OECD engagement in Latin America and the Caribbean (LAC) addresses development challenges and works towards sustainable policy reforms while supporting economic integration and well-functioning institutions. The OECD has four members in the region (Chile, Colombia, Costa Rica and Mexico) and three other countries are currently in the accession process (Argentina, Brazil and Peru). The OECD works closely with all LAC countries to facilitate policy dialogue, promote effective policy making and support agendas based on OECD legal instruments and evidence-based analysis.
Latin America and the Caribbean
Latin America and the Caribbean and the OECD
Key messages
Description text: Productivity in LAC has not grown fast enough to keep pace with or significantly close the gap with advanced economies. Over the past two decades, labour productivity accounted for just one quarter of average GDP growth in LAC, while it has contributed as much as 80% in other emerging economies. The OECD supports the region in the design and implementation of productivity enhancing reforms, including strengthening competition and improving the investment environment. The work programme also helps to diversify economies through trade and foster better integration into regional and global value chains, while reducing overdependence on natural resources. The OECD supports LAC countries to foster innovation and SME uptake of new technologies, and improve formal employment and skills.
Description text: Innovative social policies implemented in LAC since the 1990s have contributed to a reduction in poverty and inequality. Yet most of those who escaped poverty are now part of a new vulnerable middle class that makes up 40% of the population. Those belonging to this socio-economic group have low quality and usually informal jobs associated with low social protection and low, often unstable, incomes. The OECD helps to identify avenues to strengthen LAC’s social protection systems to break the vicious circle of poverty and informal employment. It helps the region address the deep causes of the stagnation of social mobility, by improving the equity and quality of education and health systems, expanding early child education and the care economy, and facilitating greater participation of women in the labour force. It also helps reduce territorial disparities by empowering communities through innovative tools such as digital inclusion, financial inclusion, and the social and solidarity economy.
Description text: 70% of Latin Americans have low or no trust in their government. The erosion of trust puts democracy at risk, encourages political polarisation, and undermines growth and social cohesion by reducing investor and consumer confidence. It also weakens the effectiveness of public policies, programmes and regulations that depend on citizens’ co-operation and compliance. The OECD supports governments in the design and implementation of comprehensive strategies to promote government integrity, combat bribery and corruption, improve the civil service and digital government for a more efficient public service delivery, and enhance open and participatory regulatory and policy processes. All of this enhances trust, which together with strategies to curb tax evasion, increases revenue collection and strengthens institutions.
Description text: The LAC region is highly vulnerable to climate change, with 18% of global extreme weather events associated to climate change concentrated in the Americas. The related economic damage represents 45% of global material losses to weather events in the last 50 years. At the same time, more than a quarter of the region’s primary energy and more than 60% of electricity generation come from renewables, twice the global averages. LAC is a major producer of critical minerals, accounting for 40% of global production of copper and 35% of the world’s lithium supply. LAC also has significant potential in graphite, nickel, manganese and rare earth elements production. The OECD supports the region to design and implement comprehensive environmental sustainability strategies, to strengthen resilience to climate related events, while also advising governments on alternatives for financing a green and just transition.
Context
Latin America and the Caribbean (LAC) is a region of growing importance and relevance to the world economy
The LAC region accounts for a GDP of almost USD 7 trillion and a population of 650 million people. This makes the region the world’s fourth-largest economy.
After Europe and North America, it is also the most democratic region in the world. It is endowed with abundant natural resources, is home to the world’s largest rainforest, and already produces most of its electricity from renewable sources (see graph).
The reconfiguration of global value chains, as well as the digital and green transitions offer new avenues for growth and development.
Structural factors, including low levels of investment, the high prevalence of informality, and low trust in governments hinder growth and development potential
At 20% of GDP, the LAC region has one of the lowest levels of total investment across all regions globally (see graph).
The average informal employment rate was 48.7% in 2022 and, measured at household level, 64.6% of the region’s populations depends totally or partially on informal employment.
