Source: Bloomberg.
The Western Hemisphere is at an important inflection point. The Americas were the hardest hit region globally by the COVID-19 pandemic—both economically and in terms of cases and deaths—and the region continues to struggle in its recovery. At the same time, the region faces the ever-growing threat of climate change, persistent inequality, the destructive middle-income trap, growing disillusionment with democracy, the largest refugee crisis outside of a war zone, among numerous other challenges. Given the veritable cornucopia of threats the region faces, identifying which challenges are the most pressing and challenging is a difficult task—but a necessary one if governments across the region are to address these threats.
The Top Challenges Facing the Americas According to Global Americans’ International Advisory Council
Fortunately, Global Americans benefits from the insights of its International Advisory Council (IAC)—a diverse group of the foremost experts on hemispheric affairs from across the Americas and a variety of different professional backgrounds. When asked what they see as the greatest regional challenges, our IAC provided an impressive list of topics ranging from concerns over democratic backsliding in the region to disinformation to the implications of growing animosity between the United States and China for the region. Despite our Advisory Council’s mixed opinions on the chief threat the region faces, there were several areas of consensus on some of the greatest challenges. These included:
- Limited Institutional Capacity
Governments across the region—both democratically-elected and those with authoritarian tendencies—are facing trouble in delivering services and on their promises to their populaces as well as even ensuring security in different parts of their countries. While several different elements lead to a lack of institutional credibility, Stephanie Junger-Moat noted that “A lack of institutional integrity is to blame for widespread lack of institutional checks and balances—this has created an environment throughout the region where political corruption is left unchecked, the rule of law is questionable and economic and social advancement are impeded. If the region cannot do better in strengthening its institutions it will be unable to embrace the needed economic, political, and social reforms necessary to promote growth and prosperity.”
The limits of government capacity in these spaces create potentially volatile situations that impact the economies of countries across the region and have political implications that can further erode future state capacity. This “limited capacity of the State to enforce its own legality creates much space for illegal activities, corruption, areas of society totally excluded from the formal functioning of institutions, and even for the emergence of populist leaders,” highlighted Flavio Dario Espinal. As one member noted, week institutions are exacerbated by other challenges facing the region, such as drug trafficking and crime. This incentives politicians in the region to develop strong institutions that lack oversight to address specific challenges—as Nayib Bukele has done in El Salvador. While this may address a specific problem, it does little to address the gaps in institutional capacity of the state and may create longer term challenges. Therefore, in order to address many of the region’s challenges, governments must first take the important step of strengthening their institutional capacity.
- Populism and Democratic Backsliding
As Espinal underscored, the limited capacity of the state can result in the rise of populist leaders. Global Americans IAC members were deeply concerned about the rise of populist leaders—from across the political spectrum—and democratic backsliding occurring across the region. Espinal noted that in the region, “the authoritarian tradition manifests itself in different forms… and styles…” In addition to the lack of state capacity in delivering to the needs of its citizens, Espinal suggested “the dissolution or pulverization of political parties in many of our societies… [and] the fragmentation of political life, the difficulties of establishing an effective relationship between State and society, and, ultimately, the creation of conditions for the emergence of populist leaders that operate in a political vacuum.”
Populist leaders and the political vacuum surrounding them can create further challenges for the democratic functioning of a country. Indeed, Jorge Mariscal stressed, “The growing prevalence of policies that reject independent institutions and checks and balances, as well as an effort to turn back the clock on globalization, undermine democracies and polarize society.” Polarized societies further ideas of governance as a zero-sum game and limit the desire of governments to implement the governance reforms necessary to establish the institutions that can deliver to the people. This vicious cycle leads to the continuing deterioration of democracy.
IAC Charmain Tulio Vera warned that “…populism leads to unrealistic economic expectations, which can only be remotely met by fiscal expansion. The latter typically proves to be the Achille’s heel of an economy, and leads to negative economic performance from which the population at large suffers in terms of growth, opportunity, and inequality.” Indeed, Mariscal also cautioned, this deterioration and populist policies “do not result in the best allocation of national resources, so growth and income distribution… suffer.”
- Lack of a 21st-Century Development Strategy
As democracies decline and populist governments fund expanding budgets, the region finds itself in a new economic situation. One very different from where the regional economy was in the 1990s and the first decade of the 2000s, when, as Tulio Vera reminded, “market-oriented policies brought greater predictability to economic policy, faster growth performance, and reduced income and wealth inequality. Furthermore, globalization made adherence to such policies easier, and the benefits were quicker to achieve.”
However, governments in the region have shifted their reference, including the United States. Javier Corrales highlighted that regional development “…has been extractivist, with no real strategy to develop competitiveness.” This model has led governments to utilize natural resource windfalls to boost spending and stimulate the local economies, something which cannot be sustained when commodity prices decline. As Vera emphasized, this “stop and start aspect of policy implementation in the region makes it difficult to develop the solid economic foundations that not only build reliable economic partnerships, but which facilitate the establishment of local political institutions.”
Past economic growth and populist spending have created a volatile situation that exacerbates democratic decline and institutional decay while also creating new problems. This sentiment was expressed by Richard Feinberg, who said that “Citizens anticipate rising household incomes which over time requires sustainable economic growth that is reasonably well shared among social classes… [However, when not reached,] frustrations produce a wide range of serious problems; [including] emigration, narcotics addictions, and crime—which in turn can corrode support for national institutions and open the gates to opportunistic authoritarian leaders.”
- Educational Limitations
Limited and unequal access to education in much of the hemisphere exacerbates these challenges. Even though there were important improvements in educational attainment across the region during the first two decades of the twenty-first century, the COVID-19 pandemic erased these gains and will continue to have long-lasting implications for educational attainment in the region as students may not return to school.
Low levels of educational attainment and education quality result in a self-perpetuating cycle that limits growth opportunities for the region as a whole. Indeed, as Jacqueline Bern de Mena informed, “…Because of the lack of quality education, people have less access to improve their income and quality of life, thus creating greater economic inequality, and in turn greater political instability.” This political instability should not come as a surprise, after all, as Richard Feinberg affirmed, because “education provides a baseline context for analyzing life’s challenges and opportunities, and for critically assessing information.”
Not only do limits to educational attainment perpetuate the other challenges the region faces, but limited educational opportunities and outcomes will result in even greater impacts further down the line. As Junger-Moat advised, the region “… needs to create societies that are better educated and able to be more competitive in today’s global workforce.” This shift will require that governments begin the necessary investments in education now as “high quality education is required to train the workforce of the future in an increasingly sophisticated technological society,” as Feinberg indicated.
- The Lack of a Clearly Defined U.S. Policy Toward Latin America and the Caribbean
Although many of the problems discussed above are based on domestic challenges, according to many members of our IAC, waning U.S. interest has only allowed the challenges in the region to grow. As Enrique Garcia stated “Evidence shows the diminished priority given by the U.S. to Latin America and the Caribbean in view of the higher importance given to other areas of the world,” including Russia and China.
The neglect of the region, however, comes at a cost. U.S. leadership can play a profound role in the region. As Vera mentioned, “The United States has often acted as a leader and a role model—this has been expressed through its policies and initiatives towards the region. While the reception has not always been positive, and the intentions have not always been altruistic, the leadership and guidance that the United Sates has exerted has created a more predictable policy anchor for the region. Without this guidance, policy in the region seems adrift.”
The lack of coherence includes trade and integration, which the United States has long been a proponent of. Instead, as Amparo Mercader warned, “U.S. policies have become self-centered and no longer aim to foster trade and integration with the region.” Although the United States is prioritizing its competition with China, the United States still has not focused on promoting trade with Latin America and the Caribbean despite China’s growing trade with the region.
With the United States focused on other regions, as Garcia warns, we are also seeing the “…fragmentation of the LAC regional and sub-regional integration mechanisms.” The lack of regional cooperation combined with reduced U.S. leadership create a void that contributes to the inability of the Americas to address the shared challenges and to take advantage of opportunities on the horizon.
While the challenges the region faces are numerous, our International Advisory Council views those laid out in this paper as the greatest tests facing the Americas as a whole. Addressing these challenges will require a gargantuan effort and prioritizing these specific areas over other issues that become the issues du jour. Fortunately, many of these areas are interconnected. Getting these fundamental challenges in check can allow stakeholders to address some of the other challenges our IAC identified and that continue to evolve.
The Global Americans International Advisory Council (IAC) is a standing body of leading economists, political scientists, journalists, diplomats, and thought leaders in the Americas. Learn more about this group of world-class thinkers here.
