- As noted by Matthew Swift, Mauricio Claver-Carone is taking office amidst a challenging time for Latin America and the Caribbean, with the region facing a daunting pandemic that is leading to deepening economic recessions. Claver-Carone campaigned for the presidency of the Inter-American Development Bank (IDB) with the promise of a response to the present crisis. This objective will be his top priority during the self-imposed maximum of five years that he will hold this post.
- Claver-Carone hopes to have dispersed 35% more capital than was given out during the 2008 financial crisis. His investments will be focused on four pillars: public health preparations; the creation of safety nets for vulnerable populations; enhancing economic productivity and employment through small and medium-sized enterprises (SMEs); and, developing a fiscal policy that mitigates the economic impacts of the virus. Claver-Carone hopes that the IDB can find opportunities to help the region come out stronger after the crisis, while acknowledging that debt will pose a challenge.
“The lesson that the U.S. business community learned from this pandemic is that it’s worth it having your supply chains close to home,” Mauricio Claver-Carone
- Latin America is facing unprecedented challenges, among them COVID-19, one of the world’s gravest refugee crises, and the devastating impacts of two recent powerful hurricanes. The needs of the region amount to $25 billion, yet the lending capacity of the IDB is $12 billion. The bank therefore needs a capital increase, which Claver-Carone will request in March 2021 during the IDB’s Annual Meeting. The region’s health sectors alone require $150 billion, and SMEs require $85 billion to fully recover. The CARES Act, passed during the spring by U.S. Congress, supported the ADB, IFC, and IMF, but not the IDB.
- One of the principal aims of the IDB under Claver-Carone will be to focus on job creation, making this the standard through which progress is measured. Facilitating investment and public-private partnerships will be of utmost importance in the process, as will a focus on the informal economy.
- Foreign direct investment fell 7.8% in 2019 and 50% in 2020. While catastrophic, this does imply opportunity. In terms of a call to action for the U.S. business community, Claver-Carone stated that the opportunities that arise from nearshoring are a win-win situation for the U.S. and Latin America. If the U.S. would nearshore just 10% of what it already imports from Asia, this would mean nearly $150 million in trade investment for the region. As a result, the IDB will start a nearshoring initiative and toolkit. Nearshoring is shown to improve the resiliency of supply chains, while also benefiting the environment, development, and governance. This kind of commerce is also something that is currently being done by other regions: 65% of all European commerce and 55% of all Asian commerce is intra-regional, compared to just 15% in Latin America. Claver-Carone is seeking to make Latin America a prime destination for foreign direct investment.
“You can’t talk about the future of Latin America until you talk about how you address the informal economy,” Matthew Swift