OBRA PARTNERSHIP CARIBBEAN LEARNING & LAUNCH EVENT Kingston, - PowerPoint PPT Presentation

OBRA PARTNERSHIP CARIBBEAN LEARNING & LAUNCH EVENT Kingston, Jamaica 12 – 14 April 2010

THE PROBLEM • RISING UNEMPLOYMENT TWICE AS HIGH AMONG THE YOUNG • POOR QUALITY AND/OR INCOMPLETE EDUCATION FEW INFORMAL JOBS • REZAGADOS, YOUTH AT RISK, OS MARGINAIS • BIG PROBLEM: 50% POPULATION • GAP BETWEEN RICH AND POOR GROWING • ECONOMIC/SOCIAL GROWTH OR CONFLICT, UNREST, UNDERMINE

NO VACUUM • INFORMAL SECTOR OR CRIME PROVIDE THE ONLY ALTERNATIVES TO JOBS • GOVERNANCE: INFORMAL JUSTICE • ECONOMICS: LOW PRODUCTIVITY & INCOMES • SOCIAL: EXCLUSION (WRONG ADDRESS, WRONG RACE, WRONG SCHOOL, WRONG NAME)

PERU GUATEMALA JAMAICA • MIDDLE INCOME BUT VERY DIFFERENT • HIGH INCIDENCE & GROWING INFORMALITY • HISTORY OF CONFLICT • SKEWED DISTRIBUTION OF INCOME • DUAL CULTURES • HIGH REMITTANCES: SAFETY NET • WEAK PUBLIC SECTOR.

BIG DIFFERENCES PERU GUATE JAM GROWTH 0.9% -.05% -4.2% INFLATION 1.2% 2.2% 8.6% CURRENT DEF $0.8B $0.6b $1.4b DEBT/GDP 26% 33% 132% PER CAP GDP $8,600 $5,200 $8,300

OUTLOOK • COMMODITY PRICES ARE RISING • CAPITAL FLOWS SLOWED • DEVALUATION BOOSTS EXPORTS BUT ALSO EXTERNAL DEBT AND INFLATION • FISCAL DEFICITS MUST BE REVERSED • LOW GROWTH AND LOW EMPLOYMENT IN SMALL, OPEN, NET IMPORTING ECONOMIES

Commodity Prices and Terms of Trade: difference btw big and small countries. Commodity Prices Terms of Trade (Index of Fuel and Non Fuel Commodities, (Mar.09 - Jun.09 Variation) Average 91-97=100) 400 10% Beginning of Global 383 Recovery 8.6% 8% 350 Variation in % Fuel 79% 12% Food 6% Metals 60% 300 4% 250 241 2% 200 0% 43% -1.0% 169 150 -2% Apr-07 Jul-07 Oct-07 Apr-08 Jul-08 Oct-08 Apr-09 Jul-09 Oct-09 LAC-7 CAC-7 Jan-07 Jan-08 Jan-09 Source: IMF LAC-7 is the simple average of the seven major Latin American countries, namely Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. These countries represent 91% of Latin America’s GDP. CAC-7 is the simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

External Vulnerability Liability Dollarization Current Account Balance (Public Debt and Banking System Dollarization; 2008) (2008, % of GDP) CAC-7 LAC-7 CAC-7* LAC-7 2% 70% 65% 0.4% 0% 60% -2% 50% -4% 38% 38% 40% -6% 30% -8% 20% 13% -10% 10% -12% -11.3% 0% Public Debt Banking Public Debt Banking System System * Excludes El Salvador and Panama LAC-7 is the simple average of the seven major Latin American countries, namely Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. These countries represent 91% of Latin America’s GDP. CAC-7 is the simple average of Costa Rica, El Salvador, Guatemala, Dominican Republic, Honduras, Nicaragua and Panama.

Fiscal Vulnerability Fiscal Balance Public Debt (2009 Estimate*; % of GDP and % of Revenues) (2009 Estimate*; % of GDP and Years of Revenues) LAC-7 CAC-7 LAC-7 CAC-7 250% 0% -2.5% -3.2% 2.0 200% -5% -10% 150% -9.9% 1.2 -15% 100% -20% 50% 35% -20.0% 32% -25% 0% % of Revenues Years of % of GDP % of Revenues Years of % of GDP % of GDP % of GDP Revenues Revenues *Source: Own calculations based on ECLAC and WEO LAC-7 is the simple average of the seven major Latin American countries, namely Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. These countries represent 91% of Latin America’s GDP. CAC-7 is the simple average of Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua and Panama.

GOV’T SOLUTIONS • ENGAGE INFORMAL GOVERNANCE STRUCTURE OR COMBAT IT? • DECOPAZ: REBUILD SOCIAL/ECONOMIC CAPITAL • SQUATTING: (JA 30%) PROPERTY OWNERSHIP • TRAIN: (MORE WELDERS?) • KURP: INTERNSHIPS, COLLATERAL • BUT: NO FISCAL SPACE • DOUBLE IDB STILL NOT ENOUGH

GOV’T CAN’T DO IT ALONE… • PRIVATE SECTOR INTERVENTION TO FINANCE AND MANAGE INFRASTRUCTURE(ROADS, WATER, AIRPORTS, ELECTRICITY, EVEN SCHOOLS) • CORPORATE SOCIAL OUTREACH: INTERNSHIPS • DALLAS CASTLE: FINOR: PARTNERS NOT EMPLOYEES OR SUPPLIERS