Business Leaders Discuss the Economic Impact of the COVID-19 Crisis on Latin America
This webinar sought to understand the opportunities for innovation that this disruptive moment may offer. In particular, it gathered experts to assess how the business and government sectors might seize this moment to foster growth and innovation for Latin America. It looked closely at the roles played by different industries, commodities, and financial markets in the region, and how their realignment might unleash new opportunities.
During summer 2020 Georgetown’s Center for Latin American Studies and the Latin American Leadership Program are hosting an event series addressing both the opportunities for innovation and issues emerging from the COVID-19 crisis in Latin America. Their first panel took place on May 27, 2020 and discussed the economic impact of COVID-19.
Opportunities and Challenges for the Region
The economic and health crises caused by the COVID-19 pandemic have raised concern about the prospects for democracy and development in Latin America. Latin America is now the hardest hit region in the world by COVID-19. The pandemic is proving to be one of the worst crises in Latin American history. Despite these intense challenges, the panelists took a positive view of the situation, looking towards opportunities for the region as it combats and eventually emerges from the crisis.
Ms. Muni Jensen, senior advisor with Albright Stonebridge Group and former Colombian diplomat, spoke of four main opportunities that can be achieved through collaboration between private and public sectors: emulation, engagement, long-term planning, and innovation. Being that Latin America is a few weeks behind other regions hit by the virus, it can better handle the crisis by emulating other countries’ good responses and avoiding their poor responses. Latin America can also increase world engagement by moving beyond commodities, engaging with international businesses and increasing investor protections. The region must use this opportunity to create a long-term vision that focuses on sustainable development and gender equality. “Innovation is the key word right now,” Jensen said.
This is a long haul situation. We're not just adapting for the short term for the confinement for finding ways out of this specific situation. I think it's an opportunity for Latin America.
Mr. Manuel Balbontin, chairman of the Georgetown University Latin American Board and a partner, founder, and executive chairman of Compass Group, and Mr. Álvaro Fernández, CEO of Alfa S.A.B de C.V., both explained the financial crisis facing Latin America. Balbontin highlighted the ongoing problem of labor informality. “Labor informality in the region is huge,” he elaborated. “Not only [is it] an economic problem... But in a situation like this... the countries are putting massive fiscal measures to try to help the situation [and it] is very hard to distribute that.” Despite general regional trends, Balbontin reminded the audience that there is no one solution for a diverse region. Fernández called upon Latin America to step up and diversify its production.
Professor Hector Schamis, adjunct professor at the Center for Latin American Studies at Georgetown University, worried about the state of the economy and democracy following the pandemic and warned that Latin America could be facing another “década perdida” (lost decade). Schamis said, “I have a very somber reflection, which is, without COVID-19 we might as well have had this conversation in the same terms or in pretty similar terms. Why is growth sluggish, why are we so tied to cycles of prices? Why are we, I would say, incapable of learning?” Prior to the pandemic, Latin America was already facing economic stagnation. Latin America had not used their boom period earlier in the century to invest in education and infrastructure, and the region had not considered counter-cyclical policy. Protecting and incentivizing investment in Latin America will be a crucial part of the response to the economic crisis.
Latin America’s Urgent Problems
Moderating the panel, Professor Ricardo Ernst, Baratta Chair in Global Business and executive director of the Latin America Leadership Program at Georgetown University, asked each panelist what they thought the most urgent problem to solve was in Latin America.
Balbontin thought that fiscal policies must be more aggressive to tackle the economic crisis and seize the opportunity to increase trade and production and invest in infrastructure. Jensen added that countries such as Colombia and Costa Rica have had superior responses to the virus in their responses’ centralization. She reflected,
As a very, very global crisis has descended on us, the world is looking inward. And what needs to be a global coordinated solution has turned into sometimes struggles between city governments and states... There's a lot of confusion... tribalism, and...disorganization. And that results in something very dangerous, which is that trust is eroded between the citizens and their governments. And I think that's a key opportunity for business to step in where other actors are failing.
Schamis maintained that despite being in an era of protectionism, countries must embrace global solutions; he also highlighted gender inequality as an urgent problem, especially given the increased inequalities and threats that women are facing as a result of the virus. He also predicted that given the West’s current anger with China’s mismanagement of the virus, it is likely that countries might prioritize standing up to China’s unfair trade practices.
Skills for the Future
Closing the panel, Ernst asked each panelist what skills students should develop to best prepare them to take on the challenges facing Latin America and the world. Jensen highlighted the need for flexibility and knowledge of global affairs. Schamis called for more engineers to develop infrastructure in Latin America. Fernández underlined the need for empathy and knowledge of history. Finally, Balbontin emphasized entrepreneurship, innovation, and positivity. Ernst ended the panel on a hopeful note. “We have to be optimistic, we have to be positive… Let’s take this opportunity to actually move Latin America to the place and the position that it deserves and where it belongs.”