Why do productivity and competitiveness remain so elusive in Latin America and the Caribbean despite decades of public policy models and strategies aimed at addressing them? Moreover, is it possible to build an economy where productivity and the well-being of the entire population go hand in hand? With its impressive natural wealth and a young, vibrant population, Latin America and the Caribbean are at a critical juncture to rethink their future. However, the obstacles are significant:

The region remains trapped in a cycle of low growth, high informality, and, above all, stark inequality. Thirty-two percent of Latin Americans live in poverty, while half of the workforce is employed in the informal sector, without access to basic benefits needed to move forward.

Insufficient investment in education and training results in a workforce with limited skills, reducing their ability to integrate into formal jobs and innovate or adapt to technological advances. According to ECLAC, the region invests an average of 5% of GDP in education, far below other developing regions. Closely linked to this, urban centers have seen a decline in manufacturing activities, shifting toward low-productivity non-tradable services like retail and personal services.

Additionally, gaps in adequate infrastructure, such as transportation and communication, increase production costs and limit economic integration. The World Bank notes that current infrastructure investment in Latin America is half of what is needed to close these gaps.

The low sophistication of the productive apparatus in Latin America and the Caribbean is a key cause of the trap of low productivity, limited competitiveness, and poor integration into global value chains. Overcoming these challenges requires diversifying and modernizing productive sectors through investment in innovation, technological capacity building, and policies that incentivize integration into global value chains. According to the Observatory of Economic Complexity (OEC), in 2022, several Latin American countries ranked low on this index. For example, even the most diversified economies in the region held relatively low positions, with Mexico being the exception at 21st globally. Brazil ranked 49th, Colombia 58th, Argentina 61st, and Chile 70th.

From a non-economic perspective, several countries in the region are impacted by comparatively high levels of insecurity, which negatively affect the investment climate, business operations, and decision-making. This increases costs and reduces productivity. Additionally, Latin America scores 44/100 on Transparency International's Corruption Perception Index, falling below the global average. This erodes trust in political systems and discourages investment.

The series of international crises in recent decades has also had a profound and multifaceted impact on Latin America and the Caribbean, hindering the region's ability to establish sustained and sustainable growth. Events such as recurring financial crises, the COVID-19 pandemic, the war in Ukraine, and global inflation have exacerbated existing challenges while introducing new ones that limit development: an increase in poverty and inequality; greater fiscal pressure and rising debt levels; higher global inflation, particularly in food and energy; severe disruptions to supply chains; reduced financial support to the region coupled with growing capital outflows; and a rapidly shifting global value chain landscape, where opportunities depend on optimal infrastructure and logistics conditions that the region currently lacks.

While this heavily analyzed and over-diagnosed scenario may seem bleak, the challenges it presents also offer an opportunity to rethink the development model toward one that is more dynamic, inclusive, and sustainable. As Nobel Laureate Daron Acemoglu points out: "Economic growth is not just a matter of investment and technology but also of strong institutions and an empowered citizenry". The root cause of low productivity and competitiveness in Latin America and the Caribbean appears to lie in the structural weakness of its institutions and a production system focused on low-value-added sectors with minimal investment in innovation. Weak institutions lead to inefficiency, corruption, and a lack of incentives for formalization and economic modernization, limiting the development of high-value-added and technological industries.

Inspired by the work of Acemoglu and his colleague James A. Robinson on the importance of inclusive institutions, this forum will bring together global leaders, development experts, and renowned figures to analyze and discuss how the region can build a development model that enhances productivity without leaving anyone behind. We will seek answers to fundamental questions: How can we increase productivity equitably? How can we ensure that new opportunities reach those who need them most? How can we overcome the barriers that have limited the region’s growth for decades?

Latin America has the potential and opportunity to set a growth path that truly benefits its entire population, and this Forum will be a key step toward that goal. Together, we aim to design a concrete action plan to improve quality of life and build a fairer, more resilient, and sustainable economy.