(28 May 2013) According to a new ECLAC document launched today, Latin American countries must review and strengthen the institutions and instruments in order to maximize the contribution of natural resources to regional development, particularly in the current cycle of high prices.

The report Natural resources within the Union of South American Nations: Status and trends for a regional development agendawas presented by Antonio Prado, Deputy Executive Secretary of this United Nations regional commission, at the Conference of the Union of South American Nations on Natural Resources and Integral Development in the Region, which is being held until 30 May in Caracas, Venezuela.

In the document, ECLAC analyses the issue of natural resource governance in the region, which refers to the set of sovereign policies over ownership and allotment of natural resources and the distribution of productivity gains arising from their exploitation.

Latin America and the Caribbean has 65% of the world’s reserves in lithium, 42% of silver, 38% of copper, 33% of tin,  21% of iron, 18% of bauxite and 14% of nickel. It also has large oil reserves: a third of world bioethanol production, almost 25% of biofuels and 13% of oil.

The region has around 30% of the world’s total renewable water resources, which represents over 70% of the water throughout the Americas, as well as having 21% of the planet’s forests and plentiful biodiversity.

However, the region has major weaknesses, such as production and export structures based on static comparative advantages (based on natural resources alone) rather than dynamic competitive advantages; low investment in infrastructure, exploration and value added; and poor performance in innovation, science and technology.

According to Antonio Prado “Historically, the region has been unable to translate the boom periods of exporting its resources into long-term economic development processes.  The challenge for the countries of the region is to generate and efficiently invest extraordinary revenue from the current price cycle with social and environmental sustainability”.

In the new report, ECLAC describes the various legal and economic instruments that Latin American and Caribbean States have at their disposal to appropriate and distribute the revenues from the exploitation of natural resources relating to mining, water and hydrocarbons.

In terms of mining, ECLAC states that four UNASUR countries (Argentina, Brazil, Chile and Peru) receive 62% of regional investment in exploration (and according to 2010 data the percentage climbs to 84% if Mexico is added).

In 2011, Brazil, Chile and Peru were among the top 10 recipients of mining investment, accounting for 36% of the world total (compared to 26% in 2000).

Between 2000 and 2010, the region’s oil exports did not follow the upward trend of prices, unlike the pattern in the rest of the world. Despite this, estimated income of the hydrocarbons sector during the boom of 2004-2009 (7.1% of GDP) was double the average recorded between 1990 and 2003 (3.6% of GDP).

ECLAC also states that UNASUR has a primary energy supply structure that is cleaner than the world average (31% compared with 12%), as it combines energy sources such as hydroelectricity, biomass and other renewables. In 2011, for instance, hydroelectricity represented 11% of these countries’ total primary energy supply (which is much higher than the world figure of 2%).

The Commission describes the region as facing the challenge of achieving homogenization and integration in energy consumption, with a view to narrowing the subregional divides that still persist, namely: the heterogeneity of natural resources, supply structures and energy consumption, and the need to achieve institutional consolidation and establish the basic conditions for renewable energy promotion and penetration policies.

According to ECLAC, the subregion’s public policies should take a long-term view on the need to ensure efficient investment of the windfall earnings from natural resources now that prices are buoyant, as well as on the need to improve public management of socioenvironmental conflicts that arise in the development of natural resource sectors.

The Statistical Yearbook for Latin America and the Caribbean seeks to respond to the demands of users who require reliable and sound statistical information in order to analyse the economic, social and environmental situation of the region. This year’s edition includes information available up to mid-December 2012.

This edition of the Statistical Yearbook is similar in structure to the 2011 edition as no significant changes have been made in terms of content or design. The Yearbook comprises four chapters. The first covers demographic and social indicators and continues to reflect special efforts to mainstream the gender perspective in statistical information and to encompass poverty-related topics. The second chapter presents economic statistics relating to trade, the balance of payments and domestic prices, as well as national accounts. The statistical series are expressed in domestic currency and constant dollars. The third chapter provides the quantitative information available on the environment. Here, priority is given to data from international sources. The electronic version also includes the data available and compiled by the Economic Commission for Latin America and the Caribbean (ECLAC) for this chapter.

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SUMMARY

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This publication is a contribution by the Economic Commission for Latin America and the Caribbean (ECLAC) to the analysis of trade and investment relations between the United States of America and Latin America and the Caribbean, on the occasion of the visit of President Barack Obama to Brazil, Chile and El Salvador in March 2011.

The early years of this new decade have brought good news for Latin America and the Caribbean. The region weathered the international crisis with unprecedented resilience and emerged from it sooner and more strongly than the developed economies. It grew by 6% in 2010, and is expected to grow by over 4% in 2011. The region’s economic reforms of past decades, its fiscal and macroeconomic prudence and its sound financial supervision, together with ever closer commercial ties with China and other emerging economies, have allowed it not only to successfully navigate through the worst international crisis of the past 80 years but also to enter the new decade with a promising outlook for growth and advances in quality of life. For the first time in its history, the region achieved during the past decade a combination of high growth, macroeconomic stability, poverty reduction and improvement in income distribution. On the strength of the foregoing and of its privileged endowment in natural resources, energy, water and biodiversity, the Latin American and Caribbean region will be called upon to assume an increasingly larger role in the global economy. At Davos and other specialized forums, it has been said that this could be the decade of the Latin American and Caribbean region and that, with regard to global economic recovery, the region is today firmly part of the solution.

The region’s resilience to, and strong recovery from, the international financial crisis have renewed the interest of the European Union in strengthening linkages with it. At the same time, the Asia-Pacific region ?particularly the People’s Republic of China? has become a privileged trading partner for Latin America and the Caribbean. These closer trade and investment links have been both a cause for and a result of the increasing number of trade agreements already in force or under negotiation that link various countries of the region with the European Union and Asia-Pacific.

In this context of special opportunities and diversification of trading partners, the share of the United States of America in the region’s trade has been shrinking. More importantly, there is a perception in Latin America and the Caribbean that the United States lacks strategic vision vis-à-vis the region. In past decades, the Alliance for Progress, the Initiative for the Americas and, later, the Free Trade Area of the Americas (with which ECLAC, the Inter-American Development Bank and the Organization of American States collaborated through the Tripartite Committee) were all ambitious United States initiatives for regional cooperation. Today no such initiatives exist.

Despite recent improvements on many fronts, the Latin American and Caribbean region faces some formidable structural challenges. It still has the highest indices of inequality in the world, as well as serious lags in technology, innovation and competitiveness. Nevertheless, the region, together with its main partners, is approaching these challenges as opportunities for new partnerships that promote growth and development through increased trade and investment. The United States can and should be an active partner of the region in this endeavour.

The visit of President Obama to three Latin American countries provides the United States with a unique opportunity to revitalize hemispheric relations. It could do so by presenting proposals for a strategic dialogue and for new hemispheric initiatives in trade and investment to strengthen cooperation between the United States and the region.