Better governance and greater integration to determine fate of Latin America and the Caribbean in 2030

New Atlantic Council report commissioned by IDB offers contrasting scenarios for crime, democracy, trade and economic growth

The Atlantic Council today released "Latin America and the Caribbean 2030: Future Scenarios," a report commissioned by the Inter-American Development Bank (IDB) that looks at how the region's countries could evolve over the next 14 years, underscoring how more integration and better governance hold the key to greater prosperity.

The report was launched today at an event in which IDB President Luis Alberto Moreno and the Atlantic Council's Jason Marczak debated its findings with representatives of the business, academic and diplomatic communities. 

The report describes a baseline "business as usual" scenario that would see 57 million more Latin Americans and Caribbean citizens joining the middle class over the coming 14 years, assuming that the region's governments continue largely on their current course. Annual GDP growth rate in this scenarios would be 2.4 percent, slightly outperforming the U.S. growth rate of 2.2 percent. The region would face growing  challenges in the areas of income distribution, demographic changes and climate change impacts.

However, the report also indicates that global and regional trends, combined with ambitious domestic reforms, could put Latin America and the Caribbean on a path toward faster growth and prosperity. It offers positive scenarios in which the region embraces better governance and more integration, leading to a doubling of infrastructure investments, big reductions in homicides and less tax evasion, among other pluses.

On the other hand, less optimistic scenarios based on a more fragmented region forecast continued high crime, more political instability, low productivity, dependence on commodity exports and difficulties in attracting foreign investments.

Latin America and the Caribbean 2030: Future Scenarios, written by Jason Marczak of the Atlantic Council’s Adrienne Arsht Latin America Center and Peter Engelke of its Strategic Foresight Initiative, outlines several alternative scenarios as to how the region could unfold.

1. "Muddling Through" the base-case scenario, shows what current trends point to modest economic fortunes and relatively stable democracies. Among its findings: the middle class increases to 345 million people by 2030.
2. "Governance on the Rise or an Illicit World Afloat" looks at the potential for qualitative jumps in governance on the heels of active citizen engagement and digital revolutions or, alternatively, the potential for corruption scandals, transnational crime, and weakened rule of law. Two key data points: with better governance, the regional economy grows by an additional 7 to 10 percent. But foreign direct investment shrinks by more than 50 percent in a scenario of growing crime and impunity. 
3. "Toward Integration or Fragmentation Prevails" foresees what could happen if countries cooperate in making investments and joint policies in finance, labor markets, energy, infrastructure, and education. In a contrasting scenario, some countries may be pulled toward different economic poles, making the region less coherent than ever. In the first case infrastructure investments reach 5 percent of GDP and Central America’s economies grow by over 9 percent. But fragmentation could result in regional exports declining by $200 billion annually. 
4. Climate change has its own set of challenges. More natural disasters, droughts, flooding, and new diseases could be more common, but an opportunity also exists for the region to become the world’s bread basket and its global green leader. In the 2020s, most glaciers in the Peruvian and Bolivian Andes below 5,000 meters could disappear entirely.

"The future holds great promise but also the risk of great uncertainty. Looking to 2030, middle-class growth, stronger economies, healthier people, and greater security will come only through a call to action today," says Jason Marczak. Adds Peter Engelke: "the key question will be how the region anticipates and addresses global and regional drivers of change. Latin America will soon be at a decision point in its place regionally but also in the world."

The publication, produced in collaboration with the Frederick S. Pardee Center for International Futures at the University of Denver, reflects insight from over 110 decision makers representing 15 countries. It provides specific numbers on how the region’s trajectory may unfold—from economic growth to security and health to education.

"Latin America and the Caribbean 2030: Future Scenarios" includes an introduction by IDB President Luis Alberto Moreno and 17 guest columns by prominent experts such as Marta Lagos, director of Latinobarómetro; Paul Farmer, co-founder of Partners In Health; and Esteban Bullrich, Minister of Education of Argentina.

The full report and a crucial visual summary is available online: www.iadb.org/LAC2030