Latin America’s awakened citizenry changes the equation for reforms

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Colombia is experiencing major civil unrest triggered by the government’s proposal for a sales tax and other changes to respond to the economic damage from the COVID-19 crisis. Various commentators have warned that other nations in Latin America, developing countries similarly weakened by the extensive economic damage and loss of life from the COVID crisis, could also face destabilizing social tensions as they implement needed reforms. But for Latin America’s governments to overcome the crisis, the process of reform must actively involve their “citizenry,” namely, the empowered middle and working classes that emerged from the economic successes the region enjoyed earlier this century.

Indeed, as we cautioned in an article published last summer in various outlets in the region, in looking to a COVID recovery, Latin America’s governments will need to better embrace the concerns and aspirations of their citizenry. The events in Colombia seem to support the importance of this shift in approach.

From 2000 through 2014, Latin America experienced a period of overall robust economic growth largely powered by natural resource exports that enabled the region to significantly reduce poverty, increase opportunities for workers and create a vibrant middle class.  For the first time in the region’s history, the middle class was larger than the number of poor people. Equally important, numerous countries saw the consolidation of democratic regimes and the adoption of policies that produced important gains for many outside of the established elites.

These development successes fostered a new and forceful citizenry, which emerged from a population that had often felt disempowered in the past. Buoyed by economic and social gains, many working and middle-class families, and even poorer households, began to taste a better life through expanded consumption and increasing incomes, notably in urban areas. They also became energized by a growing promise of improved health care, expanded access to better education, and strengthened pensions. From a repeatedly disenfranchised and stifled population often focused on basic needs rose a citizenry marked by increasing means, better education, more confidence (including in social and political arenas) and, importantly, rising expectations 

Unfortunately, by the end of 2014, the natural resources boon that had fueled the region’s expansion had begun to dissipate. Economic growth across Latin America stalled and, in the face of hardening fiscal constraints, multiple governments stopped expanding benefits and instead reduced them, including by raising prices for public services. The citizenry — particularly the younger, more connected and more outspoken urban segment — was unwilling to accept these cut-backs in silence, especially in the face of ongoing ubiquitous corruption and the persistent privileges accorded the region’s entrenched elites. By 2019, Colombia, Chile, Ecuador and other countries were facing civil unrest as the citizenry went out in force to protest against unmet expectations, inequality, discrimination, crime and corruption.  

The following year, the COVID-19 pandemic struck, dramatically exacerbating the economic situation, and placing enormous strains on the region’s citizenry. Over the course of 2020, the number of poor people in the region increased by 22 million as many fell back into poverty, and South America’s GDP per capita dropped to its 2010 level, erasing a decade of gains. Concerned about the economic and social situation, the U.S. intelligence community predicted just last month that the region “will see hotspots of volatility [including] … violent popular protests” from mounting frustration over the economic situation “compound[ed by] concerns about … widespread official corruption.” 

Latin America’s governments need to act to address COVID’s impact. But recent events in Colombia, including both the deadly clashes and subsequent withdrawal by the government of its reform proposals, highlight an important new dynamic for any reform effort: to develop effective and sustainable policies, governments must do a better job of engaging the citizenry in the process. 

Today, even as the region’s citizenry experiences tangible losses and understands the threats it faces from the COVID crisis, it continues to strive to recover and eventually advance the improvements gained last decade. It looks for better jobs, progress on corruption and fairer treatment (including regarding its share of the unavoidable burdens to be borne to recover from the COVID crisis and its access to social and economic opportunities). Of crucial importance, it wants to participate actively in the reform process, no longer willing merely to acquiesce to government edicts. 

It may be difficult at times for a government to identify appropriate “delegates” of this citizenry that is in many ways both informal and structureless. In general, however, it will be useful to engage labor unions, student associations and other formal civil society groups in the reform process. And governments must demonstrate a willingness to listen and adjust. Crafting an effective approach will be challenging, and implementation will be unpredictable and likely volatile at times. But failing to engage effectively with the citizenry increases the risk of disruptive and destructive civil unrest. 

Given the emergence of an empowered citizenry, Latin America’s governments need to alter the way in which they go about crafting economic and social policy changes. They must permit and foster greater citizenry engagement in the reform process, not only to reduce the potential for civil strife, but also to produce more effective and sustainable policies that can better enable the region to recover from the COVID crisis. 

Philippe Benoit is managing director at Global Infrastructure Advisory Services 2050 and previously served at the World Bank as sector manager-energy for the Latin America region. Ricardo Raineri was previously minister of Energy for Chile and past president of the International Association for Energy Economics. He is currently professor of Economics at Pontificia Universidad Católica de Chile.

Tags #covid19 Economy of Colombia Latin America Latin American economy

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