Education quality is key to Latin American Transformation

(Miami, Oct. 26).- CAF President Enrique García said Latin America needs to improve its high school and university education quality as part of structural transformations that will allow the region to take advantage of an opportunity he called “historic.”

At the Latin Trade Symposium in Miami, García, who gave the keynote address, The imperative for Latin America, said, “In the last decades, the region has made major progress in terms of educational reach and has practically eradicated illiteracy; therefore, the current mission is to improve the quality, especially in high school and university, within the framework of state policies.”

He pointed to South Korea’s example, whose GDP went from US$265 in the mid sixties to US$23,000 nowadays. "That is mainly because it focused on education, which is the instrument for human capital to be appropriate for a necessary productive transformation,” he said.

According to García’s analysis, Latin America must replace its current comparative advantages model with a competitive advantages one, moving away from natural resources and low wages to knowledge, added value, innovation and technology.

That is why he believes the region should not content itself with good macroeconomic growth rates, as it currently has a unique “historic opportunity to generate structural changes that allow a sustained and equal growth.”

Latin America, García said, "is experiencing a renewed ‘commoditization’ of its economy, with a high concentration in products whose cycles are very volatile,” he warned. He insisted on the need to take advantage of the momentum in order to promote a long term agenda leading to convergence with industrialized nations and, fundamentally, address inequality.

To achieve it, García called for a bigger regional investment in infrastructure and logistics. "Latin America invests less than 3 percent in infrastructure, whereas China invests 10 percent and the average for advanced nations is 5-6 percent,” he said.

In order to boost “modest” growth rates “in terms of productivity,” García called for a larger share of GDP to be allocated to investments. “Asia now saves more than 40 percent of its GDP,” he said.

In addition, “efficiency improvements, institutional strengthening and good corporate governance” are needed to attract foreign investment.

In his concluding remarks, García said the region will not be competitive as long as it does not achieve real integration. “This is a good moment for Latin America, and today it has the platform to make the adjustments: it must not pass up the opportunity,” he said.

The Latin Trade Symposium gathers leaders, entrepreneurs and executives to discuss how to build a new Latin America. Participants include Council of the Americas President Susan Segal; Chile’s Finance Minister Felipe Larraín, and Peru’s Central Bank President Julio Velarde.