot of intellectual appeal. I wanted to try to look at different aspects that go beyond the problems and describe the opportunities.”
“We [in LatAm] have an inclination to talk about failure […] I wanted to try to look at different aspects that go beyond the problems and describe the opportunities”—Luis Alberto Moreno
For Moreno, Latin Americans tend to re-litigate the past, giving the great discussions of the future little space to develop. The desire to change that, as well as the need to reduce the gap between the level of conversation in public debates and how people talk and perceive their own lives, are essential motivators for his book.
Inequality, a Defining Problem
“There is no doubt that the main problem in Latin America is inequality,” stated the former IDB chief.
He’s not wrong. Latin America has long been described as the most unequal region in the world. Recent studies show that the percentage of income held by the richest 20% of the population in Latin American countries is still higher than other geographical areas. Most of the income generated in Brazil, Mexico, Chile and Colombia, some of the largest economies in the region, stays with the top earners.
Moreno recommends exploring several policy options to deal with the issue of inequality. Universal basic income (UBI) is one them. UBI has gained significant traction in policy circles in places like the US and European Union countries. The value proposition behind it is that by regularly providing all citizens of a given population with a financial grant paid by the government, there can be a significant reduction of poverty and inequality.
However, Moreno places a stronger focus on education.
“Education is one of the great afflictions in the region. Clearly, beyond the fact that a third of the deaths in the world from the pandemic occurred in Latin America, the other important loss occurred in education,” he pointed out. “We did not have the tools to quickly adapt and continue with normal educational life. We need to get into a big discussion to enable a process that allows us to bring all the students who fell behind up to speed.”
When asked about the shortages of talent in the labor markets, Moreno places significant hope in the role of industry to lead the training needed to reduce the skills gap.
“We’re experiencing a significant talent gap and, for me, that has to do with continued education. All these startups emerging in the region have been very successful in serving traditionally marginalized communities. This is true whether we talk about financial issues, health care or other social services. But they need people with the right skills to do it,” he stated. “What we’re seeing in terms of the private sector taking the issues of training into their hands is very valuable, but the public sector and traditional academic institutions need to do more as well to make sure the labor pool has the skills needed for the jobs of the 21st century.”
The Great Opportunity of a Digital Single Market
Deep economic and political integration in Latin America has long been a desired outcome within the region’s political class.
“Constant polls show that the majority of Latin Americans agree on the need for further commercial ties between our countries, and we actually have many different integration mechanisms. For some reason, that doesn’t translate into the level of connectivity that we need in the region,” Moreno pointed out.
“When I was at the IDB, I used to tell people that we needed to move from Made in America to Made in the Americas”—Luis Alberto Moreno
For Moreno, the issue of integration becomes even more relevant in the digital age. “Many startups now include their international expansion goals in their business plans from day one. To raise the needed amount of capital, they have to clearly state how big is their target market and how extensive are their opportunities for expansion,” he explained. “For any Colombian, Mexican or Brazilian startups, there is a big difference if they could target 600 million people instead of 100 million. There is the opportunity for a digital single market, fully integrated across the Americas with similar regulations and opportunities.”
Even when this idea might seem too bold and difficult to reach, the former IDB president believes that the current global geopolitical moment provides precisely the kind of scenario that Latin America needs to capitalize on in order to produce robust progress. Nearshoring is a trend which gives Moreno hope for the region’s future.
“After the collapse of the Berlin Wall, the world has lived in a period of relative peace. That is now ending. We can focus on the negative: capital outflows, inflation, high interest rates, etc., but the region could see its position modified in a good way as well,” he stated.
For Moreno, it’s all about continental integration, a sentiment that has been echoed by top executives in the Nearshore IT industry. America, after all, is not a country, nor a group of isolated regions. It’s a whole continent that extends, uninterrupted, from pole to pole.
“When I was at the IDB, I used to tell people that we needed to move from Made in America to Made in the Americas. Now there is a moment when we could expand that opportunity and realign the region’s economic position. But that requires investment, changes in regulation and general hard work that some institutions are too slow to do right now,” he concluded.