The biggest challenge for Latin America today is to return to the path of economic development, underpinning productive diversification and technological innovation, said the executive secretary of the Economic Commission for Latin America and the Caribbean (CEPAL), Alicia Bárcena.

The current decline in the prices of oil and other basic products on the international market sheds light on an old and widely-known problem: the region largely depends on market fluctuations, making it highly vulnerable.

The biggest challenge for Latin America today is to return to the path of economic development, underpinning productive diversification and technological innovation, said the executive secretary of the Economic Commission for Latin America and the Caribbean (CEPAL), Alicia Bárcena.Amid these circumstances, it is imperative to protect the achievements attained over the past ten years; namely, the reduction of poverty, the distribution of income and social inclusion, according to CEPAL.

The institution, which is a regional commission of the United Nations, is also “particularly worried” about the slowdown in gross fixed capital formation, because its contribution to the region’s Gross Domestic Product decreased from 21.5 percent in 2013 to 20 percent in 2015.

“The reduction of investments is worrying not only because it aggravates the effects of the economic crisis but also because it limits future growth prospects and the possibilities for countries to move toward productive diversification and growth,” said Bárcenas.

The end of the rise in raw material prices and the consequent disagreements over trade terms have had a diverse impact among importing and exporting countries, Bárcenas explained at the World Economic Forum held in late January in Davos, Switzerland.

However, the drop in non-tax revenue was compensated with an increase in tax collection, which resulted from the recent progressive tax reforms implemented in more than 15 countries, she noted.

As Compared to previous slowdowns, the region is now in better economic conditions to carry out these kinds of policies, especially in areas that could reactivate the economy such as infrastructure, innovation and development, the CEPAL executive secretary explained.

It is time now for the region to stimulate these sectors that could give a major boost to economic growth and exports, as is the case for environmentally sustainable sectors like renewable sources of energy and services, with views to attaining clean and intelligent urban development, the official suggested.

According to CEPAL, public and private investment must join efforts to promote innovation and social inclusion: huge prospects exist for creating a single digital market that allows increasing connectivity throughout the region, CEPAL noted.

Bárcena praised the likelihood of combining investments in energy and digital infrastructure with the objective of encouraging technological and environmental innovation. To attain this goal, the governments have to create alliances with the private sector, teaching centers and the civilian society, she recommended.

The high percentage of the young population features as one of Latin America’s greatest assets. Hence, it is crucial to invest in education and technical training to further improve those sectors and to be able to play an active role in the digital and technological revolution, and in the knowledge-oriented economy as well.

The Latin American and Caribbean countries “need a new form of sustainable development,” Bárcenas said in Davos when addressing the debate on the Fourth Industrial Revolution.

In the face of development, it is essential for the region to grow together. This enables the people to make better use of the historical opportunities provided by the digital revolution, financial management and the need to reduce carbon dioxide emissions linked to production and consumption, according to CEPAL.

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