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Event co-organized by the IDB, Asia Society Washington DC Center and Woodrow Wilson Center for Scholars
  • Thanks to co-organizing institutions: Asia Society DC Center and Woodrow Wilson International Center for Scholars.
  • For most of their history, India and Latin America have been on the periphery of each other’s foreign policy. 
  • For nearly half a century, they turned their backs to the world economy. Their concerns were elsewhere, mostly on their domestic economies and their immediate neighbors.
     
  • Not anymore. Having paid a price in terms of missed growth opportunities, and having fallen deeply behind counterparts in East Asia, since the late eighties both have made extraordinary progress in finding their way back into the world economy. 
  • The results are there for everybody to see. Posting high rates of growth, even during a deep financial crisis, both economies clearly show that they left behind the years of relative stagnation and that fast growth is not just a privilege of the economies of East Asia. 
     
  • It was just a matter of time before they were on each other’s radar.
  • Economic theory tells us that size, complementarity of resources and similarity of consumer preferences are the main drivers of trade and investment. 
  • All three of these elements suggest that the potential for the exchange of goods, services and capital between India and Latin America is nothing short of extraordinary.
  • We are talking here of trillion-dollar economies; of a relationship where an economy abundant in natural resources meets a partner with extremely scarce resources, particularly in the context of fast growth. 
  • And we are talking here of economies with large low-income populations, which could trade goods and services to help satisfy their needs.
  • These very same factors suggest there is vast potential for cooperation. 
  • Just as the similarity of per capita incomes can be a powerful incentive to trade, similar stages of development provide opportunities for a mutually beneficial exchange of knowledge and policy experiences in key developmental areas.
  • These similarities also mean that countries, more often than not, share interests in shaping the rules and institutions that govern the world economy.
  • It is not hard to think of very concrete examples:
  • India can provide valuable lessons based on its successes in elite college education, ICT, aerospace, offshoring, microfinance and pharmaceuticals, just to name a few.
  • Latin America can provide success stories in agriculture, mining, aeronautics, biofuels, private pension schemes, and poverty alleviation programs.
  • It is not surprising, then, that the bilateral trade has been showing signs of dynamism. So have bilateral investments and cooperation initiatives ranging from global trade to climate change to education and poverty alleviation. 
  • What is surprising is that all those activities--particularly trade, which can be considered the handmaiden of all them for its ability to provide incentives and diffuse information-- have yet to achieve a critical mass.
  • The comparison with the relations between China and Latin America suggests that India and Latin America have only scratched the surface of the huge potential that marks their relationship. 
  • One of the main motivations of the IDB report we are discussing today is to understand why--and to suggest policies and actions that will help ensure that this potential can be realized. 
  • In its search for useful policy lessons, the report looks at the striking similarities in the development strategies pursued by both economies and their frequently divergent results. It also explores the competitive implications for Latin American producers of the emergence of another one-billion-plus-people economy. 
  • To conclude, I want to share my belief that economic historians when looking back at the 21st century will be probably talking about a seismic change in the world’s economic geography.
  • They will not be just talking about China. It is very likely that India and Latin America will be among the protagonists of this emerging new world order because their extraordinary resources—most precious of all, the size and skills of their labor forces—and their resilient democracies. 
  • The growth opportunities offered by closer and deeper integration between these two economies--via trade, investment or cooperation--would go a long way to help turn this belief into reality. 
  • India’s and Latin American future success is not only critical to more than one and a half billion Indians and Latin American, but also to peoples elsewhere.  Through its success, this special relationship could become a beacon of hope throughout the developing world.