To break recession, Latin America and Caribbean nations must support its self-starters, study says
Latin American and Caribbean nations continue to languish in a recession, and a recent report says policies that promote greater entrepreneurship could give economies a needed boost.
In a report from the Organization for Economic Cooperation and Development, researchers asked how inclusive and sustainable is economic growth in Latin America and the Caribbean. What jobs are available for young people ages 15 to 29, who make up one quarter of the region’s population? What skills do they bring to the workplace and how much room for innovation remains?
Steep regulation and financing, paired with inadequate workforce education and access to export markets, built barriers to entrepreneurship and new jobs for young people in Latin America and the Caribbean, said Angel Melguizo, an economist who leads the organization’s research for the region. The problem is greater than elsewhere in the developed world, he added.
Latin American and Caribbean nations fall short of the average industrialized nation, according to this OECD index.
Often, Latin American and Caribbean entrepreneurs become self-starters because there are simply no other jobs, Melguizo said. Entrepreneurship borne out of necessity, rather than opportunity, can eat away at long-term job creation and stable economic growth, he said.
Over the next two years, more than a dozen presidential elections will pop up across Latin America and the Caribbean. Melguizo said people should take advantage of this moment to push policies more friendly toward entrepreneurs.
“This is a huge opportunity to fight economic slowdown and strengthen social programs and gain political capital if we empower youth with the right skills and right entrepreneurship policies,” Melguizo said. “They are at the center of the equation.”
Chief economist Daniel Lederman said large formal firms in Latin America should do more to generate jobs “so that small entrepreneurs don’t have to rely on the food truck on the corner to survive.”
Understanding why large firms don’t do more to innovate is “a daunting task,” Lederman said in a 2014 World Bank report.
“We have way too many self-employed subsistence entrepreneurs and our superstar firms don’t innovate enough,” he told the NewsHour.
But despite the economic recession that tests Latin America, Lederman said he remains optimistic.
“Entrepreneurship seems to flourish under difficult circumstances,” he said.