SELA calls for adequate public policies for economic recovery
November 14, 2022
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The Latin American and Caribbean Economic System (SELA), which aims to make strides in productive coordination for economic recovery, is in the process of showing that a profitable regional fabric is possible, with the support of adequate public and fiscal policies, promotion and revaluation of each country's products.
The objective of the integration organisation is to give Small and Medium-sized Enterprises (SMEs) in Latin America the opportunity to compete, as far as possible, with imported products - increasingly abundant in the Latin American market - despite the difficulty that this entails.
The Permanent Secretary of SELA, Ambassador Clarems Endara, acknowledged that this is a complex mission. Therefore, he stressed the need to give value to local products, which does not mean “waging war on imports.”
To that end, it is mandatory to “work much more on domestic production,” but not just to ensure that goods are on the market without further ado, but to make them competitive, with selling prices that are in line with the consumer's purchasing power.
“It is a question of price. No matter how much preference you have, the price is going to guide your ability to afford them. No matter how much you like a traditional product in your city; if the imported product is half a dollar lower, you are not going to choose with your affection, you are going to choose with your purchasing power,” Endara explained.
But to ensure that the prices of local goods are competitive in the market and, at the same time, that the producer makes a profit, it is necessary to start with appropriate fiscal policies.
SELA'S STUDIES AND WORK
According to the regional body's analysis, when Covid-19 hit, the trade mechanism and domestic production in Latin American and Caribbean countries were already in decline, but the pandemic took it to extreme levels.
Before 2020, the region already showed little productivity growth, but as the pandemic spread, dependence on international production increased considerably, at a time when many economies were experiencing shortages of imported products.
The measures implemented by the various governments to contain the virus led to the closure of more than 2.7 million SMEs, the destruction of some 8.5 million jobs, the impact on global supply chains and the collapse of health systems at the regional level.
Subsequently, in 2021, it seemed that everything was starting to work again, and “very large” growth projections were made. But in 2022, it was necessary to “come back to reality,” recalculate and assess priorities, now with a new ingredient against: the war in Ukraine, which mainly affected the large cereal and fertiliser markets.
Against this backdrop, SELA is working with a programme whose objectives are to formulate public policies for the promotion of productive sectors, strengthen business models and develop new markets for the business ecosystem of SMEs.
Through the “Productive Coordination” project, the regional organisation supports the countries with technical advice and tools that lead to the search for local productive niches that then have options for expansion, according to the needs of the region, thus achieving productive coordination.
The first step is to see what inputs are needed to manufacture a given product and if they can be obtained in the region itself, as a preferential option. Once this objective has been achieved, the aim is to look at the large markets, where the productive coordination project should be targeted.
This formula relies on technical advice from SELA, which has already worked with countries such as Bolivia and Nicaragua.
With others, such as Panama, the next level has already been reached, in which existing public policies for SMEs are being studied, a task that is supported by specialised personnel in the field.
THE REVIEW
SELA needs to see where each country stands and how it has evolved in the different areas, after receiving the recommendations, according to the structure and possibilities of each nation.
To that end, aspects such as digitalisation, the formulas used to carry out procedures and their results, the guarantees they have for investment, the promotion policies for the opening of SMEs, or advice on gender issues, among others, are evaluated.
This assessment is carried out through forms that cover all the points of interest and are filled in online by the countries over a period of two months.
At the end of the work, the organisation is able to identify the level of depth achieved in terms of best practices, such as the inclusion of gender in the promotion of SMEs from start-up to internationalisation, or the state of public policies regarding the facilitation of start-up procedures and guidance for setting up a company.
It also examines the level of public policy support in the digitalisation of technologies proposed to effectively promote products.
All these dimensions will be measured “in a very precise way,” Endara assures, in order to be able to provide specific recommendations for each country, according to its characteristics.
The Permanent Secretary stresses that "everything is confidential", i.e., it is not open to all, but each nation will receive a specific dossier on the recommendations given by SELA after the analysis.
This is a follow-up to determine whether the recommendations have made progress and how much the capacity to strengthen SMEs has improved, and to be able to continue the support in a precise and personalised way.
As part of this work, conceptual maps of advances are made that will enter a validation process, in which the national authority does not intervene to defend one or the other norms, “but goes with the productive sector, which is the one that feels them and needs them.”
This is followed by the verification with the authorities, which should result in a report that is “as honest as possible,” since it is for the administration of the nation itself, but which helps SELA identify the existing weaknesses in order to be able to support SMEs in an adjusted manner.
SMEs generate 87% of the labour force in the region, and SELA's objective is to maintain them, for which it is necessary to avoid closures and instability, objectives on which the regional organisation continues to work, for the benefit of the economy of Latin America and the Caribbean.
Venezuela and SELA prepare for next regular meeting
Representatives of Venezuela and the Latin American and Caribbean Economic System (SELA) are meeting as part of the preparations of the South American country, which will host the next regular meeting of the organisation, to be held on 29 and 30 November.
The information was released through a message posted on the Twitter account of the Deputy Minister for Latin America and the Caribbean of the People's Ministry of Foreign Affairs, Rander Peña, who met with the Permanent Secretary of SELA, Ambassador Walter Clarems Endara.
The meeting was held in the Casa Amarilla to evaluate the work agenda of the Regular Meeting of the Latin American Council of SELA, where Peña emphasized that the work agenda will be ambitious, but possible, with the efforts of all SELA member countries, according to a press release.
He stressed that this space would serve as an important platform for the exchange of experiences among different countries, and highlighted its importance in the current economic context, which demands innovation and resilience after the world went through so many undesirable situations.
The Latin American and Caribbean Economic System was created on 17 October 1975, through the Panama Convention, as a regional intergovernmental body to consolidate a system of consultation and coordination of economically beneficial strategies for Latin America and the Caribbean as a whole.
It brings together 25 countries of the region: Argentina, Bahamas, Barbados, Belize, Bolivia, Brazil, Colombia, Cuba, Chile, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Trinidad and Tobago, Uruguay and Venezuela.