A new article from the McKinsey Global Institute (MGI), What could a new era mean for Latin America? (What Could a New Era Mean for Latin America?), looks at what today’s disruptions could mean for Latin America. Olivia White, Senior Partner at McKinsey & Company and Director of MGI, said: “The unipolar world is giving way to a multipolar world. The population is aging, inequality has worsened, and polarizing political tensions have been on the rise.
Emerging technologies are certainly promising, but they also pose risks. At the same time, the world needs to cut emissions even as it musters the necessary resources, and all this in the face of unprecedented debt and sluggish productivity growth.
Latin American leaders must prepare to face these changes, but they also have the opportunity to shape this new era.”
Andrés Cadena, a senior partner at McKinsey & Company in Bogotá, said: “If Latin America does not optimally manage the transition to a new era, it could face rising inequality, rising social tensions and economic stagnation.
But if managed correctly, the region’s abundance of resources critical to the net zero transition could stimulate investment in infrastructure and human capital, and catalyze both technology transfer and innovation.
The region could experience the booming economic expansion seen in other outperforming middle-income economies.”
The key findings of the report include:
• Today’s global upheaval may seem new, but there are similar periods of sharp rupture in recent history, each ushering in a new era with its own distinct landscape. In the most recent era, global value chains have expanded across the globe, digitization has democratized meteorically, and billions of people have benefited from macroeconomic stability.
• However, Latin America remained relatively outside of global economic integration, lagged behind in technology adoption, and was not at the frontier of innovation. Growth was subdued, and some economies experienced debt and inflation.
• If a new era opens, how will Latin America fare? Can the region enhance its global participation in a multipolar world? Can you catch up with the technological innovation curve and use technology to improve equity? Can it benefit from its youthful population, address its entrenched inequalities, and define a new social contract to support long-term growth? Can you harness your natural resources to be a driver of the net zero transition? Can it finally raise the level of regional economic growth, investment and productivity growth?
• Many questions remain unresolved, and critical decisions still need to be made, as the region’s leaders not only prepare for a new era, but also seek to shape it.