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Latin American Economic Outlook 2012

Transforming the State for Development

image of Latin American Economic Outlook 2012

Even in the midst of a global financial crisis, Latin American and Caribbean economies find themselves in better condition than in years past. Latin America must seize this opportunity to design and implement good public policies. The greatest of the long-term objectives of Latin American states remains development: economic growth and structural change that is rapid, sustainable and inclusive. In particular, governments must reduce inequalities in income, public-service delivery and opportunities, as well as promote the diversification of economies, often concentrated on a few primary-product exports.

Improved efficiency of public administration is crucial to address both the short-term and long-term dimensions of these challenges. The real change, however, will come if Latin American and Caribbean states carry out meaningful fiscal reforms, making them not only more efficient but also more effective. The increased effectiveness of fiscal policy holds the promise to provide resources needed to address the key challenges of economic development. Three key priority areas for investing additional resources have been highlighted by many governments in the region for their potential to raise competitiveness and social inclusion: education, infrastructure and innovation. In each of these areas, more efficient administration and more effective strategic action is needed from states.

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Better institutions for innovation and productive development

OECD Development Centre

Following a period of structural reform oriented towards free trade and exports, Latin America has turned its attention to strategies for innovation and productive development. The region is currently seeking to insert itself in the global knowledge economy. To do this, it will need to achieve better coordination of actions in this field. Governments, firms, scientific agents and civil society act in a context that has been made more complex by changes in the global economy and by new technological paradigms. Despite these difficulties, many countries have made strides thanks to the creation of institutions, methodologies, and instruments that take on the challenge of innovation and technological change. In order to consolidate these advances, the region needs to support the definition of new models of governance, stronger institutions and models of public policy that can mobilise the agents in the national innovation system. These efforts can motivate the commitment of the private sector in innovation, research and development.

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