Caracas, October 9th.- The Permanent Secretary of the Latin American Economic System (SELA), the Chilean Ambassador Otto Boye Soto, announced at a press conference today that the XXVI Regular Meeting of the Latin American Council of SELA  will be held in Caracas,  from October 16th to October 18th, 2000.  The Latin American Council is the  highest authority of this organization which  groups 28 countries from Latin America and the Caribbean    

 

The meeting coincides with the 25th anniversary of the founding of SELA and will therefore be used to reflect on the mission and prospects of this organization, which was created in 1975 upon the initiative of Venezuela and Mexico, and whose statutes and objectives were defined at the Panama Convention.

This reflection upon SELA’s mission and prospects will be the main item addressed by  the panel discussion that is to be held on Tuesday 17^th within the framework of the Council Meeting, and all the organization’s  former Permanent Secretaries have been invited to participate.

 

These are as follows: Jaime Moncayo (Ecuadorian,1975-1979), Carlos Alzamora (Peruvian,1979-1983), Sebastián Alegrett (Venezuelan, 1983-1987), Salvador Arriola (Mexican, 1987-1991), Carlos Pérez del Castillo (Uruguayan, 1991-1995), Carlos Moneta (Argentine,1995-1999) and  Boye, who took up his post last December and whose term is due to end in the year 2003.

 

 The meeting, which is to be held in the Hotel Gran Meliá, has two stages: a technical and preparatory one, and a ministerial one.  The President of Venezuela, Hugo Chávez Frías, and the Venezuelan Minister of Foreign Affairs, José Vicente Rangel, will be speaking at the latter,  which is to take place on Wednesday 18^th.    

 

During the ministerial stage, delegates of SELA Member States will analyse, amongst other proposals, a document prepared by the SELA Permanent Secretariat that underscores the need for the region to undertake joint action in order to attain a better insertion in the world economy.

 

The SELA document “The insertion of Latin America and the Caribbean in the globalization process of the world economy” warns that the advancement of development and equity within a framework of peace and democracy is the “crucial challenge” facing the countries of Latin America and the Caribbean and that in order to meet it, “the region will need policies that can satisfy the people’s needs and expectations, which includes making progress in the fight against poverty and inequality.”

 

“Democracy and peace, values and realities that have become widespread in Latin America and the Caribbean, now form the underlying principles of our national societies and consequently of the region’s insertion in the world economy”, according to SELA.

 

The study shows that the experience of the countries of Latin America and the Caribbean, in a world which has become increasingly globalized during the last decade, has revealed the need to undertake active policies for insertion in the world economy. 

 

“A passive attitude towards the changing situation will fail to take full advantage of the opportunities offered by technological progress and the intensification of international economic inter-relations and will moreover increase the region’s vulnerability to the external fluctuations and effects that are inherent to the globalization process.”

 

“Insertion and integration should be seen as complementary phenomena, and the regional strategy that needs to be pursued could be defined as insertion with integration” the document states.

 

According to SELA, the countries of Latin America and the Caribbean have, in general,  recorded positive economic growth over the past decade.  This period was, however, marked by “several clearly differentiated cycles: two expansion phases, from 1990 to mid-1994 and from mid-1995 to mid-1997, and two slow-downs in economic growth: mid 1994 to mid 1995 and mid 1997 to mid 1999”, as the report drafted by the SELA Secretariat entitled “External financing and growth in Latin America: recent development and prospects” points out. 

 

This report states that during the first expansion phase the region’s GDP grew from 3.5% to 5.5% and during the second, from 1% to 5.5%.  During the contraction phases, GDP fell from 5.5% to 1% and from 5.5% to 0.5%.  Since then the  region has started  on a new cycle with a new expansion phase that has still not reached its peak.  Recent ECLAC and IMF reports, however,  predict that the region’s growth will be around 4% this year and next.

 

According to another study made by the SELA Secretariat on the behaviour of FDI in the region during the year 2000, the adjustment policies that have been implemented in the region since the mid 1980’s paved the way for a steep rise in external financing in the region, especially in the form of foreign direct investments.        

 

There has been a significant increase in annual capital flows since 1990, from almost 22 billion dollars that year to 137 billion in 1998.  This figure fell back slightly to 107 billion dollars in 1999, however, due to the financial crises of the previous two years.

 

One significant feature of these capital flows is that, as of 1994, there has been a predominance of direct investments, which reached almost 90 billion dollars in 1999 (up from 8.2 billion in 1990).  These kinds of investments represent 83 per cent of the net capital flows that entered Latin America and the Caribbean in 1999 (compared with 37% in 1990 and 20% in 1993). 

 

In the case of Venezuela, net direct foreign investment flows rose from 76 million dollars in 1990 to 1.86 billion in 1999.

 

The economic stability attained by most of the countries of the region during the nineties is, however, “at serious risk if they do not follow up with insertion policies that have clearly defined objectives and instruments and are also compatible with national policies,” warns the document that SELA will present to its Member States at the Council Meeting.

 

On this issue, Boye pointed out that it was during this decade that globalization burst onto the scene, and our region needs to get itself inserted into the process.   “But the key issue is: how to insert ourselves,” he said, adding that if Latin America and the Caribbean “co-ordinates its efforts, the region could insert itself on its own terms.  Otherwise, its insertion will be fragmented.”

 

He also commented that the region has initiated the integration process starting with subregional groups such as the Andean Community, MERCOSUR and the Central American Common Market, and this is producing positive results.

 

“But for the region’s integration to be perfected, another key issue arises: how to achieve the articulation and convergence of these subregional schemes.  This is another matter that needs to be urgently addressed so that the region can be in an advantageous position for entering into negotiations,” such as those underway for the creation of a hemispheric free trade area (FTAA).

 

According to Boye, this leads to a third matter that requires consideration: the institutional framework for integration.

 

“Latin America does not have an institutional framework for proceeding towards integration.  We therefore need to determine which would be the political instances for decision-making bodies; or the executive entities for implementing those decisions, or the financial entities for obtaining the resources needed for integration,” he said.

 

In this respect, he added, the Communiqué of Brasilia, adopted by the presidents who attended the Summit of South American Presidents in the Brazilian capital in August this year, represents a “navigation chart” to be followed by Latin America and the Caribbean on its course towards regional integration.