Ilan Goldfajn and Eduardo Levy Yeyati
Project Syndicate
Economic stabilization has been a significant achievement for Latin America and the Caribbean, a region with a long history of financial crises. But these countries need a well-sequenced reform agenda to attract private investment and create the growth engine that will translate hard-won gains into higher living standards.
In recent years, Latin America and the Caribbean (LAC) have shown that development increasingly rests on the twin pillars of resilience and growth. But while the region has shown a remarkable amount of the former, the latter has remained stubbornly slow.
Over the past six decades, the LAC region grew at an average annual per capita rate of just 1.8%, whereas emerging Asia grew at more than twice that pace. In short, the region has a productivity problem. Despite accumulating capital, expanding its workforce, and increasing years of schooling during this period, total factor productivity (the efficiency with which those inputs are used) recorded essentially no growth.
To its credit, the region has largely done the hard work of stabilization. Inflation is down in most countries. Fiscal frameworks are stronger than they were a generation ago, while macroeconomic credibility has been painstakingly built over decades. Poverty has declined, owing in no small part to the social policies that fiscal stability made possible. For a region with a long history of inflationary spirals, debt crises, abrupt devaluations, and stop-go cycles, these are significant achievements.
But stability is a platform, not a destination. Growth is the bridge that turns these hard-won gains into higher living standards. Stability enables investment, which drives productivity; and productivity-driven growth expands opportunities and reduces poverty, while also creating the fiscal space that governments need to increase social spending and implement further reforms.
The region’s governments, facing high debt levels and limited political tolerance for another round of adjustment, cannot spend their way to growth. Andmultilateral development banks and bilateral lenders cannot make up the shortfall. While public resources and development finance are important, what matters most is the much larger pool of private capital they can unlock.
The challenge, then, is to use public policy more effectively to catalyze private investment. That means creating the conditions to attract long-term capital: clear rules, credible contracts, reliable infrastructure, regulatory predictability, and a government that can address market failures when necessary. With sustained private investment, LAC economies will be better positioned to absorb technology, generate exports, and create good jobs at scale—in other words, to create a growth engine.
The region’s unfinished transition to a competitive productive base despite strengthened macro frameworks has come at a high cost. According to a 2025 report from the Inter-American Development Bank (IDB), if the region’s product markets were as competitive as those in advanced economies, GDP would be roughly 11% higher and inequality 6% lower. Weak competition is not just a source of inefficiency; it is the main culprit behind stagnant LAC productivity.
Addressing this gap requires not only adopting the right policies, but also taking a holistic approach: identifying constraints, sequencing reforms, and aligning the necessary financing, regulation, infrastructure, and institutions around a concrete growth goal. To that end, the IDB recently launched LAC Crece, a platform that helps the region’s governments design growth strategies based on three principles.
First, not all constraints are equally important. Countries fail to grow because a few critical bottlenecks have gone unaddressed for too long. The challenge is to identify what, exactly, is holding back investment at this particular moment.
Second, sequencing matters: successful growth strategies do not try to change everything at once. They are selective, cumulative, and coherent.
Lastly, windows of opportunity are rarely open for long. When a new administration, a reform coalition, a gain in credibility, or a favorable external environment creates an opportunity to move, speed is crucial. In LAC countries, inaction has often been mistaken for prudence; in fact, it has delayed much-needed reforms.
Growth commands broad support across ideological lines, because no government can finance its political agenda without a dynamic economy. This suggests that LAC countries would do well to develop growth strategies that are anchored in actual constraints, selective about priorities, and realistic about state capacity and delivery. By creating the conditions for private investment, these plans can translate macroeconomic gains such as lower inflation and better balance sheets into higher productivity, sustainable growth, and persistent, visible gains in living standards.
As supply chains reorganize around energy security and technological resilience, the LAC region is better positioned than most: it has the critical minerals, food-production capacity, and renewables potential that the changing global economy demands. A well-sequenced growth agenda can turn this opportunity into broad-based, lasting development, rather than just a commodity windfall.
Stabilization efforts have provided LAC countries with the macro credibility and institutional capacity to achieve inclusive growth. Now they need to build the strategic framework that will enable them to achieve this goal.
Link da publicação: https://www.project-syndicate.org/commentary/latin-america-caribbean-must-build-strategic-growth-frameworks-by-ilan-goldfajn-and-eduardo-l-yeyati-2026-06
As opiniões aqui expressas são do autor e não refletem necessariamente as do CDPP, tampouco as dos demais associados.
