IDB aims to capitalize and promote investment in Latin America in 2022

The Inter-American Development Bank (IDB) closes the year with almost US $ 20,000 million of new financing for Latin America and the Caribbean and its sights are set on capitalizing and promoting foreign direct investment in the region.

For the president of the BID, Mauricio Claver-Carone, these goals are essential to help overcome the crisis caused by COVID-19, which caused a 7% contraction of the regional GDP in 2020, more than three percentage points above the world average.

“I can safely say that we are not going to have a lost decade in macroeconomic terms. GDP is recovering”He declared.

“But are we going to have a decade of missed opportunities?“, he asked himself.

The great challenge is to close the “huge socioeconomic gaps“That make Latin America and the Caribbean the most unequal region on the planet, he said.

“It is not a coincidence that it is the region most affected by COVID-19. It represents 8% of the global population, but accumulates 35% of deaths in the world. Why? Due to huge disparitiesHe has, he asserted.

In order to support growth “sustainable and inclusive“, The owner of the BID advocates a further increase in the bank’s capital, the 10th since it was founded in 1959.

The United States, which with 30% of the shares is the main shareholder of the BID, “you have a unique opportunity to strengthen this institutionClaver-Carone assured.

The first non-Latin American president of the IDB welcomed a bill that is advancing in the US Congress with bipartisan support, which authorizes up to US $ 80,000 million to capitalize the regional lender.

Lithium and call centers

The capitalization of BID, which Claver-Carone compared months ago with “a Marshall Plan for the region”, Alluding to the US program to rebuild Europe after World War II, it would also allow the United States to gain ground against China, which in recent years has become the leading trading partner of almost all South American countries.

For the IDB president, during the last 20 to 30 years, Latin America and the Caribbean lost great development opportunities because the world turned to China. But the supply problems brought on by the pandemic open up a historic opportunity to reverse that situation.

“Two-thirds of the world’s lithium is in South America. China buys lithium to make batteries that it then sells to the United States. Why not directly export the lithium from South America to Mexico, make the batteries in Mexico, and then ship them to the United States?“, he pointed.

This would reduce not only prices, but also harmful emissions for the environment. And it would create many jobs in the region, he argued.

Nearshoring, as the phenomenon of relocating production processes that companies had taken far to lower costs, is known closer to customers, also includes services.

“There is an entire English-speaking population in the Caribbean. Microsoft and Google alone can employ half of Jamaica if they move some of their facilities from India to the Caribbean”Claver-Carone explained.

The BID this year approved US $ 2.3 billion to strengthen regional supply chains. And it worked with 16 countries to identify the advantages of ‘nearshoring‘, among others in the semiconductor and textile sector.

“We have done great things in Costa Rica, Dominican Republic, Colombia, Uruguay, Ecuador“Said the head of the IDB.

“Break stereotypes”

Attracting investments that create jobs and development in Latin America and the Caribbean is one of the greatest challenges for the IDB president.

“The question is: are all the countries in the region implementing the appropriate policies to attract this foreign direct investment? No“, He said. “So our job is to help them”.

The IDB held four investment promotion forums this year (in Belize, Brazil, Ecuador and Miami), which generated a forecast of US $ 55,000 million in business agreements. And it schedules a new round in 2022 in Panama, Paraguay and Jamaica.

But ideological preferences in some countries can drive capital outflows.

To mitigate that, Claver-Carone aims to work with all governments “to help lessen investor concern”, As he is already doing in Peru with President Pedro Castillo, and as he hopes to do with the elected president of Chile, Gabriel Boric, both from the left. “My goal is to help break stereotypes“, he claimed.