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Strategic Outlook No. 4, November 2012
Recent global economic developments
The recovery of the global economy has suffered setbacks in the last months of 2012, and uncertainty weighs heavily on the outlook. A key reason is that policies in the major advanced economies have not rebuilt confidence in medium-term prospects. Tail risks, such as those related to the viability of the Euro area or major U.S. fiscal policy mistakes, continue to worry investors. The World Economic Outlook (WEO) growth forecast, at 3.3 and 3.6 percent in 2012 and 2013, respectively, is weaker than in the July 2012 WEO Update, which was in turn lower than in the April 2012 WEO. In addition, financial conditions will remain fragile, according to the October 2012 Global Financial Stability Report (GFSR).
Since May 2012, nervousness and volatility reappeared in the Euro area, which roiled financial markets around the world. Credit default swap (CDS) rates in Euro area economies have increased to near record levels, while those of other high-income countries are also up considerably. |
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Recent developments in international and regional monetary and financial matters
SP/Di N° 19-12
This document has been drafted by the Permanent Secretariat at the request of the Government of Ecuador, as a contribution to the Third Technical Meeting of the Community of Latin American and Caribbean States (CELAC), scheduled to be held in October 2012, and also to the Meeting of Ministers of Economy and Finance, which the regional organization is scheduled to convene in December 2012.
It is part of the Final Report on the Regional Meeting: Analysis and Proposals for Strengthening the Regional Financial Architecture and Monetary and Financial Cooperation in Latin America and the Caribbean, which took place in Caracas, Venezuela, on 27 and 28 February 2012. This is an update of the earlier version introduced by the Permanent Secretariat of SELA (SP/RRAPCAFRMFALC/DT No. 2/ Rev. 1).
Following the first introductory chapter, this paper includes in its second chapter an analysis of the main elements of the world economic juncture during the first eight months of 2012, underscoring the global economic downfall and continued financial and monetary problems at the international level, as well as the response generated in the main international forums.
The third chapter refers to the situation in Latin America and the Caribbean in light of the persisting world crisis, and channels of regional transmission, as well as the responses generated. Progress made by fledging monetary and financial cooperation mechanisms in Latin America and the Caribbean is also stressed.
Finally, conclusions and recommendations are introduced, as well as a set of elements that mat advance the regional financial and monetary architecture, the basis for the creation of a Regional Development Bank, a Regional Contingency Fund, and a Regional Monetary Area.
The Permanent Secretariat expresses its acknowledgment and gratitude to Dr. Jaime Estay, for his dedication in preparing this paper. |
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Value chains, SMEs and public policies. International experiences and lessons for Latin America and the Caribbean
SP/FDPP: IPYMESCVGR-DT N° 2-12
This document has several objectives; (1) analyze relevant experiences of enterprises’ insertion into global and regional value chains inside and outside Latin America and the Caribbean, underlining the cases of small and medium-sized enterprises (SMEs); (2) describe the fundamental features, the instruments and the performance of public policies that support SMEs so as to encourage their insertion into global and regional value chains; and (3) based on the former objectives, submit recommendations to the governments of the Member States of SELA on the subject of policies as a means to further promote the insertion of their SMEs into global and regional value chains.
SMEs are economic agents that feature a strategic role in economic growth with social integration because they are a common source of employment and income. Homogenization of technological knowledge and development of a critical mass for productive innovation in a country are achieved by means of an articulation among different-sized enterprises. When that critical mass arises, a country ceases having features of Periphery and becomes a Centre country, as stated by Mr. Raúl Prebisch. According to this great mind of the Latin American development, the Centre is mainly diversified and homogeneous, while the Periphery is specialized and heterogeneous. The Centre is homogeneous because it has a medium stratum composed by medium-sized, innovative and highly productive enterprises. Some of them make a transition to the large-sized enterprise stratum, which has recently been the case of Apple, Microsoft, Hewlett-Packard, and many others. The Periphery is specialized and heterogeneous because technological knowledge is converged on large exporting enterprises while means of production from different eras co-exist in society; and the medium stratum of modern SMEs is lacking.
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Strategic Outlook No. 3, August 2012
Deterioration in global growth projections
In recent months, the global recovery – which was already fragile – has shown signs of weakening even more. Tensions in financial markets and sovereign debts in the euro area have intensified, approaching the levels reported at the end of 2011. In addition, growth in some large economies of the so-called “emerging markets” has been lower than anticipated until the second quarter of 2012. Thanks in part to the fact that the first quarter of this year was better than expected, a review of projections by the IMF in its economic outlook update shows that the global growth would suffer some setbacks and the increase in global product will reach 3.5% in 2012 and 3.9% in 2013; in short, these levels are lower than those predicted in the world economic outlook releases in April by this multilateral institution. |
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U.S. economic relations with Latin American and Caribbean countries in a time of transition
SP/Di No. 4 - 12
The Annual Review of Latin America and the Caribbean – United States of America Economic Relations has become a traditional contribution by SELA to the analysis of current developments of critical interest to the Member States in such a major area of their international economic relations.
The 2012 edition undertakes to review the region’s always complex and multifaceted economic relations with the United States in the context of what is recognized as a major transition for the international economy as it slowly recovers from a major crisis, confronts the challenges of keeping such a recovery steady in an unstable context, and as the region itself adapts to increasingly diversified international economic relations and to the risks and opportunities such diversification has brought about.
The current issue of the Annual Review intends to highlight not only how economic relations between Latin America and the Caribbean and the United States have evolved in recent times taking advantage of the latest available data, but equally to convey a clear and objective understanding of the political context to which such relations are subject to in the United States at a time when major trade policy decisions have to be negotiated between the U.S. Congress and the Obama Administration, the latter faces a general election, and multilateral trade negotiations under the auspices of the World Trade Organization continue to stall.
This Annual Review’s early presentation has the avowed purpose to be of service to decision-makers within SELA Member States as the 2012 agenda of regional and interregional coordination and consultation meetings gets on its way, so that they may be in a better position to plan ahead and focus their attention on critical scenarios and hopefully appropriately influence their evolution.
The SELA Permanent Secretariat wishes to express its appreciation to Mr. Craig van Grasstek for his contributions as Consultant in the preparation of the current Annual Review. |
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Status of the Reform of the International Monetary and Financial Architecture and Progress towards a Regional Monetary and Financial Architecture for Latin America and the Caribbean
SP/RRAPCAFRCMFALC/DT N° 2-12/Rev. 1
This study focuses on the status of the reform of the international monetary and financial architecture and the progress made toward a regional monetary and financial architecture for Latin America and the Caribbean (LAC).
After the introduction, Chapter II reviews the current situation of the global economy and the main elements of the reforms that have been applied on the international monetary and financial architecture thus far. Regarding the global economic scenario, this section highlights the series of downward revisions for 2012 that have occurred recently, and the deterioration evidenced during 2011 in the levels of economic activity, particularly in developed countries and in their stock markets, as well as the high levels of public and private debt and public account imbalances in the Euro zone, compounded by the high unemployment rates in that region. With respect to the reforms of the international monetary and financial architecture, an initial review is made of what happened in the U.S. and Europe, and then the study focuses on the agreements and concrete actions as regards this reform in the Group of 20, comparing them with the proposals raised in the context of the United Nations General Assembly, and identifying relevant problems on which there are major disagreements in terms of the inclusion and treatment.
Chapter III deals with how Latin America and the Caribbean have confronted the problems of the international financial and monetary architecture. The first part of this chapter presents various indicators of the impact that the global deterioration is having on production, the performance of stock markets and exchange rates of major economies in the region. The second part reviews the positions of the governments of Latin America and the Caribbean about the international monetary and financial order in various forums, such as the Latin American and Caribbean Economic System (SELA), the Community of Latin American and Caribbean States (CELAC), the United Nations General Assembly, various monetary and financial institutions, as well as integration and cooperation mechanisms in the region. And the third part of this chapter follows up the recent performance of monetary and financial cooperation mechanisms that have been created in the region over the last few years: the Local Currency Payment System (SML), the South Bank, the Regional Unitary Clearance System (SUCRE) and the Bank of ALBA.
In Chapter IV, the study concludes by providing a series of elements to make progress towards a regional financial and monetary architecture for Latin America and the Caribbean. Both the current global scenario and the present outlook for the region point to the need to pursue, as soon as possible, the agreements and actions that allow for the construction of said architecture. This section identifies the main contents that should be incorporated into three pillars: a Regional Contingency Fund, a Regional Monetary Area and a Regional Development Bank. Finally, the study raises the possibility of constructing those three pillars by taking advantage of the experience gained and the mechanisms applied by the monetary and financial institutions existing in the region. |
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The vision of the green economy In Latin America and the Caribbean
This document, prepared by the Permanent Secretariat of SELA, offers an analysis of the green economy to its Member States as a contribution to the ongoing international debate on the subject, ahead of the upcoming United Nations Conference on Sustainable Development (Rio+20), to be held in Brazil in 2012.
The document is intended to respond to three key questions: What is green economy? How could Latin America and the Caribbean, at the regional and country levels, move towards green economy on the basis of an analysis of its energy matrix? And how could such a move contribute to a better quality growth that allows for reducing income inequities and fighting against poverty?
After the introduction, the second section presents various concepts and definitions of green economy and green growth, comparing the views of several international organizations and proposing elements to reach a regional definition that attaches priority to social inclusion.
The third section analyzes the energy matrix of Latin America and the Caribbean, providing information about the energy resources available to the region in order to move towards a green economy. In sum, it offers a roadmap of the current situation of energy sources in Latin America and the Caribbean and their use.
The fourth chapter deals with the implications of the transition to a green economy for the countries in the region, highlighting some of the policies and actions that should be undertaken in order to achieve such change.
The fifth chapter contains some ideas and recommendations to promote debates on this subject among the Member States of SELA. Finally, the Conclusions underscore the urgent need for action to attain sustainable development in the region and make a positive balance of the potential energy resources found in our countries so as to move towards a green economy.
The Permanent Secretariat of SELA wishes to thank Ms. Luz María de la Mora for her valuable efforts as the consultant in charge of preparing this study. |
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Canada: International Development Cooperation policies and programmes. Opportunities for Latin America and the Caribbean
This document, prepared by the Permanent Secretariat of SELA, is basically aimed at assessing Canada’s international cooperation policy based on its governing principles, action lines and priority sectors and countries, with the purpose of supplying information on the prospects of the international development cooperation provided by Canada to the region.
The statements made herein will be the grounds for the discussions to take place at the Regional Seminar on the economic relations between Canada and Latin America and the Caribbean, convened by the Permanent Secretariat of SELA for 30 March 2012, in compliance with the Work Programme of the organization.
The first section reviews Canada’s cooperation policy, its guiding principles and priorities in the world, as well as the financial resources allocated for official development assistance. The second section contains a breakdown of the institutional structure of Canada’s international cooperation. The third chapter examines the Canadian supply of international development cooperation for Latin America and the Caribbean by amounts and regions. The fourth section makes an in-depth analysis of Canada’s relations with Latin America and the Caribbean in the area of cooperation. Lastly, the fifth chapter provides some recommendations in order to delve into and tighten the ties of the region with Canada.
The Permanent Secretariat of SELA would like to thank Consultant Luz María de la Mora for drafting this case study. |
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Relations of Latin America and the Caribbean with Africa: Current status and areas of opportunity
The Permanent Secretariat of SELA – as part of its
project on the diversification of the external economic
relations of Latin America and the Caribbean (LAC)
which has been underway for three years, and in
response to the requests made by some Member
States during the past XXXVI Regular Meeting of the
Latin American Council (Caracas, October 2010) –
presents this first informative document on the current
situation of the economic relations between the
countries of our region and the African nations and
their areas of opportunity.
Caracas, Venezuela - June 2011 |
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Strategic Outlook No. 4, November 2012
Recent global economic developments
The recovery of the global economy has suffered setbacks in the last months of 2012, and uncertainty weighs heavily on the outlook. A key reason is that policies in the major advanced economies have not rebuilt confidence in medium-term prospects. Tail risks, such as those related to the viability of the Euro area or major U.S. fiscal policy mistakes, continue to worry investors. The World Economic Outlook (WEO) growth forecast, at 3.3 and 3.6 percent in 2012 and 2013, respectively, is weaker than in the July 2012 WEO Update, which was in turn lower than in the April 2012 WEO. In addition, financial conditions will remain fragile, according to the October 2012 Global Financial Stability Report (GFSR).
Since May 2012, nervousness and volatility reappeared in the Euro area, which roiled financial markets around the world. Credit default swap (CDS) rates in Euro area economies have increased to near record levels, while those of other high-income countries are also up considerably. |
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Strategic Outlook No. 3, August 2012
Deterioration in global growth projections
In recent months, the global recovery – which was already fragile – has shown signs of weakening even more. Tensions in financial markets and sovereign debts in the euro area have intensified, approaching the levels reported at the end of 2011. In addition, growth in some large economies of the so-called “emerging markets” has been lower than anticipated until the second quarter of 2012. Thanks in part to the fact that the first quarter of this year was better than expected, a review of projections by the IMF in its economic outlook update shows that the global growth would suffer some setbacks and the increase in global product will reach 3.5% in 2012 and 3.9% in 2013; in short, these levels are lower than those predicted in the world economic outlook releases in April by this multilateral institution. |
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