Special meeting

CONSEJO PERMANENTE DE LA ORGANIZACIÓN DE LOS ESTADOS AMERICANOS

ACTA DE LA SESIÓN EXTRAORDINARIA CELEBRADA EL

9 DE FEBRERO DE 2022

Nómina de los miembros que asistieron a la sesión

En la ciudad de Washington, D. C., a las diez y cinco minutos de la mañana del miércoles 9 de febrero de 2022, celebró sesión extraordinaria el Consejo Permanente de la Organización de los Estados Americanos con el objeto de abordar el tema “Descenso en los índices de productividad laboral y el éxodo del capital humano”. Presidió la sesión el Embajador Everson Hull, Representante Permanente de Saint Kitts y Nevis y Presidente del Consejo Permanente. Asistieron los siguientes miembros:

Embajador Anthony Phillips-Spencer, Representante Permanente de Trinidad y Tobago

Embajadora Audrey Marks, Representante Permanente de Jamaica

Embajadora Rita Claverie Diaz de Sciolli, Representante Permanente de Guatemala

Embajador Carlos Alberto Játiva Naranjo, Representante Permanente del Ecuador

Embajador Noel Anderson Lynch, Representante Permanente de Barbados

Embajadora Yolande Yvonne Smith, Representante Permanente de Grenada

Embajadora Luz Elena Baños Rivas, Representante Permanente de México

Embajador Hugh Adsett, Representante Permanente del Canadá

Embajadora María del Carmen Roquebert, Representante Permanente de Panamá

Embajadora Alejandra Solano, Representante Permanente de Costa Rica

Embajador Carlos Alberto Raimundi, Representante Permanente de la Argentina

Embajador Washington Abdala, Representante Permanente del Uruguay

Embajador Issa Kort Garriga, Representante Permanente de Chile

Embajador Héctor Arce Zaconeta, Representante Permanente de Bolivia

Embajador Lynn Raymond Young, Representante Permanente de Belize

Embajador Samuel Hinds, Representante Permanente de Guyana

Embajador Arturo McFields, Representante Permanente de Nicaragua

Embajador Agustín Vásquez, Representante Permanente de El Salvador

Embajador Harold Forsyth, Representante Permanente del Perú

Embajador Charles Léon, Representante Permanente de Haití

Señora Judith-Anne Rolle, Representante Interina del Commonwealth de Dominica

Ministro Consejero Omari S. Williams, Representante Interino de San Vicente y las Granadinas

Señor Raúl Mariano Martínez, Representante Interino del Paraguay

Señor Bradley A. Freden, Representante Interino de los Estados Unidos

Señor Aurimar Jacobino de Barros Nunes, Representante Interino del Brasil

Ministra Consejera Joy-Dee Davis-Lake, Representante Alterna de Antigua y Barbuda

Ministra Consejera Saira Esmeralda Ponce Rosales, Representante Alterna de Honduras

Segunda Secretaria Tracee Dorestant, Representante Alterna del Commonwealth de las Bahamas

Primera Secretaria Shirnaya Valin Stephen, Representante Alterna de Santa Lucía

Ministra Consejera María Alexandra Sanglade, Representante Alterna de Venezuela

Ministro Gustavo Humberto Paredes Rojas, Representante Alterno de Colombia

Representante Alterna de la República Dominicana

Señora Margarita Doloris Belliot, Agregada de Suriname

Estuvieron también presentes el Secretario General, Luis Almagro Lemes, y el Secretario General Adjunto, Embajador Nestor Mendez, Secretario del Consejo Permanente.

Aprobación del orden del día

El PRESIDENTE: Good morning distinguished permanent representatives; alternate representatives; Mr. Secretary General; Mr. Assistant Secretary General; permanent observers; ladies and gentlemen.

Following verification of the quorum by the Secretariat, I am pleased to declare open this special meeting of the Permanent Council that has been convened by the Chair pursuant to the authority vested under Article 27 of the Rules of Procedure, for purpose of considering the topic “Declining Labor Productivity Rates Under the Human Capital Exodus,” as contained in the order of business, document CP/OD-2360/22, which I hereby submit for the consideration of this Permanent Council.

[El proyecto de orden del día contiene los siguientes puntos:

1. Aprobación del orden del día (CP/OD-2360/22)

2. Descenso en los índices de productividad laboral y el éxodo del capital humano

- Presentaciones introductorias a cargo de:

- Dr. William Maloney, Economista en Jefe para América Latina y el Caribe, Banco Mundial

- Dr. Diego Restuccia, Catedrático de Economía, University of Toronto

- Dr. Andrew Selee, Presidente, Migration Policy Institute

- Comentarios de las delegaciones de los Estados Miembros]

There being no observations or concerns, we will proceed to adopt it without amendment.

Descenso en los índices de productividad laboral y el éxodo del capital humano

El PRESIDENTE: Dear colleagues, as I stated in the Work Plan for the Permanent Council, under the Chairmanship of Saint Kitts and Nevis, a few selective matters of grave concern to our Hemisphere will be addressed. One such important matter of continuing concern is the declining levels of productivity in our member states, as measured by output-per-manhour. In its very simplest terms, the volume of goods and services produced by each individual has been declining at a disturbingly rapid pace over the past 30 years, and this is the data that is being reported by the Economic Commission for Latin America and the Caribbean (ECLAC) and others.

Among the key determinants often cited are low performance rankings on the global Ease of Doing Business Index. A review of the World Bank’s data for 190 countries, which were ranked under the Bank’s Global Ease of Doing Business Index, shows that only 12 of our 34 Organization of American States (OAS) member states were counted among the top 100 countries. And, among this group of 12 OAS member states, there are only two Caribbean Community (CARICOM) member states that have made the global top-100 list of countries, which have demonstrated the ability to provide a measure of ease in doing business.

The last regular session of the OAS General Assembly was held under the theme “Towards Renewal in the Americas.” In this context, and as a direct response to building back our economies and making them more productive and efficient in the wake of the COVID-19 pandemic, OAS member states are urged to redouble their efforts to enhance productivity and efficiency.

Other factors that influence our productivity levels include poor government arrangements and limited innovations in technology. The damaging effect of these factors are an increase in the cost of doing business, the cost of producing goods and services, a reduction in the volume of highly valued goods and services brought to the marketplace, and an increase in our level of imports. In combination, these factors are harmful to our economies. They trap our member states at low rates of income and economic growth leaving each, without exception, operating far short of their full productive potential. These debilitating factors are intensified during a major economic contraction. They stand in the way of a vibrant economic recovery from the global pandemic.

Within this context, today we will hear from experts on the topic of “Declining Labor Productivity and the Human Capital Exodus.” Each panelist will be allowed 15 minutes to deliver their initial presentation. Thereafter, I will the open the floor to a question-and-answer session. At the outset, I would also like to inform delegations that Dr. Andrew Selee will not be able to join us until 11:10 a.m. due to an unavoidable work commitment. If delegates have no objection, I will offer him the floor as soon as he connects with us.

Presentaciones introductorias a cargo de:

Doctor William Maloney, Economista en Jefe para América Latina y el Caribe, Banco Mundial

El PRESIDENTE: Having said that, I am honored to open this panel discussion with the initial presenter, Dr. William F. Maloney, Chief Economist for the Latin America Region, and Caribbean Region of the World Bank. Dr. William F. Maloney joined the World Bank in 1998 as Senior Economist for the Latin America and Caribbean Region. He held various positions, including Lead Economist in the Office of the Chief Economist for Latin America, as Lead Economist in the Development Economics Research Group, Chief Economist for Trade and Competitiveness, and Global Lead on Innovation and Productivity, the very subject that we are discussing today. He was most recently Chief Economist for Equitable Growth and Finance.

From 2011 to 2014, Dr. William F. Maloney was Visiting Professor at the University of the Andes, working closely with the Colombian Government on innovation and firm upgrading issues. Dr. Maloney received his PhD in Economics from the University of California at Berkeley in 1980; his Bachelor of Arts degree is from Harvard University; and he also studied at the University of the Andes in Bogota, Colombia. His research activities and publications have focused on issues related to international trade and finance, developing country labor markets, innovation, and growth, including several flagship publications about Latin America and the Caribbean.

Dr. William F. Maloney, welcome to the OAS Permanent Council. You have the floor, Sir.

El ECONOMISTA EN JEFE PARA AMÉRICA LATINA Y EL CARIBE DEL BANCO MUNDIAL: Good morning to everybody. Muy buenos días a todos. Bom dia. I am very pleased to be here. Thank you, Ambassador Everson Hull, for this kind invitation and to all for convening this special meeting of the Permanent Council on what is —I think—a critical topic for our region going forward. I am going to pop up some slides, share screen.

Ambassador Hull, can you see that?

El PRESIDENTE: Yes, we can indeed, Sir.

El ECONOMISTA EN JEFE PARA AMÉRICA LATINA Y EL CARIBE DEL BANCO MUNDIAL: Fantastic.

I am broadly phrasing this: What is needed for takeoff? and I will explain why, but I have this little Condorito, this condor from Alejandro Obregón, a Colombian artist, just thinking, contemplating what is going to take to get into flight. I think that is our topic today and we are very fortunate to have Diego Restuccia, who is going to focus, I think, on one particular approach to productivity, which I am entirely align with and, for that reason, I am going to focus on some other issues, which are things that I have been looking at recently, which are things we also need to have on the table.

I just want to start by saying that Latin America is stalled and grumpy, and that starts just because our growth has been poor, even leaving aside COVID-19, which was of course a disaster in many ways for our region, more than many others. Growth forecasts going forward are about 2,8 percent in 2022 and 2,6 percent in 2023. You can say that is not ominous, except is very, very similar to the fact that, before COVID-19, we were growing very slowly, at about 2,2 percent when the rest of the world was growing at 3,1 percent. We can say “Oh, okay, we are very depending on commodity prices and those were falling.” Okay, that is part of the issue we need to look at: Why we remain so dependent in commodities. But, more broadly speaking, productivity accounts in general, around the world, for about half this growth, and, as I will show, we have been missing that part almost entirely.

Some of the things that are making Latin America grumpy, that I will just mention but are not directly on point. COVID-19 is subsiding, and vaccinations progress is good, but uniform across the Caribbean in particular there are some areas where there is resistance, often resistance. We need to address that because recovery of the tourism sector and many other sectors is going to be dependent on being resistant to whatever the next variant that might come across deals us.

We have made modest progress in the region on poverty and inequality. Not anything, but not as much as we might have liked, but there is also something that I might call the middle-class squeeze, which is, because productivity growth has been slow, there has been slow salary growth overall. For those who are now retiring, the pension pay-outs have been below what has often been expected, whether reasonably or not, and public schools across the region remain terrible by international scores, and that is going to be a major problem that I am going to address at the very end, but, in any case, we have a region that is unhappy and some of that is just because we are not growing, and that has given rise in many countries to a concern that the mainstream growth model is exhausted or never really worked. The big issue, I would say in Chile, is that that is kind of what we have dealing with, whether countries are trying out looks like the mainstream, North American, Neoliberal, whatever you want to call it, the model. If you just look at this graph, you see that productivity really jumped a lot during their period of reforms from about 1983 to 1997, when there is a lot of re allocation of factors of production from productive firms and activities to more productive firms and activities, but after that, from about 2000 on, we have been pretty stagnant.

In Colombia, just because as a country I spent a lot of time in there, we have a similar issue of not very much productivity growth for the last 20 years. Mexico, you can just look at the graph and see what is going on. As I said, we remain volatile and dependent on commodities, and that is an issue. So, how do we go about, as you might expect, in the World Bank I am not arguing to throw out the model. I think the basic framework of a model that has been employed in many countries remains the most fructiferous, the one that is going to give us the best results over a long time. But I am not sure we have the entire solution, and that is what we are going to talk about. We are going to talk about 5 things.

The first thing is they are broadly, and this is to set up a little bit Diego’s talk as well. We normally talk about productivity increasing along three different channels. One is between different activities, which I was just talking of: During reforms we get resources moving from one sector to another, to a more productive sector, and that is this green bar here; within productivity growth is taking existing firms and making them more productive, and that is the yellow bar here; and then there is net entry; there is entry of better firms and exit of worse firms, that we also look for.

As we can see from these examples, all three of those margins, as we call them, or these dimensions, are relevant, are important. You can see, for Chile, that between the reallocation, that is largely done. That was done earlier, so that contribution is fairly small, whereas the entry of new and better firms becomes the important margin and operating of existing firms becomes more important.

In Colombia, for instance, there still appears to be more work to be done on that between margin, or there is more action happening in that between margins. So, when we think about what is going to promote productivity across these different dimensions, I want to focus on two broad categories. One is capabilities, and that is going to be capabilities of entrepreneurs, capabilities, and those can be entrepreneurial capabilities, those can be management, and those can be technological. We want to talk about capabilities of workers and all those are important to what I want to discuss, because I think we frequently miss that in the discussions of the model.

Second, the enabling environment. This is where we often focus and this is where Ambassador Everson Hull started focusing about the doing business indicators, which, while they are presently in a bit of disfavor, nonetheless I think call attention to precisely, as he says, many reforms that remain unapproached across our region and which we really need to work on. But I will talk about those in some detail.

The first thing on this, I want to make the case for why capabilities are so important, because we can build the best model; the most, cleanest, doing business top of the scale economy, but I want to argue that we do not have certain other things—namely very literate entrepreneurs, technologically literate entrepreneurs with a lot of support from an innovation system and an entrepreneurial system that will help them succeed—we may not get as much out as we would like. I think we need to focus on that and one area that we need to focus less on are particular goods that we are producing as a region. I want to use the example of Chilean copper production to illustrate that.

First thing—this is ancient history, but we are all from the region, we like history—and we see, then, about 1860, 1870, Chile was the largest producer of copper in the world; they had about 40 percent of the market, but you can see that approaching 1900, absolute production and share of the market were pretty much declining. In fact, local entrepreneurs at the time, local business associations were saying the industry was dead, but it clearly is not dead now, right? We can see them going forward from 1900. Production really picked up and the share of market gained as well.

Now, what was the difference? Because what we have to register here is the exact same product that was created 14 billion years ago, just after the Big Bang and has changed relatively little, had two very different impacts on development. I want to say that the big change was the introduction of new technologies like the Bessemer cross process that allowed a much more efficient production and discovery process. That is what made it possible to compete with other countries like Spain, which were introducing exactly these processes.

So, message from this is that the development impact that the same good can be radically different across time, but I also want to highlight that it can also differ across place. In the United States, Gavin Wright says that we became a learning nation partly through copper production. We do not normally think about that, but in his article “Can a Nation Learn?” he says yes, and the United States precisely leveraged copper; it established universities around mining and I will highlight U.C. Berkley—not only because it is my alma mater but because it is going to play a role a little bit later—the Columbia, Colorado School of Mines, all of these were critical for developing capabilities in metallurgy and chemistry that provided a foundation for subsequent diversification. In fact, the United States companies that built up these capabilities were precisely the ones that introduced the technologies into Chile’s copper mines after 1900 and pretty much spearheaded the process of CODELCO (Corporación Nacional del Cobre) establishment in 1976. So, again, this process of developing capability, technological capabilities, and applying them to copper was key. Here is a picture I love from Montana. There is Wisdom straight ahead, the town of Wisdom; the town of Anaconda, where the Anaconda mines are. These are actually complementary: You have to apply wisdom, precisely to copper.

The second counter example I just want to put up because I wanted you to go home with it in your head. The second largest copper exporter after Chile in the mid-1800s was Japan, and the copper industry gave rise to numerous zaibatsu; they are mega firms that brought up all the growth: Sumitomo, you might have heard of Sumitomo Bank, who started as a copper company by the father of copper, Masatomo Sumitomo; Hitachi came out of developing the motors for Hitachi Copper Mine; Fujitsu, now the fourth largest information company in the world that was started by the copper king.

The question that we have in Latin American and Caribbean regions, then: “Well, we have had copper, we have had mining and all these things. Where are our big companies like those? Where is our Sumitomo, our Hitachi, our Fujitsu? In this sector, or any other sector, including manufacturing?” I want to argue that, you know, part of that is because we had trouble and we continue to have trouble adapting and inventing new technologies.

In this particular picture I have gross domestic product (GDP) per capita on the “x” axis, and on the vertical axis I have engineering density, number of engineers per capita, essentially, and that blue line shows you that Chile, Argentina, Sweden, Denmark, and the United States had all pretty much the same level of income in 1900, but you can see that Sweden and Denmark had 5 times as many engineers per capita as Chile and Argentina, and that is just a story about the whole region. I have a more updated graph that I should put in, but I also have a couple from a Caribbean company or two, but we did not have much there either.

So, fundamentally, I would say that what we want to conclude from these previous three slides, and this is it is not just so much a problem of making. It is whether you have this technological capability to leverage that. And, as I was saying, is not just in natural resources, but we look at Mexico and Korea, who started producing electronics in the same time period, and yet we do not have a Teléfono Azteca; we do not have a Samsun Galaxy analogue anywhere in the region, and we have to ask the question why? Not in copper, not in electronics. What are we missing? I think this, fundamentally, you know, if we want to explain the copper example, Latin America entered the Second Industrial Revolution unarmed and, going to the Fourth Industrial Evolution, we remain low among every measure of innovation, and we have to rectify that.

Second thing I want to stress is capabilities of entrepreneurs to take risk and manage products. This table shows the share of significant businesses—we are not talking micro firms—that were started by immigrants, and you can see that immigrants dominate. That is Argentina, at 80 percent; and Brazil, Sao Pablo, at 50 percent; Chile is 70 percent; In Colombia, Barranquilla, 60 percent; Santander is 50 percent; Mexico is 50 percent. And the last column gives that as a share of their provement of the immigrant population shares. You see that immigrants are way, way overrepresented in business given their share in the population.

This raises the question, “then it cannot be entirely the business climate and it cannot entirely be the institutional structure. There has to be some kind of human capital that these guys had that allowed them to take a look at the situation and say ‘oh, I can do this here. Let us do it.’ The locals were not doing it.” There is a whole literature on culture.

I want to step away from that for a second because there is a lot of evidence that Latin America and the Caribbean had a lot of entrepreneurial drive, but it started behind for a variety of reasons that we can discussed, and it slipped as the technological frontier moved into the Second Industrial Revolution. Chile developed nitrate and copper industries; they did all the heavy lifting. Thirty to 40.000 Chileans and Peruvians migrated to San Francisco during the Gold Rush and taught United States miners how to mine. As a Chilean observer said, at the time, we did not lack the entrepreneurial spirit, but we lost it. The qualities we had were lost. I do not think people got lazy; they did not get lazy. It is just that the technological frontier moved, and we could not keep up with it; we did not keep up with it.

Just another example of that. One region here which is fully locally dominated—well, in addition to Minas Gerais that was a bit this way too, but…—is Antioquia in Colombia, where it was almost entirely locally, industrialization was entirely local. And why was that? What was special about that? I think it was a combination of the gold trade with London early on that made them very familiar with business practices there. And then this guy, Pedro Nel Ospina, who wound up going to Berkley, precisely as it was being set up as a mining school. He came back to Antioquia; he set up the National School of Mines, and all together led to golden era of Antioquia entrepreneurship and industrialization.

That has since stopped, or slowed down, let us put it that way. The Antioquians, for instance, lost the United States textile market to the Asians and that had to do with problems of quality, productivity, and timeliness, according to Morawetz a while ago. But it is precisely—again, making this point—that we have to have entrepreneurs who are capable of evaluating technologies and of evaluating risks. Just today, we lack in these managerial capabilities still. If you look in the “x” axis again, we have GDP per capita, and on the “y” axis we have global management scores and you can see that we are not so far above many countries in Africa, for instance, and we are far below the superstars like Japan, the United States, Germany, and all that. Okay, so that is something we need to work on and, certainly, it is key to the Asian growth miracle. The Japanese spent a lot of time precisely on building this kind of capabilities; Singapore, seeing the success of the Japanese productivity movement, just bought it off the shelf and replicated it in Singapore, and they have excellent, excellent entrepreneurial support programs.

The Japanese Productivity Center also set up the National Productivity Center in Colombia, which has done this but maybe less effectively than in Singapore, but we documented some work that we were doing there. You can actually improve managerial quality in Colombia. I am going to skip this because I am running out of time.

We move to the second category, which is the enabling environment, and put a couple of issues back on the table. This figure departs from the idea that another measure of firm performance and national performance is the quality of what we produce. Namely, I can sell a white cotton t-shirt for US$1 in the United States or, if I am France, I can put a brand name on it and sell it for US$500, right? Or they are actually just names. And there is often a true quality difference, but maybe a design issue among other things. This applies to all of our products that we export.

If you think of tourism in the region, you know, there are different grades, there are different qualities of tourism that we can think of that lead to different amounts of value added, that contribute to national growth. So, in the “y” axis here I have the rate growth of national quality, the average of quality in nations, and on the “x” axis I have the variation in those growth rates. So why does that matter? Well, just think of Nokia. One day, you got a telephone that you can sell for US$500; the next day no one is buying it. It is a huge variance in the rate of growth and the quality of your product there. In fact, we know that some products are riskier than others. But what is important here is to see that there is a positive relationship and the more risk you can take, the more you are going to have higher rates of growth. And this is not just in quality; this is just a kind of metaphor. This is also productivity, but what is also interesting here is we find all of the good boys—the United Kingdom, Japan, Switzerland, Denmark—all these guys are up there in the high risk-high return category, and we are down here—Dominican Republic, Guatemala, Venezuela, El Salvador—we are down here with the lower risk-lower return category. So then, this raises the question, why are we there? Can entrepreneurs actually manage risk, in particular long return risk that is implicit in innovation? Can banks evaluate it? I just want to put those on the table as key things we need to study more.

Now, competition, is essential but it is low in Latin America. You can see in this recent paper by De Loecker and Eeckhout that Europe and Latin America are rapidly, from mark-ups, nationally, are rising over time, so there is more concentration. We have been high in South America forever, and you can see that the impact that lack of competition can have, I will just choose Buenos Aires, for example. When I went for the first time in 1988, it was full of 1968 Ford Falcons, and that was an excellent car; I had one as a kid. The problem is it is not a good car in 1988, and the only reason that Ford could continue building it is because there was no competition. Same thing happened with US cars in the United States 1970s until the Japanese came. This has effects both within and between the selection channels that we talked about. Maybe Diego will talk more about it.

There is an issue here, though, and recent studies we have done say “Look, more competition without having those capabilities just leads you to fail.” So, we need to open up more. We need to increase competition, but we also need to build the capabilities to enable firms to meet them.

Two other things and then I will conclude. Education is kind of the most basic form of capabilities, and we are not building them. To give you two numbers, well, we all know that our piece of scores in the region continue to lag those of the rest of the world and certainly for countries in our level of income, and we need to work on that. But here is another number: Only 30 percent of the students in the region meet the minimum standards for science. Where do we think, these high-tech entrepreneurs are going to come from if most of our kids do not meet minimum standards? We need to work on that. But then also we know that we lost 1.5 years of education to COVID-19, on average, in the region. We need to work on that.

Second thing is—well, I am talking about capabilities—a recent paper by Bloom and others says “You know? Okay; improving capabilities is key, but there is an interaction effect too.” That is to say: If you devote all this money to building up a strength of your entrepreneurs and building technological capability; if you do not have the ability for them leverage that in having market scale—and that means exporting, often—; if you do not have the infrastructure to make that possible; if you have a lot of crime and corruption or other barriers, then that is not going to work either. So, we need to work precisely on the conventional barriers to growth and distortions that the model, if we will, has been talking about for 20 years, as well as this issue of capabilities.

Broadly speaking, the innovation of an entrepreneurial ecosystem is something we need to look at more seriously. I would say, as a gross generalization, there is a de-linking, for example, of what we are doing, what kind of analytics and research is being done in universities and what is needed by the private sector. We find there is generally a low regard in the private sector for the quality of that and there is very few linkages. In Scandinavia or in Asia, that would be seen as a really bad situation, and anybody who knows the United States economy and knows the role of exactly U.C. Berkley, or MIT or Stanford, that needs to be addressed, but is not as easy as just copying what the United States or what Finland is doing, for us.

This is the hideous slide that I will leave you with as homework, but we have to deal not only with the kind of market failures that are relevant to the innovation literature, but all of these things that cause get in the way of firms, accumulating factors of production, including the accumulation of knowledge, and that is the macro context, the competitive structure, the trade regime: All of that is key. The firm capabilities that I was talking about; are all this in the right-hand side. That is all key. And, in the left-hand side, all the stuff that I was talking about in terms of domestic science and technology system and all that; that is key. We need to work in all these fronts in our economies because we are not Sweden. A lot of these things that work nicely in Sweden, we do not have them done yet, but we need to work on both fronts of increasing the capabilities of the actors within our system and keep working on the quality of the system.

Just to wind up, this is the World Bank Productivity Project, which I have led for the last six years. These are all free and they all deal with various topics that I have covered here. So, please check them out.

Thank you very much.

El PRESIDENTE: You provided us with substantive food for thought. Your presentation was deep and very comprehensive and certainly very, very educational.

Doctor Diego Restuccia, Catedrático de Economía, University of Toronto

El PRESIDENTE: I would like to turn next to our second speaker, who is Dr. Diego Restuccia. He is a professor of Economics and a Canada Research Chair in Macroeconomics and Productivity at the University of Toronto, and a Research Associate at the National Bureau of Economic Research in Cambridge, Massachusetts, USA.

Professor Restuccia’s research lies at the intersection of macroeconomics, development, and labor economics. His recent work focuses on the role of resource allocation across firms or sectors in accounting for macroeconomic outcomes. His work has appeared in leading economic journals. Professor Restuccia received a Ph.D. in Economics from the University of Minnesota and an undergraduate degree from Andrés Bello Catholic University in Caracas, Venezuela. He was born in Montevideo, Uruguay, but was raised in Caracas.

Professor Restuccia, welcome to the Organization of American States Permanent Council. You have the floor, Sir.

El CATEDRÁTICO DE ECONOMÍA DE LA UNIVERSIDAD DE TORONTO: Good morning, buenos días. Thank you so much for the invitation to participate and to give these remarks. So let me share my screen. I hope you see that. Before I start, if I could confirm that you see my pointer moving?

El PRESIDENTE: Yes, I do.

El CATEDRÁTICO DE ECONOMÍA DE LA UNIVERSIDAD DE TORONTO: Thank you very much. So, I would like to offer some remarks on productivity. The way I want to organize these comments, I will first give you some facts, three facts on development that I think are important for us to consider in why we think it is important to focus on productivity as a means of achieving, you know, higher levels of standards of living in the region. So, then, I will turn into the specifics of some Latin American economies. And I will then show you specific data for Latin America that shows that, in fact, the low levels of income in Latin America boil down to a productivity problem. And then, in the last part, just to talk about what may be, what factors may be behind this productivity problem that William Maloney characterized so well in terms of the different dimensions of this productivity problem. And I will focus on the role of the allocation of resources across firms or across economic activities that may be partly responsible for that low productivity in the region.

So, let me start with a bird-eye view of some of these development problems that Will characterized already. But, if you look at comparable measures of gross domestic product (GDP) per capita across economies and you organize them by—here I have them by decile— so these are the 10, would be the 10 percent richest economies in the world, whereas one would be the poorest 10 percent countries in the world. What you see plotted here is just the relative average GDP per capita of those countries in all these deciles relative to the United States. So, it just shows two facts that were alluded already, and is not specific for Latin America but this is a broader problem in the world that relates to very large differences in income. So, if you look at the poorest economies, they are about 2 percent or 3 percent of the GDP per capita in the United States. And, while here at the top—so, US would be one—for these countries in average would be about 80 percent, or were 80 percent in 1960, and have caught up to almost one in 2010. So, you see two things: The big dispersion in income from across countries, and that these disparities have opened up over time, the same way we see it for Latin American economies, it has happened for the world as a whole. So, that is the first observation that we would really need to understand: What is driving both the last disparities and increased dispersion in productivity.

Now, the second fact is, the focus on productivity coming from kind of the policy and the institutional framework in the countries; is that these differences are arising from that institutional environment or the policy environment; in some ways, a positive perspective on the growth problem. And, so, to see this what I have here is the GDP capita of countries relative to the United States from 1960 and how that has changed over time. And I say it is a positive view because, at any point, and in particular in these examples I have chosen here, I have chosen countries that were at similar levels of income in 1960, but that had a very different performance in terms of convergence to the frontier economies. So, at the lower end, you have examples like Botswana and Ethiopia, that some are able to produce an important process of growth, whereas other economies do not. You have, you know, the divergent pattern of Malawi versus China and Korea that are able to do it, or Zimbabwe, Singapore. Almost at every point, you see that. And, so, it is not something that, is not an endowment problem that says that certain countries are just stuck in poverty, but there is something that changes in these economies that allow the growth to happen. If we figure out what those factors are, then obviously we have that positive perspective.

This table only shows you some examples but, you know, if you look at all the countries in the world—and here is 1960 and 2011—the blue line, the solid line is just the 45 degree line, meaning points in the blue line will be countries that are in the same relative income positioning in 1960 than in 2011, whereas countries that are above that line are countries that are able to improve the relative income position or are growing faster than the United States versus countries below the line, would be countries that are losing in relative terms.

What you see is that, at any point of the income distribution in 1960, you have some countries that are successful, some countries that are not successful. So, we need to understand what determines that success and what factors and what policies or institutional features might be responsible for that. So, the third fact is, everything that I mention so far relates to income per capita, or GDP per capita, as we measure it, and the question is what is driving that. And, so, when economies have done these exercises across a large set of countries, the typical process is to try to decompose the GDP per capita into factors that relate to productivity and factors that relate to the inputs that are put in that productivity process. Even with productivity, we typically try to distinguish between human capital or physical capital accumulation and distinguished total factor productivity, as Will emphasized. So, the main conclusion from many, many studies that have been done on this issue across country basically argues that differences in GDP per capita and changes in GDP per capita over time are mostly due to changes in labor productivity and then, when we go inside that labor productivity, it is really about this factor, total factor productivity that explains most of these changes. Of course, as total factor productivity changes, that also affects incentives for capital accumulation or for human capital accumulation, and so this becomes a very important component in understanding the differences in income across countries as well as their performance over time.

For the particular case of Latin America, what can we say about their level of income and the changes over time? So, in 2013, I wrote an article in Economía where it tries to put these perspectives of kind of growth and development for the Latin American economies. So, at that point, of course, I only had data until 2009 but, as we saw from Will’s presentation, of course this relative economic performance has not changed that much. And, so, in that study, I characterized the gap in the sample of Latin America that I had in this study, the 10 largest countries in Latin America, I characterized is a GDP per capita being low and not having caught up with United States in particular. For this set of countries, the average GDP per capita relative to the United States was 30 percent in 1960, and declined to 22 percent in 2009. The question I ask in this article is what are the factors that lead to that. And, so, is it productivity, as we saw for the rest of the countries? Or is it about other factors —human capital, physical capital, hours of work or participation in labor market—? And then, once we figure out these elements, we can ask “Why are these factors low?”

This is critical in kind of the research on productivity, the more we understand the source of this income problem or development problem, the more we can go inside and figure out the policy framework or the institutional framework that may be hindering that particular factor. So, in decomposing, just as alluded earlier for across countries, the first thing may be asking “Is it a labor productivity problem or is it that perhaps, you know, there is too little labor in the market?” When you look at this from the perspective of these countries in Latin America, in fact the problem is a labor productivity problem; that is, most of the gap in GDP per capita between Latin American countries and the United States is a productivity problem. In fact, if you look at hours of work, it is slightly higher in these Latin American countries and participation is low, but this factor does not account for much of the difference. Now, note that, of course, in terms of characterizing this income per capita, you might want to focus on the change over time or you might want to focus on the gap. So, as I said here, if you look at 30 percent GDP per capita in Latin America, there is a decline of 7 percentage points during this time period; perhaps this has become worse in more recent times. But it is 7 percentage point decline in relative performance.

Another perspective is to think we need to understand a 70 percent gap, or even larger gap, in terms of the level of income with respect to the United States. So, in some ways, you may want to understand why productivity is low and why it has declined when you compare it to a benchmark developed economy. Now, if you go inside the labor productivity and you ask what factors may be responsible for that—human capital, fiscal capital measures—a total factor productivity (TFP). And, so, for this, you of course need to get more information, more measurements about constructing measures of the capital stock and measures of the human capital stock, but, when you do that, what you find is that, at least in physical capital terms, the gaps are not big enough to account for this difference. In fact, in 1960, physical capital stock of Latin America was fairly comparable to international measures, and it has declined. So, perhaps capital accumulation is one component about the decline, but it does not explain the low level of labor productivity.

The other one would be human capital. There is more detail here that I have time to discuss, at least in the opening remarks, but one of the key insights in the literature is about, human capital; it is not just how many years of schooling we have, it is about the quality of that schooling, as Will mentioned. So, one of the insights that is done in this literature to try to quantify the importance of human capital. Once you take into account the quality of the human capital that is produced, then what you find is a very tight relationship with income. And, so, using that, you can decompose the labor productivity problem into a TFP gap, and an accumulation capital takes into account the effect of this income on human capital. So, when you do that is you find that, for these two periods in Latin America, the biggest comes precisely from the gap in total factor productivity, on TFP. And it is, obviously, that the gap on productivity would translate into lower capital accumulation—both physical capital as well as human capital, so that would translate into a larger income difference, but the main source of those differences really comes from productivity.

When you take these numbers, and you isolate what would be that TFP gap from Latin America compared to the United States, basically tells you it must be around 60 percent in 1960, about 66 percent in 2009. So, what that says is that we need to understand it is a gap of productivity between 30 percent and 40 percent between Latin America and the United States. Even though that gap does not sound too big, but that gap translates into gaps in physical capital, translates into gaps in human capital, and other factors. And so, the key question is, then, what accounts for this gap in total factor productivity that I just mentioned? So, one explanation that I think is fairly obvious, and it came a little bit in Will’s presentation is that poor countries are just slow in adopting advanced technologies or innovating and adapting best practices—could be the management practices that Will talked about. Of course, what happened is that many times we have trouble with understanding what is driving that slow adoption or that lack of adopting these best practices.

So, I am going to focus on what I think is a complementary explanation that relates to how resources are allocated across firms or, in general, across activity in economics, what I call misallocation, what the literature calls misallocation. One reason why I think this is important is that, to the extent that resources are not allocated to the best uses in an economy, that is going to depress aggregate productivity, so there is a direct importance of that in terms of productivity, but I think another component is that whatever policies and institutions that created that problem of misallocation, that could become a disincentive to adopting those advanced technologies and best practices. There is a connection between misallocation and those other factors that we generally talk about, the growth and innovation. So, everything could actually be driven by the same underlying policies and institutions. So, what do we know about this misallocation? There are many factors that can lead to this—regulation that is applied differentially across production units, discretionary provisions, fine costs, size-dependent policies—and actually I think it is important to understand that many times these policies are not meant to create misallocation but, you know, in practice, for example, a regulation might be applicable to all producers, but it ends up being enforced more heavily among some producers. That creates that misallocation and, through that, connects to informality.

Industrial policy, land institutions, financial frictions, trade restrictions; there are many examples on this that I do not have the time to discuss, but these are reviewed both in the work that Will discussed already and that Carmen Pages, in ‘The Age of Productivity” at the IDB Productions, where she shows a lot of evidence of this misallocation in Latin American economies.

One example that I want to offer to you because it is very illustrative of what we mean by misallocation is this idea of how land is allocated in agricultural economies. In this case, it is a figure for China. And what we are showing you is the amount of land that is operated by farms in the Chinese economy comparatively to the productivity of those farms. And the red line is meant to illustrate what a benchmark or what would be a resource allocation of land or land allocation that would be consistent with maximizing aggregate output and maximizing aggregate productivity. What you see is that the land institution in China essentially, in average, allocates the land input equally across, fairly equally across farmers, and so there is a decoupling between the amount of land that is operated by farmers and the productivity, and that depresses agro-productivity. This is quite significant. So, just as an example, if you were to move from kind of this flat relationship on the latter location to the red, agriculture TFP in China would increase by 24 percent within very narrow geographical areas, and about 50 percent if you look at nationwide.

Just as an example of misallocation means is the fact that factors of production are not allocated to the best uses; and, perhaps in Latin America, and maybe more related to how government support public enterprises that may be not as productive, as they consume a lot of resources. So, there are many examples that would have kind of a similar picture to this. So, misallocation is really coming from policies and institutions that generate effects that I call idiosyncratic because it affects different producers in different manners. Some may be subsidized; some may be effectively taxed. And the other property that misallocation has is that it is systematic, so it may affect some producers more than others and, in particular, it tends to affect those who would benefit more from growth, more from the producers who would innovate and would like to grow but they cannot because these resources do not flow to them as easily. This misallocation becomes a tax on growth and innovation or adoption of technologies. And, so, this really connects to all the evidence that Will talked about earlier. Here, I want to connect it to the establishment sizes, because it is a symptom on how this misallocation may transpire in the country. So, I will show you a couple of the examples and then I will conclude. One is how plans or establishments grow as they age. What you see is that, in an economy like the United States, you know, growth is associated with establishments becoming larger over time, whereas in countries like Mexico and India, there is a much flatter growth that you can see in these establishments, so that may be due to misallocation. Similarly, you see that in developing countries, in richer countries, what you have is the average establishment size—that is the average size of the production units they operate—are much larger, so, factors of 10 or more between the developed economies and the poorest economy in the world.

I will conclude. Productivity is at the core of differences in income and macroeconomic outcomes in general. I think misallocation, broadly conceived, is very important quantitatively in terms of accounting for productivity differences. Perhaps, one negative aspect of this is that it is not a single source. Obviously, policy makers would like to know what the single thing is they can do to change this process, but there are many angles to this. This is very important because misallocation is an effective tax on growth and innovation, so that leads to much larger productivity differences. If we tackle those elements that are creating that misallocation—the policy and institutional framework—then not only that would increase productivity through the elimination of that misallocation but through providing incentives for growth and the adoption of best technologies.

Thanks very much.

El PRESIDENTE: Thank you very much, Professor Restuccia. I think that too was a very, very informative and very, very helpful. I am particularly impressed, and certainly appreciate the attempts to link the basic factors. I think many of the items that were mentioned both Dr. Maloney and you are very, very similar, in some ways—with respect to the focus on technology, the focus on competition. That was very, very interesting, I think., with a focus on education, the management practices. I think you ended up, to some extent, with Diego.

I think that we have a few minutes ahead before we receive the next presenter. Perhaps, this might be a good time to possibly have those persons who might wish to offer a comment, offer them at this time with the understanding that when Dr. Selee comes, in about 10 minutes, we would like to be able to shift to him to have him give his presentation. He is, of course, the head of the National Migration Institute, and I think it would be very important to hear from him as well.

Comentarios de las delegaciones de los Estados Miembros

El PRESIDENTE: So, at this point, I would like to open the floor to the delegates that would like to have the benefit of their questions.

I see we have Washington Abdala and then Hugh Adsett from Canada. First, Abdala, please. You have the floor.

El REPRESENTANTE PERMANENTE DEL URUGUAY: Gracias, señor Presidente.

Me pareció de fenomenal utilidad el panel que se ha hecho. Tengo la impresión de que al final estamos con una lectura en clave de diagnóstico y, con mucho respeto, este diagnóstico tiene algo casi de pericia forense; de trabajar sobre el individuo cuando ya está en una etapa que a mí me cuesta entender el fenómeno de la productividad, pero en términos prospectivos hacia el futuro. Entonces, quizá Maloney podría porque vi algunas puntas muy interesantes cuando hacía referencia a los comparativos de Suiza y Dinamarca y digamos algunos mecanismos de apuntalamiento; ver para dónde habría que trabajar.

Él hizo alguna referencia sobre innovación, tecnología, pero quizá aterrizarlo más en términos de lo que sería la necesidad concreta para nuestra región, si eso es posible porque me da la impresión de que hay puntas ahí que son sumamente interesantes.

Muchas gracias.

El PRESIDENTE: Thank you very much.

I think I would like to, of course, allow the presenters, Dr. Maloney, or Professor Restuccia, to take a shot at addressing that question.

El ECONOMISTA EN JEFE PARA AMÉRICA LATINA Y EL CARIBE DEL BANCO MUNDIAL: I will take a quick shot and then I will turn it to Diego.

The first thing I want to say is to emphasize how complementary Diego and my presentations are in the sense that his stress on misallocation as being a barrier to, for instance, innovation and adoption of technologies is absolutely key and in no way to I want to treat these issues of human capital accumulation or managerial upgrading and the like or innovations as being somehow independent, something that as a region we can just say “Oh, we work on that and we do not have to work on all the distortions, which we know are there.”

The focus on misallocation is —to get to Mr. Washington Abdala’s first point— that entire agenda of increasing competition, of reducing barriers to firm upgrading, to making sure things like financial sectors are actually functioning well and allocating resources well; that agenda remains four square in front of us the way it has for the last 30 years.

I do think there is some additional things he wanted to throw in. And he said why, for instance, I mean, Chile has a reasonably clean microeconomy, at this point, ok? So, why is managerial capability still so low by global standards? And here is one thing that came across in Stanford Professor Nick Bloom’s work, where he asked, “How good you think you are as an entrepreneur, as a manager?” And then you cross that with the objective measures of entrepreneurial quality. And what you find is that the worse manager you are, the better you think you are, right? So, you know, some of our countries are really convinced that they are awesome entrepreneurs, and they are really very terrible. Singapore is the one country in the world that actually thinks is worse than it is, ok? So, what does that tell you? It tells you that there is a huge information asymmetry, that if you are kind of not a very good entrepreneur, that means you do not even know where you are relative to the frontier and what you need to improve. So, that information asymmetry, that lack of information on benchmarking I think motivates a lot of the efforts in Asia, for instance, to get firms into a system where they can benchmark themselves against other firms. So, you notice that in Japan and in Singapore. The very first stages of managerial consulting are essentially free or highly discounted; they are just trying to get people into the system. And then you say “Woah! I did not know how terrible I was. Now what do I have to do?”

I think those kinds of programs, which have been pretty effective in the United States, in Europe, and in Japan, we need to think about them; how the design of them needs to be done very carefully because if we just make them another government agency it will be a disaster, but that is one area to think about. This issue of innovation more generally, there are a whole bunch, there is a whole literature that talks about international innovation systems and what they need to do, and they do not need to work and the market failures around innovation. And, as region, we have tended to focus on some of those issues, right? We need subsidies for patents; we need subsidies for R&D. I am not sure those have been well designed at all, and I am very serious that there is a huge bifurcation between what goes on in the major research institutions and what goes on in the private sector that needs to be merged. The successful Asian countries think of that mission as one.

We cannot afford art for art’s sake, as 100 percent of the research portfolio. So, allow me to speed down there; allow me to speed down, and if you look at, for instance, to give a concrete example, Finland had a crisis in the 1990s, and it noted one of the things was precisely this delinking of research from the private sector. And what it did is that it cut basic financing to all the major universities and instituted a program of matching grants, where effectively you said “Ok, now you are a little short on cash, but if you do this project with Nokia, that is going to, you know, that will make up for it.” They changed specifically the incentives to working with the private sector. And they get rid of it, everything that does not do that. They do not have a tax write-off for R&D, for example, because they do not think it improves collaboration between research agencies and the private sector. Everything is devoted towards improving the quality of those agencies and improving their linkages with the private sector.

Those things are a little bit, I mean, I am not sure, Diego is at the forefront of looking at these linkages between misallocations and distortions and these other issues. And I do not for a second want to say that we do not need to focus on them; we do, but I think that, when you are thinking about innovation systems and all, it may get us into some other territory where we need to think what the institutional incentives are that we set up. I am pretty sure that Latin America. we have got a lot of those [Problema de audio] sub-optimal.

On the basic topic of education, and then I will stop. I am not exactly sure what the barriers are to us raising the basic education, the basic secondary education in the region, but that has been on the agenda for 20 years, and every time the piece scores come out, we wring our hands. I mean, I am not sure. Each country has its own political economy that we need to deal with. We cannot have that; we will not advance, regardless of what we do with other things.

Over to Diego.

El CATEDRÁTICO DE ECONOMÍA DE LA UNIVERSIDAD DE TORONTO: Yeah, thanks so much.

That is a difficult question because the answers I do not think are simple. And, in fact, in some way, if answers to that question—which is more about, you know, “what can we do in terms of the policy and framework that will have a real impact in productivity?” If those answers were so straightforward, the world would be a lot more developed. So, development is a difficult issue; it intertwines with cultural and, you know, historical contexts in many places.

I think, as researchers, what we attempt to do is try to provide, you know, the broadest description of what those frameworks may be doing and then, at an individual level, with policy makers and at the country level, then that has to be navigated together with political economy, with cultural factors, with the historical factors that may be relevant, but I will say, the other reason why providing a specific answer to that question is difficult is that the development problem or the productivity, is not a problem that we can see on the legal framework; taxes, you know, formal taxes, or formal aspects. A lot of what really disincentivizes productivity and growth has to do with effective factors. So, that makes it a little bit more complicated, because is not about doing a tax reform, that may be easy to conceptualize and to put forward, but it is something about the effective disincentives that work in that economy. So, I will give you one very simple example but, of course, the idea is that this applies to many issues. So, imagine an economy that has a land institution that is very egalitarian. In fact, individuals are not owners of their land; they just have use rights of them. So, this is very common in countries like China or Africa, and now some of these countries are trying to move away from that. Let us just imagine that. So, therefore, there is not a market for land.

Now, those who are productive farmers and would like to expand and would like to innovate, use better management practices, adopt better technologies, mechanize. That requires growth because it is not possible to do all those things—to mechanize, to adopt better technologies—without growing the size of the farm; is just not productive. So, lack of growth, lack of being able to expand, becomes an effective tax to doing those activities. So, sometimes, what policy makers do is they realize the lack of growth, and so they think maybe the problem is that we need to provide more tenure security so that those farmers do investments and, you know, their economic activity growths and it helps the economy, but what happens is that you give them more tenure security, many places perhaps, they give you a land certificate, but not the ability to sell, not the ability to rent, just as a certificate that says you are not going to be expropriated in the future.

What happens is that there are no growth results from that. The reason is that, for this growth to occur, you do need that reallocation of resources that will make successful activities grow larger, account for more of the inputs, and have been able to expand. So, it is really, this is why the growth, and the misallocation are so tightly connected. And, so, for this to work in terms of the policy framework, it is about changing the ability of entrepreneurs and economic agency in general to be able to reap the profits from their innovation, from their risk, from their activities. What happens is that many of the barriers that are there for that growth are not formal regulations or taxes; they are implicit. And, so, it is really a review of the framework that would allow that growth.

I showed you that picture of how successful businesses grow in the United States economy as they age, and we do not see the same happening in our economies. And, so, it is about really changing the policy and institutional framework to change that pattern.

El PRESIDENTE: Thank you very much, Professor.

This is a fascinating discussion, and I am hopeful that we will be able to return to it after we have heard from Dr. Andrew Selee, who I think is now here with us.

Doctor Andrew Selee, Presidente, Migration Policy Institute (Continuación)

El PRESIDENTE: Dr. Andrew Selee, we would like to make available to you the floor. You have the floor. May I just introduce him.

Dr. Andrew Selee is the President of the Migration Policy Institute.

His research focuses on global migration, with special emphasis on immigration policies in the United States, Latin America, and the Caribbean. He is the author of several books and has published opinion articles in Foreign Affairs, Foreign Policy, and Americas Quarterly. He also contributes to a regular column in Mexico’s largest newspaper, El Universal. He is an adjunct professor at Georgetown University, teaching courses on global migration and has previously taught at Johns Hopkins University and George Washington University and has been a visiting scholar at El Colegio de México. Additionally, Dr. Selee was Co-Director of the Regional Migration Study Group, formed by the merger of the Migration Policy Institute (MPI) with the Wilson Center, and part of the steering committee for MPI’s, the Migration Policy Institute Independent Task Force on Immigration and America’s Future.

Prior to joining the Migration Policy Institute, Dr. Selee spent 17 years at the Woodrow Wilson Center, where he founded the Center’s Mexico Institute and later served as the Center’s Vice President of Programs and, later, as Executive Vice President. He has also worked as a member of staff in the United States Congress and on programs addressing migrant youth in Tijuana, Mexico.

Dr. Selee holds a PhD in Policy Studies from the University of Maryland, a Master’s degree in Latin American Studies from the University of California at San Diego, a Bachelor of Arts degree from Washington University in Saint Louis, and a certificate in strategic perspectives on nonprofit management from Harvard Business School. He was selected as an Andrew Carnegie Fellow for the 2017-2018 period.

Dr. Selee, welcome to the Organization of American States Permanent Council. We are delighted that you are able to join us. You have the floor, Sir. Thank you.

El PRESIDENTE DE MIGRATION POLICY INSTITUTE: Thank you, Ambassador Everson Hull. It is great to be here. Thank you for the introduction and thank you for inviting me to be here. Good to see you, Secretary General Almagro, as well; good to see you again, Secretary General, gusto de verlo.

I want to talk about human capital, you know, can we capture human capital in the time of mobility. Let me start by saying that our Hemisphere is living through a new age of migration. Unlike the last wave of migration, which was primarily about people leaving the Caribbean and Latin America for North America and Europe, this one is much more complex. Today, many people in the region are moving within Latin America and the Caribbean, and sometimes diasporas are returning home from North America and Europe to the countries of origin. And there is still people leaving from certain Latin American, Caribbean countries to other parts of the world, but it is much more complex and multidimensional than in other moments.

There are at least a few different characteristics at this period. One is that there has actually been some intentional mobility agreements within regions of the Hemisphere that have facilitated mobility. We often overlook this, but the Southern Common Market (Mercosur) and the Andean Pact and Caribbean Community (CARICOM) and the Organization of East Caribbean States (OECS) and the Central America 4, just to name the principal ones; these are agreements often tied to existing institutions or existing other agreements, trade agreements that have facilitated people moving back and forward within certain subregions. You know, they are not all equally important, but they have been significant for some people, very significant in border areas, and very significant in some cases. I would say the MERCOSUR Agreement and, to some extent, the CARICOM agreement, for professionals have been quite significant, among others.

Secondly, we are living at a moment of a few crises in certain countries—Venezuela, Nicaragua, Haiti, and Cuba, among others— have led to patterns of forced migration and mixed migration to other countries in the region. Of the 6 million Venezuelans living abroad, almost 90 percent, a little over 85 percent are living in Latin America and the Caribbean—about 5 million in all. And that is a migration that has touched almost every country in the region, while more than half million Haitians live in the Dominican Republic. And something that has been going on for a long time; it has been a long and complicated relationship. There are also large Haitians communities in South America, which numbered recently somewhere between 3 to 400,000 people, perhaps more than 400,000. And tens of thousands more in other Caribbean nations and in Mexico.

The third characteristic is that there is also continued migration to North America and Europe, even though at lower rates than in the past, certainly at lower rates than the late 1990s or early 2000s. But we are seeing the numbers of countries changing, and this has been a characteristic particularly in Central America, but also seeing larger numbers of Haitians and Venezuelans, Cubans, Cubans, Colombians, Ecuadorians, and Brazilians primarily headed towards the United States, though some people head into Canada and some to Europe as well. And there is a number of Hondurans and Colombians and Venezuelans to Spain, for example, which are quite notable.

You know, not everyone makes it to their destination and, as a result, some of these migrations that are intended arrive elsewhere; people headed to the United States, you are seeing growing numbers settling down in Mexico, which is becoming an immigrant society for the first time in recent memory, as well as in Costa Rica and Panama.

Fourth, we are starting to see diasporas that once left Latin America and the Caribbean return home, not always in large numbers, but sometimes it adds up over time. We see this in Mexico and Central America and the Dominican Republic, but also Colombia, Ecuador, Peru, and much of the Caribbean, actually. And the numbers are quite big. I mean, when we talk about now there being a million and a half to 1,8 million Americans, US citizens living in Mexico; yes, there are a bunch of those that are professionals and people working multinational companies and retirees —I will get to them in a minute— but a lot of these are Mexican families returning back with US-born spouses and US-born children. This is a significant number of people, actually, and it is significant in certain countries. So, the diaspora is returning, and often with people born abroad, often especially children but also spouses from abroad is significant.

Finally, the diasporas continue to be very important maintaining close family ties, visiting, sending remittances, and sometimes even investing in productive ventures in their countries of origin. And, although this is not migration, the old migrations that took place, the people that are still living abroad, continue to be a part of most societies in Latin America.

There is one final group, which a small one but worth noting because the numbers are growing and COVID-19 has actually been significant in the numbers growing, and that is the number of North Americans and Europeans who have moved to Latin America and the Caribbean because they can work from anywhere—the digital nomads, as they are called—or because their retirement savings stretch a lot further. In the past, we assumed people moved from South to North; that people went to economies that were stronger, the job market was a little bit stronger, but we are also seeing people who maybe in countries that have strong job markets choosing to move somewhere else because of quality of life. It is a small group but is a group that has obviously been accentuated by the fact that more and more work is online and allows people to move. So why does this matter? Why does all this matter in a panel dedicated to discussions of declining productivity rates, which Ambassador Everson Hull has asked us to focus on? I mean, this is the question: How does all this relate?

First of all, it matters because declining productivity is, of course, at the base of why people leave—sometimes alone, simply the lack of economic opportunities; sometimes in combination with state fragility, political conflict, or criminal violence, but it is a central part of the reason why we see people, those who are still leaving are leaving the region and why people are moving within the region. Secondly, there is an opportunity here that is also worth capturing. There is an opportunity to enhance productivity. Migration may be a symptom of declining productivity, but it is also part of the solution, it turns out. The migrations that are going on in the Hemisphere are a source of needed human capital and, in some cases, investment, to reverse the decline in productivity.

Let me give you a few examples on how we should be thinking about this. I will give you about four examples of areas we should be focused on where migrants are, in fact, part of the solution; where if we could think about how we capture their agency, their participation, this could be really significant for the economic future of Latin America and the Caribbean, and the Hemisphere as a whole.

First of all, we tend to talk about force migration in the Hemisphere as a tragic loss and a humanitarian crisis, because it is. Right? I mean, this humanitarian crisis is a crisis; there is no question. People leaving in large numbers, Haitians leaving in large numbers, you know, Nicaraguans … This is a crisis in different ways. People leaving Honduras in large numbers. But one country’s loss is another country’s gain, it turns out. The human capital of the Venezuelan diaspora living in the Hemisphere, for example, which is one we have looked at a lot in the Migration Policy Institute, is actually quite large and, if it is put to good use, it could help boost productivity and economic growth in several countries of the region. On average, Venezuelan migrants tend to be even higher education levels than the native-born residence and citizens in most countries where they arrive. There are a couple of exceptions, but for most countries that is actually true. And they often bring needed skills; they are bringing entrepreneurial experience.

The question is “how do you begin taking advantage of it?” And this requires thinking about legal status, about credential recognition, about financial and credit access. People are often starting over; you have doctors driving Ubers; you have people working at restaurants who were pulling teeth as dentists; we have teachers who are, you know, who are working as street vendors. What if we actually gave people, we have people who actually ran businesses in another country—in Haiti, in Venezuela, in Nicaragua—who are starting over at the lowest rung, but what if we gave people the opportunities to actually be able to do what they have done before in areas that need it, where there is need for doctors, where people have access to credit as they are starting over so they can, who have been entrepreneurs, who can find niches in the economy where they can be entrepreneurial again. So, we have talked about these crises as crises, as we should, as humanitarian crises, but we also should start the conversation about human capital and how we begin to think of the options of integration, the options of inclusion, also being beneficial for the economic productivity of the countries where they have arrived.

Secondly, diasporas can be a source of productivity-enhancing investments. There are at least two ways of addressing this; they each with an infinite number of permutations but let me lay out at least two ways that are pretty useful to think about this. One is figuring out how to bank remittances, and this has been an issue that has been dealt with in numerous ways, but preferably not only banking remittances within financial institutions, but within local financial institutions that are actually with local financial institutions that actually do lending to local communities—to support entrepreneurship, to support infrastructure, to support education. There are some commercial banks that do this—Banrural in Guatemala is a great example of a commercial bank that also has a social purpose and does a lot of local community lending—but there is also lots and lots of local cooperatives, of local financial institutions that are particularly good at this: Credit unions and coops that actually, if they were able to be capitalized through remittances, then are able to do loans for local development in creative ways.

The second way to look at this is, of course, partnering with migrants who want to invest in their communities. The Mexican Government has done some of this at a national level with migrant associations, but at the state level, with actually individual migrants who want to make investments in small and microbusinesses, they have not matched the investments that they are willing to make with low or no interest credit.

Finding the way that people who have left, as you know, almost every migrant who leaves wants to come back successful or, if they cannot come back, wants to at least keep a foot where they left. So, at least, except for those who have had to flee for their lives, where it is sometimes more mixed. But, for most migrants who left for economic reasons, the dream of being able to be successful not only where they land but also where they left remain. So, taking advantage of that to figure out how to incentivize people investing in their home communities in ways that create jobs and spur productivity.

Third, migrants are returning home, as I mentioned earlier. So, thinking about ways of ensuring that migrants are documented quickly, that they have access to financial institutions. One of the quirks of our financial world is you change countries and suddenly you find out that you have no credit in the new country you have arrived in. You know, there are exceptions to that, but generally speaking people start over. And that is certainly true with people who do not, you know, go into jobs where their institution or their employer would guarantee them in some ways. So, finding ways of banking people in some way as they arrive back; how to begin to recognize peoples’ skill sets, both credentialing which skills, you know, earned abroad. Some of the same things, by the way, Venezuelan or Haitian immigrants, professionals, face in Latin America, nationals of the same country face as they try to move into the labor market or return from getting a degree abroad, by the way. So, credentials, it is a big issue. But also recognizing what a group of sociologists have called “the skills of the unskilled,” people who have been living abroad are often learning things about entrepreneurship, about managing money, about managing people, about new techniques for doing things. How do you capture and support that? So, thinking of migrants who are returning is an asset to the Caribbean and Latin America.

Finally, the final idea I want to throw out is paying attention to the small growing number of digital nomads and retirees from industrialized countries who are moving to the Caribbean and Latin America. A lot of these people come in on tourist visas and then stay on tourist visas for a long, they come and go, and they stay on tourist visas. Finding ways of getting people legal status and making it easy for them to get in the financial system ties them more closely to the host communities where they live, and beginning to think of ways, and eventually, you know, investing in those communities and paying taxes in those communities. I think we are going to see more and more of this. I think the pandemic has revolutionized. Technology started to revolutionize how we work. Now the pandemic has spurted that along a lot faster. I think we are going to see an increase in people looking at places they want to live rather than where they have to live. And it turns out that the Caribbean and Latin America is full of places that people want to live, that are really, you know, attractive to folks from other parts of the world. I think it is worth thinking about it. There is a small niche migration, but one that is worth not forgetting about.

Let me just conclude by saying that none of these strategies that focus on very different groups of migrants but all on migration will turn around local economies or address productivity decline alone. They should be seen within the wider context of measures that help make economies more dynamic, strengthen education, and build livelihoods for people. The kind of things the other panelists have spoken about, and I am sure Ambassador Everson Hull has spoken about. Indeed, the more the conditions for growth nationally exist, the more migrants who are arriving or those who have left but want to return or want to invest in their country of origin will be successful in doing so. So, this is part of a larger question, but it is worth remembering, as we think about economic productivity that, while migration may be driven in many cases by low productivity, migrants themselves are key actors of reversing this trend, helping economies grow in ways that can chart a new future for the countries in the Hemisphere.

Thank you very much for having me here.

El PRESIDENTE: Thank you very much. That was, again, very, very insightful, very, very useful.

I would like to revert now to our delegates and open the floor to them. I think we have first the Ambassador for Canada, Hugh Adsett.

You have the floor, Sir.

El REPRESENTANTE PERMANENTE DEL CANADÁ: Thank you very much, Mr. Chair. A pleasure to see you this morning.

I wanted to pick up, if I could, and make a couple of comments. But first if I can, thank the presenters, all three interesting presentations. Just a quick word on the last presentation that we had, just to say that I very much agree with the comments he was making about the contribution of migrants and migration to the economy; that is certainly, I think, in the Canadian experience, I was glad to hear that there is comments being made this morning on that.

I had a very specific point, as well, that I wanted to raise briefly this morning. Canada’s experience and, I think, as with every country in the region, with the pandemic, has been a negative impact on labor productivity of businesses. We have seen the economic fallout from the pandemic particularly devastating for women. I wanted to pick up on this topic because I think it is worth mentioning this morning, and perhaps our presenters will have some comments on this as well: Higher job loses for women than for men as a result of the pandemic. We know that women play a critical role in our economies. As part of that, really important to make sure that they have opportunities to meaningfully contribute to sustainable development in post-crisis recovery efforts.

We cannot talk about women’s economic empowerment without recognizing gender inequalities and gender inequalities that are caused by the inequitable distribution of care work. And that in and of itself leads to poverty amongst women and girls. So, it is a topic that is important, I think, for all of us, and I know the issue of gender equality is important for all members of the Organization. I would be interested in comments from the panelists in steps to be taken. I noted a footnote in Professor’s Maloney’s slide that noted in one of his graphs from the 1900s or so that women were largely excluded from the economy at that time. And, again, I think their contribution is important to labor productivity and productivity in general, so I would be grateful for any thoughts our panelists might have on that.

Thank you.

El PRESIDENTE: Thank you very much, Ambassador.

Next, we have the Ambassador from Chile. Ambassador Issa Kort, you have the floor, Sir.

El REPRESENTANTE PERMANENTE DE CHILE: Muchas gracias, señor Presidente.

Señor Presidente, me resulta muy relevante para Chile la convocatoria de esta sesión extraordinaria del Consejo Permanente relativa al descenso de los índices de productividad laboral y el éxodo del capital humano. Por eso, agradecemos las presentaciones del doctor William Maloney, Economista Jefe para América Latina y el Caribe del Banco Mundial. De manera particular, agradecemos el que haya compartido citas históricas de la evolución de la producción de cobre para nuestro país, lo cual no sólo es un orgullo, sino que también es un desafío para el futuro. Expresamos nuestra gratitud por la exposición del doctor Diego Restuccia, Catedrático de Economía de la Universidad de Toronto, así como también del doctor Andrew Selee, Presidente del Migration Policy Institute.

Presidente, la productividad laboral constituye un factor determinante de las tasas de crecimiento económico de un país midiendo la cantidad de productos generados por cada trabajador. La productividad laboral por horas trabajadas en Chile tuvo un aumento de 62%, entre 1996 y 2016. Sin embargo, los cálculos que generalmente se utilizan reflejan sólo parcialmente la productividad en términos de la capacidad de los trabajadores o la intensidad de su esfuerzo, ya que de esto depende, en gran medida, del uso de otros insumos como el capital, la eficiencia organizacional, los insumos intermedios, las economías de escala y los cambios en la eficiencia de otros factores productivos.

Es importante destacar, entonces, que en la productividad laboral influyen factores internos como el capital humano en términos de capacitación y conocimiento y externos como, por ejemplo, las herramientas de infraestructura y la tecnología disponible que inciden sobre la eficiencia del trabajo. Por lo tanto, las políticas de inversión privadas y públicas, en infraestructura física y tecnológica, condicionan, a su vez, la productividad de los trabajadores. Lo señalado es importante para definir la relación entre productividad laboral y éxodo humano, por cuanto los proyectos migratorios individuales y grupales muchas veces se encuentran íntimamente relacionados con las condiciones sociolaborales y situación macroeconómica en los lugares de origen.

La falta de inversión en educación, ciencia, infraestructura y tecnología generan deficientes resultados de productividad laboral y agravan las ya precarias condiciones sociales existentes alcanzando, en ocasiones, niveles críticos desde el punto de vista humanitario. Estos elementos, por lo tanto, determinan, de manera directa e indirecta, la decisión de migrar derivando en situaciones denominadas como el éxodo de capital humano. En ciertos sectores de la economía y la ciencia, constituye un drama la constatación de las llamadas fugas de cerebro o fugas de talento, conceptos referidos a quienes emigran a países con más altos niveles de desarrollo atraídos por oportunidades laborales y profesionales que no encuentran en sus lugares de origen.

Si nuestros mejores científicos, ingenieros, artistas, o arquitectos buscan mejores funciones en otras latitudes, sólo se ratifica la urgente necesidad de cerrar las brechas de desarrollo que afectan directamente la productividad de nuestras economías. Por otro lado, las crisis humanitarias derivadas de migraciones masivas y descontroladas son también un tema recurrente y es por eso por lo que los Estados Miembros debemos contribuir colaborativa y coordinadamente a enfrentar tanto las dificultades que generan la situación de seguridad sanitarias y migratorias que están produciéndose en distintas regiones fronterizas de las Américas como las causas estructurales que generan la vulnerabilidad social en nuestra región. Por ejemplo, en el marco de la Presidencia de Chile de la Conferencia Suramericana de Migraciones, iniciada en septiembre de 2021, por el período de un año, se incluyó en la agenda el tema Gestión de los Grupos Migratorios dentro de la región con acento en la migración irregular, la trata de personas, el tráfico ilícito de migrantes y el papel de los gobiernos locales en la gestión de la migración, así como parte de la coordinación con países vecinos de conformidad con la hoja de ruta Bolivia-Chile, acordada el 30 de abril del año 2021, y el Memorándum de Entendimiento para la Cooperación de Asuntos Consulares y Migratorios suscrito el pasado 1º. de diciembre.

Ambos países nos reunimos la semana pasada en una mesa de trabajo entre los Ministros del Interior y Seguridad Pública de Chile y el Ministro de Gobierno de Bolivia junto a los respectivos Ministerios de Relaciones Exteriores. Asimismo, consciente de la importancia de la cooperación bilateral y multilateral para aportar medidas y acciones que contribuyan a mitigar la compleja estructura humanitaria, sanitaria y migratoria que afecta a la zona norte de Chile, se ha desarrollado un conjunto de acciones tanto con organismos internacionales como con países garantes de cooperación internacional, a fin de facilitar la entrega de ayuda humanitaria en las ciudades chilenas de Arica, Iquique y Colchane.

Señor Presidente, mejorar las condiciones sociolaborales y de productividad en nuestros países constituye el primer paso para evitar enfrentar y responder a las situaciones calificables como éxodo de capital humano en cualquiera de sus múltiples dimensiones. Sin embargo, ningún Estado puede por sí solo resolver las crisis derivadas de situaciones migratorias, sea que éstas se produzcan en su etapa de origen, tránsito, destino o retorno. Para ello, se requiere coordinación, cooperación y colaboración regional e internacional. Es por esta razón que instancias como el Consejo Permanente de la Organización de los Estados Americanos (OEA), el Consejo Interamericano para el Desarrollo Integral (CIDI) y las Comisión de Asuntos Migratorios (CAM) de la OEA son espacios válidos que los Estados Miembros no debemos desaprovechar.

Señor Presidente, Chile reitera su profundo agradecimiento por la convocatoria a esta sesión extraordinaria del Consejo Permanente.

Muchas gracias.

El PRESIDENTE: Thank you, Ambassador Issa Kort.

We next have Ambassador Noel Lynch, from Barbados. You have the floor, Sir.

El REPRESENTANTE PERMANENTE DE BARBADOS: Mr. Chairman, thank you very, very much.

I really want to start by thanking you for seeking to introduce this particular topic for discussion within the Permanent Council. I think in many instances we sometimes do not quite get the roles that we play, do not understand specifically the roles that we play in an organization like the Organization of American States (OAS), but I want to, first, also commend the presenters for the wealth of information that they have presented. These huge amounts of information that I think is valuable to all of us.

I begin with this role of policy maker. At the end of the day, envoys overseas are really policy makers; we, in essence, are pseudo-policy makers. But along the information that was presented today, interestingly enough I think needs to be presented more widely to our governments and our policy makers within the institutions that really make policy directions in these countries. I will try as best as I can to translate and to transmit what has been presented to me to those that really make the wheels of government turn, and the policy makers, but at the end of the day, a lot of what was presented, I think, is more suited, well much more suited within the realm of those who make policy, wider policy in the countries.

I want to raise a number of concerns that I have, and I want to begin first with the issue of size. Are we actually being able to compare apples with apples in terms of much of the level productivity of which we speak? The size of our economies, within which we work. Now, I know that some would tell me that this is like Singapore and the like our small countries as well, which have done very well in this regard. But then I ask myself again, “are we talking about the same cultural issues that we deal with?” Singapore is so culturally different from Barbados; ultimately, so different in terms of what they can apply, what they can do and what the government has done over time, over many, many periods after being kicked out of the Malaysia Federation. Therefore, I want to ask, are we really making the correct comparisons in terms of what we are able to do in our own space?

In the issue of available resources. We have been struggling for the longest time to get our hands on available resources, particularly coming out of international financial institutions. Even when we try to improve our law, we are then put aside; in many concepts, we are middle income countries, and we do not qualify for resources, if available resources, too, an issue within this entire mix and this entire equation of labor productivity, and where do we go from there? Then the issue of schooling. I really listened very carefully to Mr. Maloney on the issue of schooling. Barbados has introduced into its schooling system coding and robotics. Still, we are far behind in terms of available resources that we can bring to our issue of education and schooling overall, and those are the experts on the area to be able to transmit this information. Now, where you have cultural, historical challenges, are we going in the right direction? Then, the issue too of union structures within our societies. On the issue of productivity, I will tell you that what employers, I hear people talking about longer hours of work, what has not been done in developed states. Countries which have strong union cultures, particularly small countries, seem to struggle with the issue of labor productivity. Are we giving the best to our people? Are we allowing our people to be able to do what they can? Are there restrictions, particularly when there are strong unions and cultures on what we can do?

Finally, I will say this: The issue of political relations. In many instances, a lot of our people, because of small societies, small populations, need to go outward to learn, to be able to adapt better, to be able to bring policies back to their own countries, but in many instances, we are restricted. We are restricted by visa allocations, applications; we are restricted by a number of things that restrict that migrant movement to be able to bring back to our countries what we do have. In many instances, as Ambassador Kort said, once they leave our shores, it is often very difficult to get them to come back.

I am believing that there are a number of other variables at play in this equation that I really would like to consider. I know there is no one answer, no panacea for the solution to this, but I would really like to hear from the panelists. Well, some of the issues related to cultural differences, historical differences, available resources to us to be able to do what we have to do, and then, of course, the political relations that we have with the developed states, from which we can garner information and practice.

Thank you very much, Sir.

El PRESIDENTE: Thank you, Ambassador.

Next, the Representative for Saint Vincent and the Grenadines. You have the floor.

El REPRESENTANTE ALTERNO DE SAN VICENTE Y LAS GRANADINAS: Thank you very much, Mr. Chairman. Thanks to Secretary General Luis Almagro; Assistant Secretary General Nestor Mendez; permanent representatives; alternate representatives; permanent observers; and members of staff of the Organization of American States (OAS) General Secretariat: Good morning to everyone.

Mr. Chairman, my delegation must commend you for bringing forward this topic that we are addressing today, “Declining Labor Productivity Rates and the Exodus of Human Capital.” This is a very important matter and, certainly, my delegation is happy that these presentations were done this morning. Nevertheless, and with some regret, my delegation did note that there was not much data of focus on the Caribbean in particular. But nevertheless, what has been presented, of course, facilitated my delegation to speak on a number of this matters broadly and specifically as it relates to my country, Saint Vincent and the Grenadines, and, if I dare say as well, the Caribbean Community (CARICOM) member states.

Mr. Chairman, economies such as Saint Vincent and the Grenadines are small, open economies and the issue of productivity and the exodus of migration of persons from the region to North America and Europe has always been with us and it is an issue that we have been dealing with and, I dare say, will continue for years to come. So, in terms of addressing the topic on hand today, “Declining Productivity Rates and Exodus of Human Capital,” this plays in with economic growth and development, but it has to be sustainable development and opportunities.

Let me just elaborate further. In the case of Saint Vincent and the Grenadines, the government has reduced red tape over the years and the government has improved upon and created various incentives to store private sector investment and growth. Notably, while it is reducing personal and corporate income tax rates, actually over the years broadening the tax base, and eliminating other taxes by putting into place a more fair, value-added tax (VAT) system, which, of course, many goods and services are also zero rated or exempted from VAT in the past, when we had the consumption tax for it, it was various rates for the consumption taxes and also the rates were very high in some areas than others, but implementing value-added tax certainly eliminates that problem; we have one flat tax rate.

Mr. Chairman, the government as well over the years has increased the standard deduction rates before [Problema de audio] so that less persons would not be burdened with paying income tax, and that, in itself works, as an incentive and will stir productivity. Of course, there are other major infrastructure projects that the Government of Saint Vincent and the Grenadines implemented over the years and, notably, the international airport is important because it already had profound positive effects on the economy of Saint Vincent and the Grenadines. The Government of Saint Vincent in the Grenadines is embarking on another project, which is the Modern Port Project. That, of course, will lead to larger ships, larger ships with larger containers. So, it really leads to faster processing of goods across the country.

Other issues in terms of investing in education, through the education revolution from early childhood to tertiary; more investments in technical and vocation education; programs such as the Youth Involvement Scheme and also the SET Program, which is the Support for Education and Training Program; and, of course, periodic increases in salaries and wages of government workers; periodic increases in the minimum wages across the country and; even recently, the Prime Program, which has promoted youth, micro enterprises, while a program to give grants to stimulate youth and micro enterprises. And, really and truly, going forward, Mr. Chairman, because there are structures the government has in order to address productivity, which is the National Economic and Development Council, the Tripartite Committee on Economy, the Cabinet Committee on Economy. These are issues which will lead to activities to generate improvement on productivity.

Mr. Chairman, and I will try to conclude right now, in terms of addressing and improving productivity and seeing what we can do about the exodus of human capital. One issue for the region, I am certain, but I am speaking for Saint Vincent and the Grenadines, is the traditional business class whereby most businesses play it safe by doing wholesale and retailing trade; they do not get involved in other activities. And that is an issue we have to work on. Then banks are very conservative in terms of giving loans and so on and so forth. We do not have a national credit in place in terms of a credit score. I want to work on these issues; I am certain we will enhance productivity. Even with COVID-19, it is certainly justified that we need to have telework policies in place within our hybrid meetings, virtual and in person. We need to have more discussions on such policies, rotations of staff, a 24-hour workday vs the traditional workday, different times of bonuses and other incentives can be offered by both governments and private sector entities.

I do note, especially in the United States, in some education systems, there have been cases where teachers have done well and they have even gotten a bonus at the end of the year of US$10.000, and so forth, I mean, we do not have to copy. We can just, within our respective economies and institutions, we can address such matters, the issue of production integration and issues such as the CARICOM single market and economy and the OASIS Economic Union. These are examples where we can do much more work and see how we can generate productivity.

Now, in terms of migration, we cannot necessarily stop migration. Governments would have to learn how to work with it and address it, coming up with reasonable immigration policies. Free trade, but often with the free trade there is an important issue of fair trade that has to be looked at. Protection of intellectual property is a major issue, and more emphasis in technical and vocational training. Not everyone can go to university, and everyone should not go to university, because we need a more diverse work force. Persons normally in technical and vocational training and such other trades actually make more money than persons who go to university, get drowned into college debt, and enter a white collar job and their salaries are much lower, and more targeted policies in terms of how to utilize our diaspora.

Persons are going to migrate. Well, when they migrate you need to have policies to ensure we can benefit from their human capital, their financial resources, and so on and so forth. Whether it is through diaspora bonds and other financial measures, they can really help to stimulate and increase the productivity. National, regional export strategies can play a part as well in terms of boosting productivity and addressing human capital.

Thank you, Mr. Chairman. I know I went on for too long, but I am much obliged.

El PRESIDENTE: Thank you very much.

Distinguished colleagues, we do have to be very sensitive with respect to our time allocations here. I would like to urge us, given that we have some time constraints, and given that we have seven speakers to present followed by our distinguished guests who have come to present to us, it is going to take us quite a while to get through these. So, I would like to urge consideration that we limit to the time intervals to perhaps three minutes per person.

The next presenter is the distinguished representative from Peru. You have the floor, please.

[Problema de audio]

We would like then to give the next opportunity to El Salvador, and we will return to the distinguished gentleman after that.

El REPRESENTANTE PERMANENTE DE EL SALVADOR: Muchas gracias, señor Presidente.

Agradecemos la convocatoria a esta sesión extraordinaria del Consejo Permanente para abordar una temática de tanta actualidad y relevancia para nuestro Hemisferio. De manera particular, agradecemos las interesantes ponencias de nuestros invitados y, más que preguntas específicas, mi Delegación desea aportar unos comentarios de contexto desde nuestra perspectiva nacional. Sin duda alguna, el hecho de la pandemia nos ha afectado significativamente tanto en salud, educación, trabajo y otros derechos de la población poniendo en riesgo los avances logrados en el desarrollo del capital humano y los índices de productividad en las últimas décadas, con especial impacto en las mujeres y en los sectores más vulnerables.

Estas condiciones adversas se suman o refuerzan a los detonantes tradicionales de la migración, lo que nos lleva a perder valiosos recursos humanos, capital clave para el desarrollo económico y social por la falta de oportunidades. Por ello, el Gobierno de El Salvador ha privilegiado la mejora de las condiciones de vida de los ciudadanos salvadoreños, la generación de oportunidades de empleo, e invertir en su desarrollo integral para encaminarnos hacia la recuperación de la economía nacional de manera próspera, solidaria, inclusiva, resiliente y con iniciativas innovadoras.

A fin de afrontar las causas que motivan la migración irregular, se ha priorizado un abordaje integral de la movilidad humana que nos ayude a prevenir el éxodo de capital humano y se promueva la migración segura y ordenada. No podemos dejar de hacer referencia a la feminización de la migración no sólo por el aumento de las mujeres en las rutas migratorias, sino también por su participación como sujetos activos y protagonistas de este fenómeno, al cual debe darse atención particular para garantizar la protección especifica de las niñas y mujeres. En este contexto, se promueven esfuerzos articulados con entes gubernamentales, organismos internacionales y sector privado para lograr una movilidad laboral bien gestionada a través de procesos de contratación con empresas empleadoras, un proceso ordenado de reclutamiento, monitoreo de condiciones laborales de retorno y reintegración.

A la fecha, se cuenta con un importante número de salvadoreños trabajadores temporales, activos, a través del programa de movilidad laboral desempeñando labores en el Canadá y en los Estados Unidos de América. Paralelo a estos programas, nuestro mayor reto es que la población pueda desarrollarse plenamente en su tierra y asegurar que el derecho a migrar no sea una decisión forzada ni que ponga su vida en peligro.

El gobierno, además, se encuentra implementando la Agenda Digital 2030, como un conjunto de acciones que integra a todos los actores nacionales que participan en el desarrollo del país a través de la innovación y la aplicación de las tecnologías de la información y la comunicación. Con su ejecución, se busca contribuir al logro de los 17 Objetivos de Desarrollo Sostenible (ODS) y también se persigue una sólida posición en distintos índices internacionales como el índice de competitividad global, el índice global de innovación, confiando en que esto posibilitará un mayor nivel de inversión y desarrollo para el país. El Salvador, asimismo, se encamina a una reducción significativa de las brechas en materia digital e innovación impulsando, además, la renovación de la administración pública y avanzando en materia de seguridad cibernética.

Señor Presidente, esperamos que este diálogo e intercambio de experiencias que hoy desarrollamos permita a la Organización identificar, a partir de las lecciones aprendidas, estrategias innovadoras de apoyo a los estados para mejorar la productividad, fortalecer a nuestro capital humano y fomentar sociedades más eficientes.

Muchas gracias.

El PRESIDENTE: Thank you very much.

The next presenter is Costa Rica. You have the floor.

La REPRESENTANTE PERMANENTE DE COSTA RICA: Muchas gracias, señor Presidente.

Costa Rica agradece el espacio de reflexión para abordar dos temas de alta relevancia para la región, tales como el descenso de los índices de productividad laboral y el éxodo de capital humano. Agradecemos, igualmente, al doctor William Maloney del Banco Mundial, al doctor Diego Restuccia de la Universidad de Toronto, y al doctor Andrew Selee del Migration Policy Institute, por sus valiosas presentaciones. De manera especial, agradezco los valiosos aportes brindados por los distinguidos representantes de los Estados Miembros.

Costa Rica ha tomado decisiones trascendentales a lo largo de su historia, de las que me permito nombrar la inversión en nuestros sistemas de salud y educación, en lugar de la inversión militar tras la abolición del Ejército hace setenta y dos años. Esto ha tenido implicaciones directas en la consolidación de nuestro sistema democrático y en nuestro impulso hacia el desarme y el respeto al derecho internacional como ejes fundamentales de nuestra política exterior. Un segundo ejemplo es la diversificación de los sistemas productivos de nuestra economía para una sustentabilidad a largo plazo; así pasamos de exportar solamente productos agrícolas tradicionales, como el banano y el café, a convertirnos en un hub corporativo de share services o servicios de excelencia; y un país donde uno de los principales productos de exportación hoy en día son los dispositivos médicos de alta tecnología.

De igual forma, gracias a un compromiso fiel con el medio ambiente y la conservación, que data de los años setenta, con la que creación de parques nacionales y áreas de vida silvestre protegidas, hemos podido lograr una cobertura boscosa de casi el 70% de nuestro territorio, apoyado con la iniciativa del pago de servicios ambientales a comunidades y propietarios de fincas. Por su parte, la red nacional de energía ha sido alimentada en promedio con un 98% de energía renovable durante los últimos seis años de manera consecutiva.

Costa Rica ha declarado de interés público a la materia migratoria con un enfoque para el desarrollo del país de derechos humanos y de seguridad pública que se atiende de manera interinstitucional. Alrededor de treinta instituciones colaboran con su gestión, principalmente para la regularización, educación, trabajo, protección, integración social, combate a los delitos, el tráfico ilícito de migrantes y trata de personas. Esa articulación interinstitucional tiene como fin el cumplimiento del objetivo fundamental de nuestra política migratoria y de todas las acciones del aparato estatal, la plena integración. El compromiso de Costa Rica sigue inquebrantable para con las personas en situaciones más vulnerables, entre las que se encuentran los migrantes refugiados y los solicitantes.

En nuestro país, esta población representa alrededor del 10,5%, que genera un aporte aproximado del 12% del producto interno bruto (PIB), sumado, desde luego, a la contribución del acervo cultural en su diversidad y mixtura. Por eso coincidimos con el doctor Andrews Selee en la importancia de ver al fenómeno de la migración como una oportunidad para enriquecer a la población de acogida a través de su plena integración. Sin embargo, los retos y los desafíos continúan; enfrentamos brechas estructurales que debemos superar para el desarrollo de Costa Rica, el desarrollo de toda nuestra región. Hemos identificado brechas estructurales relacionadas, entre otras cosas, con educación, género, productividad, innovación, digitalización e infraestructura.

Estos obstáculos al desarrollo se han visto exacerbados por la pandemia; se han puesto de manifiesto las desigualdades, especialmente en el sector educativo y el acceso a la tecnología, así como la disparidad de género siendo las mujeres –como lo hemos mencionado en la sesión de hoy– las más afectadas por el desempleo y por un fuerte incremento a las demandas del hogar.

Una de las lecciones más importantes de la pandemia es que la cooperación y la solidaridad son elementos esenciales para superar las dificultades. Reorientar la cooperación, ayudaría a la implementación de la Agenda 2030 para el Desarrollo Sostenible y sus Objetivos de Desarrollo Sostenible (ODS), ya que el sistema actual de asignación no favorece a los países que hacen las cosas bien.

Costa Rica, efectivamente, ha dado avances positivos en su historia; somos un país de renta media, miembro de la Organización Europea para la Cooperación Económica (OECD), que enfrenta desafíos importantes al igual que muchos de los países del Hemisferio. El sistema de cooperación internacional que se define con el criterio del PIB per cápita no toma en cuenta que existen diferentes dimensiones del desarrollo: económica, social, ambiental, institucional y financiera, por citar algunos, y no refleja brechas importantes sobre las que es necesario actuar. Por eso, Costa Rica apoya el concepto de desarrollo en transición. Como Presidencia Pro Tempore de la Comisión Económica para América Latina y el Caribe (CEPAL), solicitamos a su Secretaría la elaboración de un documento sobre el concepto “Desarrollo en Transición”, bajo el cual la cooperación debe adaptarse a las necesidades específicas de los países y buscar abordar esas brechas estructurales de desarrollo.

La cooperación debe ser multilateral, multinivel, interinstitucional y se debe combinar actores tradicionales mediante formatos menos tradicionales como la cooperación horizontal, regional, sur-sur, norte-sur, sur-norte y la triangular. Las herramientas a disposición de los países deben incluir instrumentos de financiación más flexibles, fondos para el cambio climático, financiación combinada, canjes de deuda por medio ambiente y movilización de recursos internos, entre otros. Esto apoyaría el intercambio de conocimientos, el desarrollo de capacidades y la entrega de las transferencias necesarias para responder a esos estancamientos de desarrollo que mencionaban los expositores el día de hoy.

El enfoque de un desarrollo en transición considera el desarrollo como un proceso multidimensional e ininterrumpido que no termina cuando los países alcanzan un determinado nivel de ingreso per cápita, sino que continúa en las diversas dimensiones hasta que los logros sean sostenibles. Este concepto es complementario a la implementación de la Agenda 2030, pues propone un giro hacia la cooperación que facilite y catalice los procesos de desarrollo atendiendo las necesidades de los países en la medida que lo prefieran para poder atender esos desafíos estructurales.

Señor Presidente, continuamos enfrentando la pandemia del COVID-19, mismo que nos ha enseñado que debemos impulsar acciones y medidas regionales multisectoriales para afrontar la peor contracción económica de los últimos cien años en esta región. La dimensión de la crisis que vivimos hace necesario rediseñar las modalidades de cooperación internacional y, para ello, Costa Rica propone, como hoja de ruta, profundizar en el concepto de desarrollo en transición y su propuesta mediante una cooperación más renovada. De esa manera, los países que han hecho bien sus deberes no serán castigados con su graduación. Los países que se gradúan aun enfrentan desafíos para cumplir con la Agenda 2030 para el Desarrollo Sostenible; para responder a las necesidades de los ciudadanos, entre otros, mediante la creación de oportunidades de empleo que prevenga el éxodo de capital humano y que contribuya al crecimiento económico de todos los países de la región.

Muchísimas gracias, señor Presidente.

El PRESIDENTE: Thank you very much.

We lost Peru earlier, and I am going to ask that he be allowed to present next. And, again, a reminder that, to the extent possible, if we can reduce the time allotted to the presentations for three minutes that would help us to get through the group that we have assembled.

So, next is going to be Peru, please. You have the floor.

El REPRESENTANTE ALTERNO DEL PERÚ: Muchas gracias, señor Presidente, un saludo a todos los representantes permanentes de las misiones ante la Organización de los Estados Americanos (OEA).

Brevemente, agradecer la iniciativa de la Presidencia por este importante tema, así como a los doctores Maloney, Restuccia y Selee, por sus importantes exposiciones. Sin duda, el tema de la migración y la productividad laboral es un tema que atraviesa no solamente el Hemisferio, sino el mundo entero. El Perú no es ajeno a esta problemática.

Señor Presidente, el Perú tiene más de tres millones de su población, alrededor del 10% de su población total viviendo en el exterior. Tenemos presencia peruana en los cinco continentes. El Perú es un país de origen, tránsito y destino de migrantes. Este fenómeno por supuesto dificulta el tema del incremento y el desarrollo de nuestro país, pero también debe ser analizado desde otras perspectivas. La fuerza laboral de estos migrantes peruanos y americanos en general, al insertarse a nuevas realidades, a nuevos países, contribuyen decididamente con la fuerza productiva generando importantes efectos positivos en la economía, la industria, la ciencia y la tecnología y en otros campos como la cultura en los países en donde son acogidos. Además, no podemos dejar de mencionar, señor Presidente, que el fenómeno también debe ser visto desde el punto de vista de la ayuda que esas comunidades, mediante el envío de las remesas, generan para sus propias economías.

El Perú apoya esta iniciativa de la OEA y considera que este fenómeno debe ser abordado en futuras sesiones desde otras perspectivas. El tema de la educación, la capacitación de la fuerza laboral, el análisis y actualización de los derechos laborales, y sobre todo el acceso a las tecnológicas, constituyen, sin duda, otros elementos –a los mencionados el día de hoy– que condicionan las diferentes magnitudes en las cuales los países del Hemisferio afrontan el problema de la fuga de capital humano y la productividad laboral.

Muchas gracias, señor Presidente.

El PRESIDENTE: Thank you very much.

The next presenter is from Ecuador. Ambassador Játiva, you have the floor, please.

El REPRESENTANTE PERMANENTE DEL ECUADOR: Muchas gracias, señor Presidente.

En primer lugar, quiero saludar la realización de esta sesión extraordinaria del Consejo Permanente y el muy valioso e instructivo aporte de los doctores Maloney, Restuccia y Andrew Selee. La formalidad y la limitada productividad complican, y mucho, los mercados laborales; a lo que podemos añadir también el factor coyuntural de la crisis sanitaria de la pandemia del COVID-19, que provocó la mayor contracción de la actividad económica que ha experimentado la zona en más de un siglo con una caída de 6,8% del producto interno bruto (PIB), así como los retrocesos significativos que produjeron la participación laboral, en especial la femenina, poniendo fin a más de treinta años de crecimiento continuo; el impacto de la crisis, la inserción laboral de las mujeres y el resultado de su elevada producción en actividades se vieron seriamente restringidas durante el período de confinamiento, a los que se suma el mayor peso de labores no remuneradas vinculadas a cuidados del hogar.

Recordemos que entre 2019 y 2020, cerca de trece millones, de los casi veinticinco millones de personas que perdieron sus empleos, fueron mujeres; hay una necesidad de adoptar políticas integradas, incluidas las fiscales y monetarias, destinadas a promover la demanda y apoyar a las empresas como también a las industriales laborales que fomenten el empleo de calidad y el incremento de la competitividad. En este marco se inscribe el respaldo prioritario a las micro, pequeñas y medianas empresas que comprenden más del 95% de la fuerza laboral en la región. Encontramos que el capital humano es móvil, por lo que en las regiones en que existan una mayor productividad y calidad de vida, existirá una mayor migración.

Según la Comisión Económica para América Latina y el Caribe (CEPAL), las brechas entre países de origen y destino se han venido acentuando, reflejando una profundización del desarrollo asimétrico. Añadiría que el éxodo del capital humano, sobre todo del más capacitado, parece una reacción casi natural ante este desarrollo desigual, y el descenso en los índices de productividad resulta un efecto lamentablemente ilógico de este comportamiento. Igualmente, habremos de reconocer una correlación entre productividad y salario que refuerza esta dinámica de asimetría estructural y de flujos migratorios; a su vez, estos movimientos de personas construyen lazos sociales y económicos de comercio entre países y regiones que pueden ser beneficiosos para el desarrollo de los sectores más pobres, en supuestos de que vayan acompañados de políticas públicas que reduzcan los niveles de desigualdad.

En suma, nuestros esfuerzos deben impulsar la productividad laboral promoviendo los sectores de la economía que alientan el crecimiento y alta intensidad de capital humano; las cifras así lo revelan. Mientras en América Latina el promedio de tales sectores contribuye con el 26% del producto interno bruto (PIB), en las naciones desarrolladas ese porcentaje supera el 40%. Si el 21% de las poblaciones de los Estados Unidos presta servicio en ámbitos de alta productividad, en Latino América el porcentaje se reduce al 8%. El gobierno se ha comprometido con la reactivación económica y la ejecución de una estrategia de competitividad sistémica y productividades crecientes llamada a promover relaciones laborales que gocen del reconocimiento dentro y fuera del país. Una actividad especial ha sido atribuida al aumento del componente de la innovación y del conocimiento de los procesos productivos.

Ecuador, como es sabido, es un país de emisión, recepción, tránsito y retorno de personas que espera acciones de promoción de la inclusión socio económica de migrantes, dentro del nuevo proceso extraordinario de regularización de ciudadanos nacionales y extranjeros, que ha sido previsto por el Gobierno Nacional para su ejecución en tres etapas durante el presente año. Ese proceso estará acompañado de una estrategia de integración socioeconómica que será apoyada por la cooperación internacional y que beneficiará tanto a grupos de migrantes en cuanto a sus comunidades de acogida.

Con motivo de la Reunión Virtual Iberoamericana de Ministros de Trabajo, celebrada en diciembre último, el Ministro ecuatoriano sostuvo que el mundo ha cambiado y debemos de adaptarnos impulsando la reactivación económica con rostro humano, inclusiva y responsable. Para ello, dijo que es necesario generar acciones concretas e impulsar el desarrollo de competencias que contribuyan a la generación de empleo pleno en un ambiente laboral amigable. A este fin, se prepara una ley que ofrezca estabilidad en la normativa laboral para promover la inclusión extranjera, combatir la informalidad, fomentar la capacitación y productividad de los trabajadores, facilitar la contratación de jóvenes y disminuir las brechas de género y de discriminación laboral.

Muchas gracias, señor Presidente.

El PRESIDENTE: Thank you very much.

The next presenter is Saint Lucia. You have the floor, please.

La REPRESENTANTE INTERINA DE SANTA LUCÍA: Thank you, Chair.

Chair, my delegation is pleased that this topic has been addressed here at the Permanent Council, and we thank the presenters for the in-depth and informative presentations.

On the issue of productivity, the Government of Saint Lucia has a number of initiatives in place to address productivity but, at this point, I will highlight just one: The National Competitiveness and Productivity Council. This Council is critical, as it helps with the identification and analysis of issues that affect Saint Lucia’s competitiveness within the global environment. It provides information to the government, the private sector, labor unions, academia, as well as the general public, on the importance, magnitude, and implications of national productivity and competitiveness. It also identifies issues and public policies that will help drive productivity and economic growth and provide real impact to all stake holders in the space in which they operate.

The National Council has developed a Productivity Measuring Tool to provide sector businesses to measure their productivity level, with recommendations on how to improve productivity both quantitatively and qualitatively.

Thank you, Chair.

El PRESIDENTE: Thank you very much.

I would like to go next to Ambassador Hinds. You are presenting, please.

El REPRESENTANTE PERMANENTE DE GUYANA: Good morning, good day to all present.

I want to join in commending the Chairman for introducing this important topic. I have not had the chance to discuss with the Capital, so what I will say is much more of a personal view.

We must work to understand and explain the economy and what we see happening, where we want to get to, to answer the question “what is to be done?” at our particular place and time and circumstances. I think the answer is more a creative, integrative, intuitive activity, and it requires significant immersion and discussion in the particular situation, and that is often said, true.

The political appointment may not be surprising that I would tend to put at the base of our question. The social, political, world view of the people and their motivation—the sense we can bring them of national togetherness. I think if we look at the significant periods of development of various countries—England, Europe, and America and, maybe more recently, Japan, Korea, and China, —we have had people talking about Japan, Korea, and China —and I think that reflects in their situations the instances which demonstrate that there is a certain common feeling throughout: Everyone feels engaged in a common purpose and activity.

I would like to say about all the persons that are not formally educated. In our case, in Guyana, we had lots of studies of maybe getting our agricultural products into the Caribbean and, in particular in the 1970s and 1980s, it was our vendors, our suitcase vendors, who took our pineapples and other things to Barbados and maybe Saint Vincent and into the Caribbean. I think those vendors, in time, demonstrated a very great perception of relative values of goods, even though none of them may have ever sat in an economics class, but they perceived, and they acted according to their perceptions.

I will say to that, looking to development, one may see that, often, you are trapped, as people say, we are trapped in a certain situation and, often, you have to break out of the trap and I think particularly of three general patterns, South Korea, because in one of the Guyana-Korea meetings we had, which I was representing in the Guyana side, the person spoke of general pact broke us out and, at that particular time, he too resisted and joined with all the people in protesting about the investments in capital things, but he said now, 30, 40 years later, it was laying in capital. You know, he said, “We used to say, ‘give us food today, we want food, we do not want roads, we do not want ports’” So there is this issue: When you are starting out, you have limitations and there is going to be some force required. Even in Singapore, people talk about Lee Kuan Yew being somewhat of a benign dictator.

Those are my thoughts. I think, too, that we must recognize that, along the path to development, there are strategies that may change. I think particularly of references I have seen recently to the term Lewis turning point after our own Caribbean economist Nobel Laureate; as development takes place, different things matter, you move through different points.

Thank you very much. That would be my presentation.

El PRESIDENTE: Thank you very much, Sir.

I have a bit of a sequential challenge here. We have two speakers to present. We have the Holy See and then we have one of the panelists themselves. I am trying to decide if we should let the Secretary General go at this point.

Mr. Secretary General, I give the preference to you, Sir, to present next.

El SECRETARIO GENERAL: Thank you very much, Sir, and it is a big pleasure. Definitely, this matter is very relevant.

Celebramos la elección de esta temática que apunta directamente al funcionamiento de los mercados laborales de la región, un ámbito que requiere hoy de la mayor atención. La pandemia ha hecho estragos en el empleo. Según la Organización Internacional de Trabajo (OIT), durante el 2020, perdimos el equivalente a más de 50 millones de puestos de trabajo, con un efecto desproporcionado en las mujeres, la juventud y, en general, los grupos de trabajo que quizá enfrentaban dificultades en el mercado laboral.

En 2021, nos colocamos una senda de recuperación, pero sabemos que no solo es desigual, sino también insuficiente. Del total de los empleos recuperados, alrededor del 70% se da en la informalidad; son empleos de baja productividad, con bajos salarios y sin ninguna cobertura de protección social. Lograr que nuestra región se recupere de esta crisis de manera sostenible, justa y resiliente y generando mayor igualdad, tiene como condiciones indispensables reducir la informalidad, promover la creación de empleos y mejorar condiciones de trabajo y productividad.

El éxodo del capital humano y, en particular, la fuga de cerebros ha sido problema recurrente al Hemisferio originado por la búsqueda de mejores oportunidades y por la limitada capacidad de nuestras economías de generar suficientes puestos de trabajo con ingresos y garantías adecuadas. Hoy nuestra juventud tiene más años de estudio que nunca; sin embargo, enfrenta las más altas tasas de desempleo. Estamos ante una gran promesa incumplida que genera desaliento y frustración, sentimientos que seguirán encontrando válvulas de escape que no van a estar enfocadas en la productividad. Si bien el hecho del capital humano es un fenómeno en todos nuestros países, resulta más serio y problemático en algunas situaciones, vale destacar la situación del Caribe, señor Presidente, donde la fuga de talentos es una de las más elevadas a en el mundo.

En varios países del Caribe, más del 50% que completan la educación terciaria migran privándolos de un motor de crecimiento económico y generando una amenaza de contra peso al desarrollo. Hay quienes argumentan que la pérdida que representa la salida de capital humano en los niveles de crecimiento se ve compensada, parcialmente, por las remeses que envían quienes emigraron. Un estudio del Fondo Monetario Internacional (FMI), entre otros, muestran que el impacto general del éxodo depende al nivel de calificación de la población migrante y de la cuantía de las remesas. En general, para países con número considerable de migrantes que tienen altos niveles de educación, como son países del Caribe, las remesas no logran compensar el impacto negativo sobre el crecimiento que tiene la fuga de talentos.

El nivel de educación de la población migrante ha aumentado de manera considerable en todo el mundo, aunque con bastantes variables según países de origen. Los datos muestran que en los Estados Unidos, por ejemplo, el 45% de los inmigrantes originarios del Caribe, y más del 57% de migrantes originarios de Sur América, tienen dos o más años de educación por secundaria; este porcentaje es de 25% para otras regiones. Para revertir el impacto negativo de este fenómeno en el desarrollo económico y social, debemos generar condiciones para convertir la fuga de talentos.

Debemos incentivar a aquellos que han emigrado a invertir su capital humano en sus países de origen a través de la transferencia de conocimiento de las iniciativas que buscan aprovechar la diáspora y, por otro, trabajar para lograr la retención de nuestras y nuestros profesionales. Esto puede lograrse promoviendo la creación de empleos de calidad utilizando a nuestro favor los cambios emergentes en el mundo de trabajo. Las grandes transformaciones que se están sufriendo en el mundo de trabajo, gracias a los acelerados cambios tecnológicos, traen nuevas dimensiones a viejas realidades.

Las plataformas digitales y la economía del conocimiento son dos fuerzas poderosas que tenemos que utilizar en este tiempo. En un mundo cambiante en que la tecnología, la inteligencia artificial, Internet de las cosas y otros fenómenos asociados a la cuarta revolución industrial asignan un nuevo valor al conocimiento; ya las empresas no se ven limitadas por el lugar geográfico en el que desarrollan sus negocios para encontrar a personas más calificadas. El trabajo remoto abre un mundo de posibilidades; el éxodo de capital humano hoy tiene esa nueva dimensión; ahora puede existir sin necesidad de que las personas atraviesen físicamente fronteras; hoy podemos hablar de migración digital. En definitiva, nuestros países han de seguir trabajando para mejorar la equidad y pertinencia de la educación, la formación de trabajos para asegurar habilidades, para lograr mejores niveles de inversión, de política más audaz en el desarrollo productivo. Actuando en estos dos frentes a la vez lograremos que el capital humano de nuestros países se traduzca en nosotros en productividad y mejor desarrollo.

Agradezco especialmente las presentaciones realizadas por el señor Maloney, economista Restuccia, realmente apellido de muy grata memoria para todos los uruguayos y, definitivamente, Andrew. Gracias, señor Presidente, y tenemos siempre presente su trabajo en cuanto a estimular el rendimiento por resultado en esta Organización y los documentos que nos ha hecho llegar al respecto.

Gracias.

El PRESIDENTE: Thank you very much, Mr. Secretary General.

We have, lastly, the Holy See. You have the floor.

El OBSERVADOR PERMANENTE DE LA SANTA SEDE: Mr. Chair; Secretary General, Assistant Secretary General.

The delegation of the Holy See is grateful for holding this special meeting of the Permanent Council to consider the issue of “Declining Level Productivity Rates and the Human Capital Exodus.” The COVID-19 pandemic has produced a serious crisis in so many areas, including the workplace. Many companies have faced tremendous challenges; some have closed completely or partially. Also, many people have lost their jobs and now have drastically reduced incomes. Consequently, poverty has increased, as has unemployment; there have been extensive delays incorporating young people into the labor market. In addition, informal work sector has been raised, particularly affecting female employment.

Pope Francis, addressing the International Labor Conference in Geneva in June 2021, stated that the creation of future employment must be based on decent and dignified working conditions that originate in the collective negotiation, and that promotes the common good.

In the context of the present crisis, the Holy See considers that society cannot progress without including everyone, giving parity to workers who are excluded, those in the informal sector, those who undertake work that no one else wants to do, migrant workers and refugees, many of these do not have access to national health or financial protection programs. As a consequence, the Church calls on governments as well as multilateral organizations and civil society to start a dialogue that will bring together government, people, and workers, who will seek solutions for emerging from this current crisis in better conditions. In the context of this dialogue, development of a culture of solidarity will be required, in contrast to the throw away culture and the search of maximum profit at any cost. These are among the main causes of inequality that affects the entire world.

The Church has experience on such dialogues through its local communities, popular movements, and organizations. It now reaches out as a bridge builder to help create the favorable conditions needed to bring them to a conclusion. This type of dialogue is a priority to guarantee a more supportive and sustainable future for our common home.

Mr. Chair, the Holy See expresses its willingness to help build bridges for better dialogue, building on its spiritual resources and its social doctrine, and involving all political, businesses, and labor actors. We are all in the same boat; we have to get out of this crisis better.

Thank you, Mr. Chair.

El PRESIDENTE: Thank you very much for offering those comments.

I would like now to offer the floor to the panelists to see if there were any comments that they would like to share in the vast array of issues that have been brought up. You have the floor in sequential order; we would like to take them as they come in.

First, we have Dr. Restuccia. You have the floor, please.

El CATEDRÁTICO DE ECONOMÍA DE LA UNIVERSIDAD DE TORONTO: Thank you.

In the interest of time, I just wanted to make a comment on the issue of gender and, I think, more broadly, the issue of inclusion. In some places, you know, race or other groups may be also a factor. And, yeah. So, this issue was raised by Canada, and I think it was mentioned throughout in the discussions, often in the context of the pandemic as well as, I think is a more general issue. I am going to try to connect it to misallocation and you will see why in a moment. So, to the extent that you have groups of individuals in the economy that are not fulfilling their potential, that we can broadly describe as a misallocation of talent. Of course, the talent needs to be developed—human capital and so on, so that is another dimension. But, you know, to be more specific, if women cannot access to jobs as lawyers or as medical doctors in certain economies, that one would suspect, is generating a misallocation of talent or, if women are culturally expected to be at home and not participate in the labor market, that is another form of a misallocation of talent.

This is very important not just in terms of what is happening in the region and in the world in general with the pandemic that is affecting particularly women and other groups. It is an issue that is very important for productivity. As an example, I want to share a recent academic paper that was published in 2019 in one of the most prestigious journals in economics. Basically, this article documented the gaps in the occupations that happen in the United States across genders and across race, comparing 1960s to the 2000s in the United States economy. We are talking about a developed economy and, so, this gaps that they report really point to the significance of this issue of discrimination or barriers to participation or misallocation of talent in general for productivity. So, they quantify that, during this period of time, where there is a convergence in the gender dimension and the race dimension on occupations in the United States economy and on the participation on the labor market, between 20 percent and 40 percent of the overall growth in the United States economy can be attributed to that convergence, can be attributed to that redaction in the misallocation of talent in the United States economy.

I think that is a first order issue and, sometimes, as we mentioned and as Barbados pointed out, is intertwined with cultural issues and other factors, but those are actionable through policy. I think this is an issue that would be very interesting, as Mr. Almagro pointed out, on how technology is also interacting in this. In academic markets, for instance, we see how the virtual conferences and the virtual seminars in the academic markets have increased, particularly participation along the gender dimension. So, this is something that certainly there will be opportunities to close, but, as I pointed out, the productivity effects of this parallel location of talent through inclusion to these groups reaching their potential is quantitatively quite significant.

Thank you very much.

El PRESIDENTE: Thank you very much. We have next Dr. Maloney.

You have the floor, Sir.

El ECONOMISTA EN JEFE PARA AMÉRICA LATINA Y EL CARIBE DEL BANCO MUNDIAL: I am very sorry, I am going to have to go in a minute, but I am very glad to discuss any of these issues with anybody else who would like to.

I just wanted to quickly say something on the Caribbean issue about size and, as brought up by the Ambassador from Barbados, size and culture and quality and vocational training, I think it was also brought up by Saint Vincent. The issue of size makes it apples and oranges, you are entirely right. If you have a very small economy, you will never get the scale or it is going to be hard to get the scale you need to get high productivity from the internal market, obviously. That makes it necessary to be open and to have market agreements with a lot of other countries, obviously.

I think a bigger problem there is on the labor side, which is you might have someone who is born there, who is going to be just the best downhill skier, but they are not going to be able to realize their potential in Saint Vincent. You can imagine many cases where a very small local economy is not going to allow everyone to reach their potential. This is something we need to think more about in the context of the migration discussion that was discussed.

The issue of quality. Obviously, we talked about that in tourism a little bit. We all know that the more you raise the quality of your offering, the higher the profits are, the higher the value added. And that is a key component of productivity, because if you can get a higher price that shows up in your productivity, if it does not imply, you know, upsetting higher costs.

On the vocational training thing, I just wanted to flag that that is a very important issue, and there was a recent report put out by the Bank called “The Fast Track,” and it is exactly what I call fast short cycle or community college courses. The entire region is short on what we call técnicos y tecnológicos, that is to say, people with 2-year degrees focusing on technical skills. The entire region is short on that, and we probably do need to reorient some of our spending towards those sorts of community college type programs/vocational programs as well, and a little bit away from 4-year bachelors courses.

Just to show that I have not completely neglected the Caribbean, also, in a report that we did on engineers, turns out that the Dominican Republic, Haiti, and Jamaica, and Cuba all had universities before 1900 but none of them had an engineering department that was graduating engineers before 1900. So, that is why in our analysis we do not have very high density of engineers there.

There are lots of excellent questions raised. Also, just one point for the Canadian Ambassador. We have to be careful; people are adapting to COVID-19 as families, not as individuals. So, it may very well be that a family sits down and says “someone has to stay home and deal with the kids who are not in school. I have a job at a construction site that is fairly safe. Your job is in the market; that is not so safe. Why do not you stay home?” We need to include this kind of family-optimization issues when we are looking at these numbers of how many people have lost their jobs or left the labor force. I think that is important.

I have to leave but thank you all very much for this opportunity. And I hope we can continue the dialogue. Thank you very much.

El PRESIDENTE: Thank you very much, Sir. I appreciate that a great deal.

Dr. Selee, you have the floor, Sir.

El PRESIDENTE DE MIGRATION POLICY INSTITUTE: Thank you.

First of all, I appreciate the comments of the ambassadors and from the representatives, very helpful to hear them.

I just wanted a brief comment, actually. It is just to say, I think much of what I talked about in terms of how countries take advantage of human capital of migrants, both migrants that arrive in the countries or migrants that live abroad is actually already happening; it is not happening everywhere in the same way, and we can find good examples of this. I mean, Costa Rica, for example. The Ambassador of Costa Rica spoke. It is the country with the highest, at least in Latin America, perhaps not in the Caribbean, with the highest percentage, right now, of foreign-born population. Costa Rica has been very proactive on trying to figure out how to provide legal status and integrate migrants, specially from Nicaragua but also from other countries into the country.

Now, is there more than can be done? Definitely. Peru, the Ambassador of Peru spoke about this. Peru has been also gone out of its way to try and provide legal documents and, during COVID-19, actually, took advantage of foreign-born doctors from Venezuela as part of the front-line response to COVID-19. How you build on that, then, in terms of legal status, to build on, also, credential recognition and, you know, taking advantage of people—for example, medical personnel to be able to be credentialized and return for going to parts of the country where there are real needs for medical professionals.

You know, there are some real opportunities out there. There are huge opportunities out there in terms. Canada, the Ambassador of Canada, spoke about Canada’s integration. I mean, Canada is a model globally in terms of how you do thoughtful migration policy in terms of human capital. Canada thinks about migration primarily in terms of human capital. Obviously, it does some refugee resettlement; it has an active asylum system, but it primarily thinks about immigration in terms of human capital and how. I mean even with asylum, even with asylum and refugee resettlement. it takes a lot of care to look at not just how to be humanitarian but how to look at refugees and asylees as people who are going to contribute to the economy and to the communities where they go.

I think, you know, just to say, and I can go on; several of you made other comments I thought were very valuable about this. Many of these things are happening right now in the region; I think there are enormous attempts. The question is how we begin to build on them and how do we begin to think of migrants as assets and not just as a problem to be solved.

Thank you for your invitation, Mr. Hull, Ambassador Hull.

El PRESIDENTE: You are most welcome, Sir.

As we close, I would like to draw your attention to two events that are occurring. There is a meeting this afternoon, a special meeting of the Permanent Council at 3:30 p.m. this afternoon. And, secondly, I would like to announce that, on March the 9, we will be having a follow up discussion relating to this issue. I think the intent is to pick up on several of the themes that have been addressed here. One of them, of course, is “How do we transition from where we are to get to where we would like to go?” And, for that, I have invited an expert from Deloitte Touche, who has had 30 years with Deloitte Touche, he is a chief global information technology expert, and he has done a lot of work in terms of working with students and with companies and with groups that are in India and Brazil and other places, with actually trying to show them how they can be transformed to move quickly into these higher income earning occupations. So, he is very much on tap and has confirmed that he will participate.

I also have someone from Korn Ferry; this is an expert in the senior partnership level that will be dealing with incentives to motivate individuals to push a little harder than they have been currently doing. I have missed the opportunity for inviting Dr. Freeman Hrabowski, he is the President of the University of Maryland Baltimore County. He is an expert in this area in actually taking folks from the back of the line and moving them forward. He has done that very, very successfully in terms of taking black person, coming from fairly low levels and has been able to work with them and transform them into becoming highly productive citizens with PhDs in both sciences and in engineering. Just a week ago, he received a very high honor from Yale University, who named him the Legend of the Year. In that same week his university, UNBC, was awarded a [Problema de audio] delegation, naming his university as one of the top schools in the country for producing doctoral graduates; it is quite an achievement. I was instrumental in getting him to come down to Saint Kitts two years ago to deliver a lecture in terms of transforming individuals to help them to become more productive.

We missed the opportunity for getting him this time. I did contact him; he is not available, but he has made a commitment to recommend someone who will stand in his place. So, that is coming, and that will occur in the next meeting that will occur in March 9.

I would like to thank the presenters for the outstanding work that they have done in exposing us to a number of possibilities that we really may not have fully developed in the past. One in particular is transformational: “How do we take persons from the back of the line and move them quickly?” And the last comment made my Dr. Selee points to the fact that you really try to have these expedited courses when dealing with persons that have to be medical school for seven years or something like that. Is training them quickly, and we are seeing more and more of that happening. I certainly hope that we can actually bring some folks in to actually do this.

Again, thank you so much to the presenters. I look forward to continuing to follow the work that you are doing, and I wish you all the very best on this undertaking that you have been pursuing.

Ladies and gentlemen, this adjourns our meeting for today. Thank you very much for your participation.

Thank you.

[Se levanta la sesión a las 12:52 p.m.]

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