Both organizations noted that the economy of the Latin American and Caribbean region grew 5.9 per cent in 2010 and is expected to climb by 4.4 per cent this year.
“To ensure continued progress, these regions must now turn such growth into sustainable economic and social development,” said the OECD and ECLAC in the 2012 Latin American Economic Outlook presented at the XXI Iberoamerican Summit here.
“Countries enjoying high economic growth should take advantage of the opportunity to make the structural and social reforms necessary to ensure that the growth is sustainable,” said OECD Secretary-General Angel Gurria.
“Latin America and the Caribbean governments should build on recent achievements to address both short-term and long-term challenges, such as diversifying their economies, carrying out fiscal reform and giving their citizens better public services,” he added.
“Attention should focus on education, infrastructure and the promotion of innovation,” he said.
Despite progress in macroeconomic management and in their ability to attract foreign investment, the OECD and ECLAC said the region’s economies are still vulnerable to the ups and downs of the volatility, inflation and currency fluctuations of the global economy.
“In the short-term, Latin American and Caribbean states must broaden the fiscal space necessary to respond to negative shocks from international markets,” the report says.
“The Latin-American and Caribbean States should also address long-term challenges and structural issues,” it added.
For example, the report says, in 2008, the region’s tax revenues were 19 per cent as a share of Gross Domestic Product (GDP), just over half the 35 per cent collected on average across the OECD.
It says increasing the level of tax revenue would allow regional governments to invest more and improve public services.
The report notes that the region should also promote more transparent public management.
“Latin American and Caribbean economies have shown a significant resilience to the effects of financial crisis and its recovery has been faster than in other regions,” said Alicia Bárcena Ibarra, ECLAC’S executive secretary.
“In order to consolidate these achievements and take concrete actions, the region should encourage new models of governance, stronger institutions and public policies capable of mobilizing a wide range of actors,” she added.
Bárcena said while the quality of education has improved, significant gaps remain, urging Latin America and the Caribbean countries to “guarantee high-quality primary education and equitable access to secondary and tertiary education.”
She also recommended that the region increase coordination across agencies and different levels of government, and enforce deals reached with the private sector in order to improve the efficiency of the transport and energy sectors.