The sustainable path will drive unprecedented growth
Leer en Español: América Latina despierta del largo sueño
According to the World Bank, Latin America and the Caribbean’s current GDP is of about 5.201 trillion dollars. This number represents a substantial increase from 1960 when it was 0.8133 trillion dollars, meaning the region’s GDP has multiplied 6.39 times in 57 years.
Latin America’s GDP saw its biggest surge from 2003 to 2008 as it gained 2 trillion dollars in just 5 years, which is the 40% of the entire regions aggregate production. On the other hand, growth from 2008 to 2016 was of 0.625 trillion dollars. Latin America’s GDP was higher in 2010 than it is in 2016. Why?
Structurally, Latin America shares a common history, which has a lot to do with its growth perspectives until now; South America was the fertile ground for European exploration since the early XIX century where rights over the land were established under a colonial will. Initial exploration for gold soon turned into the extraction of minerals and industrial elements such as coal. Years later, as the Oil rush arrived to the region in the beginning of the XX century, the region’s elite decided to establish a primary sector economy.
Latin America’s GDP was higher in 2010 than it was in 2016 because it was based on China’s massive demand for metals and fossil fuels. Plus, the illusion of a cheap dollar kept South American elites dreaming about an expanding and mono-centered industry that would last forever.
The benefit of an economic crash that saw the light after 6 years of slowdown and 2 years of recession is that newer generations realized the perils of having a dependent economy and showed governments the importance of increasing investment and fostering a more inclusive private sector for the future. In Latin America, 50% of the working population is between 15 to 35 years old, and contrary to common belief, youth unemployment is 10% lower than it is in the European Union. The difference resides on the quality of the work.
A deciding factor for the future in Latin America’s GDP is that now more than 45% of its youths are receiving higher levels of education, which sees a 1% increase each year. More educated citizens imply greater chances for a growing product and service economy, but where should it be directed?
Latin American has the biggest proportion of Internet users in the world, where 32% of the youths under 25 are actively connected to the Internet. The region is undergoing a rapid shift from a primary sector economy to a product and service economy fueled by the Internet, which has created the background for the most educated and less economically affluent generation in history.
Latin American Post | David Eduardo Rodríguez Acevedo
Copy edited by Susana Cicchetto