Economic Recovery in Latin America and the Caribbean: The role of regulatory reform
The socio-economic landscape in Latin American and Caribbean (LAC) during 2019 was one of protests and discontent, government changes and decreasing economic growth. It was already a hard year, and then the pandemic caused by the COVID-19 came. It was like a bucket of cold water that took governments by surprise and forced them to find innovative solutions to pressing issues such as the provision of public services and medical attention, as well as limiting the loss of productivity and businesses. Rules and regulations had to be modified, or new ones issued, deadlines and requirements adapted, and the use of ICT tools multiplied in a matter of weeks.
Although the economic outlook is not very encouraging – GDP is expected to fall by 9.1% and international trade is projected to decrease by 23% in 2020 – governments are starting to define the path to follow once the sanitary crisis is over. It is important that the next steps ensure the trust of citizens and businesses, as the participation of all social and institutional actors will be necessary to have a successful recovery. Moreover, administrations must keep in mind future challenges when assessing the regulatory measures in place (including those that have been introduced to tackle the current crisis), as societies should aim for a greener, more sustainable, and inclusive growth.
In this context, policy makers from Latin American region, in collaboration with the OECD and the IDB, held a webinar on 13 of August 2020 to discuss regulatory responses to promote the economic recovery. The event organised by the Ibero American and The Caribbean Network on Regulatory Improvement included the keynote presentation by Nick Malyshev, Head of the Regulatory Policy Division of the OECD as well as panellists discussing the experiences of the Dominican Republic, Costa Rica and the IDB. The most important messages derived from the meeting include:
Re-thinking the public administration
Cooperation and collaboration across government institutions has proved vital to tackle the new challenges imposed by the pandemic. The digital response enacted by many of the countries in the region relies on interoperability and information exchange, but also on a whole-of-government approach, with an intense interaction across entities. However, the question is; how shall public administrations move forward once the COVID-19 crisis is over?
For years, experts have highlighted the efficiency gains and positive externalities that derive from the exchange of information and resources, not only across the public administration, but also among entrepreneurs, academics, citizens, civil society, and other stakeholders. New technologies and industries have shaken things and have made it even more important for governments to leave behind the idea that each ministry or entity is a silo. These new business models do not fit in the existing frameworks, and thus flexibility, re-definitions and strong cooperation across institutions will be necessary to address the new regulatory landscape.
Public administrations will need to pull resources and expertise together, on top of erasing the classical divisions across ministries and institutions, as the role of digital platforms in our daily lives increases.
The new normal is here to stay
The pandemic disrupted the provision of public services in the region. All of a sudden, governments had to introduce new communication and interaction channels as many offices closed and users had to adjust to a more digital environment. Although many of the solutions introduced were not fully developed before their deployment, the panellists in the webinar acknowledged that these new approaches are here to stay. It is true that evaluations must be carried out once the crisis is over, but one thing that the pandemic has shown is that governments in the region can continue to provide services through digital channels and that these should be used more systematically.
Although access to broadband internet in the region is still below the OECD average, the demand for digital formalities and services has increased due to the lockdowns and security measures in place. Once the pandemic is over, citizens and business will demand even more digital solutions. LAC governments must be up to the task. Administrations should aim to strengthen digital capacities, increase the availability of formalities and services online and facilitate access to elements such as the digital signature.
Say goodbye to red tape
As mentioned above, many governments in the LAC region (and in the world) had to adjust their regulatory requirements to prevent the collapse of industries and sectors. In many cases, new legal instruments were introduced, deadlines were extended, permits were automatically renewed and information requirements eliminated. In the webinar, panellists agreed on the importance of eliminating red tape and unnecessary bureaucracy to foster economic recovery in the region. Governments are trying to put in place the right incentives and administrative arrangements to contain the economic damage derived from the pandemic and foster the recovery.
More information:
Presentations from the webinar are available here
OECD Regulatory Policy Division
Regulatory Policy in Latin America and the Caribbean
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