FREE MARKETS GET A 'YES' VOTE, TRICKLE-DOWN POLICIES, 'NO'
SANTIAGO, CHILE — When economic planning officials ended the 24th Congress of the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), they had come to two conclusions.
The first task, they agreed, is to establish a solid economic base using a market approach, reducing subsidies, opening up trade, and slimming the state sector. But they also said that the marketplace does not have all the answers for countries where large portions of the population live in poverty.
The 1980s were "the lost decade" for Latin America, said Chilean Economy Minister Carlos Ominami Pascual. He pointed to falling output and drops in per capita income around the region as well as serious inflation and debt.
The economists said that governments must seek equitable distribution as part of growth.
"Global experience shows that you need both to grow and to improve the fairness of growth at the same time," said Ricardo French-Davis, until recently the head of research for Chile's central bank.
"Trickle down apparently does work - eventually," says ECLAC economist Joe Ramos, "but it may take 50 years. These countries can't wait."
ECLAC's goals include establishing stable currencies, reducing government deficits and inflation, and revising investment codes. But "you cannot have vigorous, sustained growth while 80 or 90 percent of the population is stagnating," Mr. French-Davis said.
Although ECLAC discourages government control of enterprise, it recommends that countries devise mechanisms for increasing social mobility without new expenditures. For example, pension contributions could be used to guarantee bank loans for education or home ownership, obtaining capital that commercial banks would not provide.