Where do we go next in Latin America and the Caribbean?

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An interview with Ana Basco, Director of the Institute for the Integration of Latin America and the Caribbean (INTAL) of the Inter-American Development Bank (IDB).

Ana Basco has worked at INTAL-IDB for sixteen years, where she has led different projects related to integration, gender equality and new technologies in Latin America, Europe and the United States. In the first interview of the Working together: Connecting Latin America and Europe in academia and policymaking cycle, Basco identifies the major challenges facing the region in terms of integration, trade and gender equality, new technologies, and climate change. She also explores the key areas for deeper cooperation between Latin America and the EU. This interview was conducted in Spanish and has been slightly edited for clarity.

Lucas Chiodi (LC): You lead a privileged institution for understanding what is happening in Latin America and the Caribbean (LAC), especially regarding integration. How do you see the region within the current global context?

Ana Basco (AB): Unfortunately, the last ten years have not been good for LAC. First, growth in the region’s countries was relatively low on average. Today we speak of it as being worse than the 1980s, which was one of the worst decades for LAC. In addition, the pandemic and the conflict in Ukraine have had a huge impact on the region. We also have 30% of the population living in poverty, the second-most unequal region in the world, and almost 50% of our population living in a state of informality.The international context is very challenging and, therefore, we expect a possible recession or slowdown in the region’s economic growth by 2024 (around 1% to 3% maximum growth in LAC), driven by the global crisis and the current economic performance of China, which is particularly affecting the region.

The good news is that in recent months, LAC has acquired a certain relevance or attention at the global level as a result of the war in Ukraine. Today the region has an opportunity to assume a greater role on the international stage, notably in energy provision. We have been discussing energy transition for some years, and several countries have gradually moved towards a renewable energy matrix. The war situation is an opportunity for LAC countries to supply energy to the rest of the world. And certainly, achieving self-sufficiency is another one of the great challenges for the region.

Another important area where LAC has great potential and opportunities is food security. This is a topic that became increasingly relevant as a consequence of the pandemic and the war, and that has an impact not only on developing countries, but also middle-income countries.

LC: INTAL can help us obtain better insights into regional realities. It also plays an active role in proposing and undertaking meaningful policies for regional integration. What are the key working areas under your leadership? How do these relate to the most significant regional challenges in the short and medium term?

AB: INTAL’s central objective is to promote the integration of LAC and to promote intra- and extra-regional trade. We have four areas of work: 1) integration in its purest state, that is, to contribute to regional integration processes in Latin America; 2) increasing exports with high added value (and not only producing commodities); 3) trade and gender issues; 4) trade and the environment, which is strongly linked to energy and food security issues.

The central argument we emphasize is that a large portion of our productive matrix is linked to the agricultural sector, and climate change particularly affects sectors that depend on the climate to produce. Today we see that harvest and sowing productivity are dropping considerably in the region because of climate change.

LC: Foreign trade, new technologies, and gender equality are all areas in which you have been very active. How is LAC positioned with regards to women’s participation in foreign trade and the use of new technologies? Which public policies and regional initiatives can you highlight within the INTAL framework?

AB: In terms of foreign trade, we’re starting off with very severe gender inequality. There is a higher rate of unemployment among women, higher levels of informality among women who are employed, and higher rates of poverty. Given this situation of extreme inequality, we propose that foreign trade must serve as an opportunity to increase gender equality. When we talk about the role of women in foreign trade, we focus upon three key aspects: 1) women as workers, i.e., those who work in companies that export or import; 2) businesswomen or entrepreneurs who export or import; 3) women as consumers.

When considering the first two aspects, we see that women’s participation is lower than the economic average. For example, within formal employment in Latin America, 40% of the people who work are women. But when we talk about export employment, this employment is reduced to 30%. Therefore, gender inequality in foreign trade is greater than the existing formal-employment inequality within the regional economy. We must try to get more women into the export sector. We know that, in general, wages and job quality are better in this sector, and therefore women should be able to have better access to it.

When we talk about women entrepreneurs, something similar happens. Only 15% of entrepreneurs who export are women. And this percentage is even lower when we talk about women-led companies. Women face greater challenges in entrepreneurship, challenges which include regulatory obstacles, cultural aspects, gender biases, more struggles for networking, fewer possibilities of access to credit, etc. It is also linked to a central aspect: we dedicate a lot of time to unpaid work at home.

In foreign trade, there has been some progress in the role of women as entrepreneurs but not as workers. This issue only began to be addressed within the region in the 1990s, when trade liberalization processes started. It was deepened during the 2010s, when gender chapters began to be included in trade agreements. But it has not been a topic of much debate in public policy. Where do we go next in LAC? We promote a gendered approach of trade policies, that is, to increase the participation of women in sectors that already export (mining, energy, knowledge-based services.) We also need to foster greater tradability in areas where women have traditionally had a greater presence, such as health and education. How can we transform these sectors into tradable sectors for export?

We also need to include more gender chapters in trade negotiations. There is a need to develop binding instruments on more specific issues. So far, we have very propositional and generalist chapters, but they do not necessarily discuss agreements’ impact on working women. Trade negotiations should include the participation of women exporters and gender experts, as well as ex-ante and ex-post impact assessments of the agreements’ impact on women, to make sure these are not contributing to increasing inequality.

We see a similar picture in science, technology, engineering, and mathematics (STEM). One in three people studying for a STEM career is a woman, as in one in three people working in science and technology (S&T) specifically. We must move towards parity because this sector is growing considerably. Public policies to facilitate care and gender quotas are essential. Concerning foreign trade, the feeling is that progress has been made. In Argentina, for example, the Centre for the Study of Production (Centro de Estudio para la Producción) shows how labour participation in the STEM area has increased in the last two years. In other words, there is a slight upward curve in the number of women involved in these areas.

LC: At the European University Institute, and the Latin American Focus Group (LAFG) in particular, we closely followed the recent visit of Joseph Borrell to our region. Where do you see further opportunities for cooperation? What potential does the European Union (EU) hold for INTAL?

AB: At INTAL, we launched “Integra,” a platform to include all initiatives linked to trade and integration in LAC. Our analysis shows that there are fourteen integration and trade initiatives (Pacific Alliance, Andean Community, CELAC, SELA, SICA, CARICOM, etc.), reflecting a certain disorder that contrasts with the EU. But we also can’t pretend to be moving towards an EU scenario at this stage. Our objective is to achieve greater convergence among the different integration initiatives, as we see a lot of regulatory disarray and disorder, and there is room for better articulation between these initiatives.

The EU is a central actor in LAC because of historical ties and shared values. We have opportunities to further strengthen those ties, specifically given the current international geopolitical context. We should take advantage of the incoming Spanish presidency of the EU next year.

In particular, I see an important opportunity to collaborate in the energy sector. We know that LAC can become a strong energy supplier as it has the world’s second-largest conventional gas reserves; 60% of the world’s lithium is in the region (the lithium triangle). There is a great capacity to produce green hydrogen. In this context, the EU could contribute to strengthening LAC’s energy sector through the provision of financing. Additionally, we must boost trade in services based on knowledge and technology. In LAC, we have to incorporate more value in our production and exports in order to move towards a more service-oriented economy. That is to say, final services, yes, but also services throughout the production chain. EU countries could help us in this process.

Finally, the green agenda must be a key point in our relationship with the EU. When I talk about trade policies linked to the environment, it is important to have greater collaboration on regulations and standards that are emerging and can be an obstacle to trade. These are issues that must be addressed given that we have different speeds in terms of development and energy transition issues.

We should learn a lot from the EU, but we should also have less ambitious and more concrete goals. For example, the recognition of university degrees is a central issue where there is a lot that could be done in our region.

Despite the emergence of new opportunities to further strengthen ties between LAC and the EU, it is necessary to emphasize that, at the moment, the relationship between these two regions is quite active. For instance, negotiations for the EU-Chile Advanced Framework Agreement recently concluded. This agreement of key geopolitical importance opens further opportunities for the EU and Chile to boost their partnership and foster trade and investment in the region.

LC: You mentioned different regional integration processes, and indeed Latin America and the Caribbean is quite possibly the region with the greatest overlap and number of initiatives and integration mechanisms underway. In such a context, what do Latin Americans think about regional integration?

AB: We have a partnership with Latinobarometro, where we do 20,000 surveys every year in eighteen countries in the region. We see that year after year, approximately 70% of Latin Americans support regional integration. That statistic is very notable in an era where nationalism is on the rise. Interestingly, young people are the most supportive of integration when we zoom in on this percentage. This means that we need to further reflect on how to train young leaders in integration. Our Integrados initiative works to that effect.

LC: Actually, my final question has precisely to do with youth. At INTAL, you are working hard to better know how to deal with the Fourth Industrial Revolution. What competencies and skills do young people need to acquire to navigate this period, and how can young people work to further integrate LAC and Europe?

AB: In very simple terms, the Fourth Industrial Revolution refers to the growing demand to produce more technological goods and services. It is clear that STEM skills are in greatest demand at the moment. We conduct a survey every year to measure what skills companies are asking for and what skills are lacking in the region: S&T skills were in demand before the pandemic, and since then the demand has increased substantially. On the contrary, the demand for physical skills, i.e., manual skills, dropped considerably. But because of the pandemic, soft skills, i.e., communication, empathy, and creativity, are now more valued. For robots, these abilities are difficult to learn. Therefore, when thinking about young people, we should incorporate S&T skills and other inherent human skills. Companies struggle to find workers focused on STEM and soft skills.

In the framework of the Integrados programme, we developed a meeting on trade and environment together with ESglobal. Young Europeans and Latin Americans exchanged their views on these issues, and the idea is to publish a document to give young people a voice and develop a future network.

Finally, it would be a great opportunity to think about activities with more European universities, such as the European University Institute, to link even more young people from both regions. There is still a lot of potential.

LC: I am glad to hear you bring this last point up, as that is one of the aims of these conversations: to think about ways in which it would be possible for us to work together. To conclude on a more personal note, Ana, what is your favourite book or author?

AB: I was deeply influenced in pre-adolescence by Simone De Beauvoir’s “Memoirs of a Formal Young Woman.” My mother is a feminist and instilled in me these values from an early age. She is a great inspiration in my life.