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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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The State and reform of public infrastructure policy

OECD Development Centre

This chapter examines the changes needed in the role of the State in managing infrastructure to increase the effectiveness and efficiency of public investment and support economic and social development. The gap between Latin America and other emerging economies in economic infrastructure such as transport, telecommunications, water and energy hampers economic development potential and social cohesion in the region.

Greater investment alone will not suffice to solve this problem if the way in which public management policy is conceived and implemented is not changed. This chapter analyses infrastructure policies in transport and telecommunications (in particular, broadband Internet) and suggests that to increase the effectiveness of public infrastructure policies, Latin American states must improve policy design through a comprehensive and sustainable framework, fostering a clear and flexible institutional and regulatory framework for an effective participation of the private sector and civil society.

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