sustainable development 20 years on from the ... - José Eli da Veiga

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In fact, despite achievements made in the recent period and in <strong>20</strong>04-<strong>20</strong>08, the region’s growth
averaged just 3.4% between 1990 and <strong>20</strong>08. As shown in table I.5, yearly per capita GDP 12 growth over
that period was 1.9%, far below the rate for China and India and similar to that of the United States
(whose per capita income is, however, almost five times that of Latin America and the Caribbean).
The momentum of GDP growth depends on a number of factors, a key one being the investment
rate. Capital formation has been notably poor in the region by comparison with other emerging economies
and with the region’s own rate for the 1970s (see figure I.16).
Figure I.16
LATIN AMERICA (19 COUNTRIES): GROSS FIXED CAPITAL FORMATION, 1970-<strong>20</strong>09 a
(Percentages of GDP)
25
24
23
23.1
22
21
<strong>20</strong>
<strong>20</strong>.4
19
18
17.5
18.4
17.7
17
16
15
14
13
12
11
10
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
<strong>20</strong>00
<strong>20</strong>02
<strong>20</strong>04
<strong>20</strong>06
<strong>20</strong>08
Source: Economic Commission for Latin America and the Caribbean (ECLAC), Time for equality: closing gaps, opening trails
(LC/G.2432(SES.33/3)), Santiago, Chile, <strong>20</strong>10.
a
Figures for <strong>20</strong>09 are preliminary. The percentages shown on the horizontal lines represent the annual averages for the
relevant sub-periods.
International experience suggests that maintaining a high, stable real exchange rate can provide
significant support for growth in the long run and in the absence of other engines of international
competitiveness. In the past two decades, real exchange rate trends have been heavily driven by liquidity
cycles in capital markets and by rising income from the region’s main export products. This, combined
with the use of the exchange rate as a nominal anchor in anti-inflation policy, has led to periods of
currency overvaluation in the region. Together with other processes, this has weakened exports and the
production of domestic-market-oriented small and medium-sized enterprises (SMEs). The cyclical
12
This does not truly reflect national wealth, however, since it omits degradation or depletion of natural capital and
counts as wealth spending which is in fact defence against the unwanted side effects of economic activity.