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LATIN AMERICA: Critics Sceptical of Business Community’s Concern About Poverty

Daniela Estrada

SANTIAGO, Apr 26 2007 (IPS) - Regional business leaders at the World Economic Forum (WEF) on Latin America admitted that unequal distribution of wealth is a crucial problem, and said they want to contribute to its solution.

Merely empty expressions of good intentions, their critics replied.

In spite of positive economic results in recent years, Latin America is still the region with the widest gap between rich and poor in the world, according to United Nations agencies.

“In our surveys, the top risk identified by the Latin American business community is inequality. Its members realise they are a necessary part of the fight against poverty and inequality,” Emilio Lozoya, WEF head for Latin America, told IPS at the meeting’s inauguration on Wednesday.

“Big business leaders know they have to take a more active role, and we are very pleased by that,” said Lozoya, in whose opinion the key issue is for education to deliver “the tools needed by industry,” in order to curb unemployment.

“Writing a cheque (to solve immediate problems) has an effect in the short term, but education is preparation for the future,” the economist said.

The World Economic Forum on Latin America is being held in Chile for the first time, and has drawn 400 economic, political, academic and social leaders from the Americas, Europe and the Asia Pacific region.

It is one of the regional meetings of the WEF, which brings together the world’s political and economic leaders every year in the Swiss ski resort town of Davos.

Presidents Michelle Bachelet of Chile and Luiz Inácio Lula da Silva of Brazil are attending the forum, as are the executive secretary of the Economic Commission for Latin America and the Caribbean, José Luis Machinea, the secretary general of the Organisation of American States, José Miguel Insulza, and representatives of the World Trade Organisation, the Inter-American Development Bank and the International Monetary Fund.

Also participating are 100 heads of international companies, and 20 government ministers from the region.

“Redistribution of wealth is our foremost concern as a country, and the only way to deal with the problem is through democratic governments, fiscal responsibility and investment incentives, in order to boost growth rates,” said the Chilean co-chair of WEF for Latin America, Andrónico Luksic.

The organisers of the WEF forum on “The Power of a Positive Regional Agenda” highlighted the region’s economic and political achievements, including sustained growth and the strengthening of democracy after the election of a dozen new governments over the last two years.

In this context, the challenges for Latin America are to advance in innovation, integration of infrastructure, energy security and quality of education, as well as to formulate strategies for ensuring long-term benefits from its relations with the Asia Pacific region and to prepare for climate change, according to the WEF.

Luksic, head of Chile’ largest bank, said the challenges for countries in the region are “to consolidate the rule of law, defend private property, and improve security,” in order to attract both domestic and foreign investment.

Decent work, quality education for all, and climate change are being discussed at the forum, among other causes espoused by social organisations.

Víctor Hugo de la Fuente, spokesman for the Chilean chapter of the international Association for the Taxation of Financial Transactions to Aid Citizens (ATTAC), praised the breadth of topics on the WEF agenda, which he said was an achievement of the World Social Forum (WSF), the largest gathering of organised civil society, which started in 2001 in Porto Alegre, Brazil as a counterpoint to the Davos meeting.

“The issues raised by civil society in the WSFs have been taken up by transnational corporations and the WEF. That’s a good thing, and it’s a mark of our success. But how these new ideas are going to be used is quite another question,” de la Fuente told IPS.

The activist was pessimistic on this account. “If (former Chilean President) Ricardo Lagos (2000-2006) promised us growth with equality, and we got growth with inequality, it’s hard to believe that big business, the owners of the world and transnational corporations are really going to make the changes happen. I don’t think they will,” he said.

“Inequality in Chile could be reduced by raising the minimum wage (at present 250 dollars a month), but business owners, who earn 100 times the minimum wage, claim they can’t increase it by 20,000 pesos (40 dollars) a month, because it would cause economic chaos,” he said.

In protest against the WEF, ATTAC organised two alternative activities for information and debate on Wednesday and Thursday, on matters that it considers essential to progress in the region.

These issues are the redistribution of wealth, Latin American integration, the need to tax industries that extract natural resources, and implementation of the Tobin tax, a surcharge on financial market transactions inspired by U.S. economist and Nobel Economics Prize-winner James Tobin.

ATTAC is an international citizens’ movement with branches in 40 countries, and an active participant in the WSF process.

“Multinational companies only seek better markets to exploit natural resources, to increase their profits by means of financial speculation, and to take over service industries, after pressuring to have them privatised. These great conglomerates exercise real government power, to the detriment of the democratic will of ordinary citizens,” said an article by ATTAC Chile.

José Ignacio Ávalos, founder of the non-governmental Gente Nueva (New People) Foundation, which has given rise to microcredit, food, health and rural supply organisations in Mexico, told IPS that “inequality in the region is a very important issue that isn’t receiving the attention it needs. The economy and the market alone aren’t capable of solving the problem.”

“It’s essential for the state to increase its participation as a social investor to accelerate economic growth, and also for organised civil society to participate in the development process, to try to bridge the huge gap between rich and poor,” he said.

The WEF announced a new index it has developed to measure the attractiveness of Latin American countries for infrastructure investments, such as ports, airports, highways and electricity.

The “Infrastructure Private Investment Attractiveness Index (IPIAI)” takes eight factors into account: macroeconomic environment, legal framework, political risk, ease of access to information, sophistication of the national financial markets, the country’s track record on private investment in infrastructure over the past 15 years, relations between government and society, and the government’s ability to facilitate investment.

A study of 12 Latin American and Caribbean countries, with calculations of their IPIAI index, was also presented. Chile was in the lead, with the best investment climate and an index of 5.53, followed by Brazil with 4.40, Colombia with 4.33 and Peru with 4.23 out of a maximum of seven points.

At the bottom were Venezuela with 3.37 points, Bolivia with 3.34, and the Dominican Republic with 3.33 points.