Latin America cannot achieve sustainable development without recognizing that wealth is made, not found
Setting aside the headlines from Bolivia and Ecuador for the moment, these appear to be good times for Latin America and the Caribbean. GDP in the region is expected to grow 4% for the fourth year in a row and current account surpluses are rising.
However, these positive indicators may be transitory — the very trends that are lending prosperity to the region are driving policies and perspectives down the same “boom and bust” trajectory of the past century.
The high price of commodities is the main source of Latin America’s impressive growth, but that cannot last forever. Unfortunately, today’s moment of prosperity may be enticing policymakers to defer needed reforms, and it may also lull businesses into deferring the arduous climb up the value ladder now being scaled by Asian rivals. Worst of all, it may foment a return to the mistaken economic thinking of the 1960s and 1970s and usher in an era of expropriations, lack of respect for the rule of law, and investment flight.
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