1. Regional Challenges Latin America and the Caribbean THE WORLD BANK 2007

2. 2 Latin America and the Caribbean’s Twin Development Challenges Low and volatile growth and persistently high inequality contribute to high levels of poverty in an essentially a middle income country (MIC) region. 2 Source: WDI, simple average of country figures 2000-5 Gini Coefficient, 2000-5 (average) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 ECASAEAPMENALAC Income per capita With respect to OECD 1950-2005

3. 3 Latin America and the Caribbean is one of the most unequal regions of the world Source: WDR 2006 High Income Countries Europe & Central Asia Middle East & N. Africa Sub-Saharan Africa East Asia & Pacific Latin America & Caribbean

4. 4 Recent Progress in Growth Recovery and Job Creation  Due to favorable external conditions and good macroeconomic policies. 4

5. 5 Taking advantage of good times to reduce vulnerabilities  Accumulated international reserves and primary surpluses  Reductions in public debt/GDP ratio  Reduced vulnerability and increased capacity to cope with future exogenous shocks. 5

6. 6 But, modest progress in Investment Climate and Infrastructure  Total infrastructure investment in LAC remains very low around 3% of GDP compared to 7% of GDP in EAP (East Asia and the Pacific region).  Private investment has not compensated for the fall in public investment. 6

7. 7 And in Poverty Reduction and Equity 7

8. Based on data from ECLAC (2005). Maternal mortality rates were obtained from United Nations (2005), Statistical databases: http://millenniumindicators.un.org0 8 With challenges in some MDG targets

9. 9 To address these challenges, the WB strategy in LAC is centered around the four themes – “4Gs” GROWTH & JOBS  Improving investment climate  Increasing investment in infrastructure  Deepening financial systems  Increasing innovation GLOBAL  Climate change  Migration and remittances  Trade negotiations  Crime and violence  Energy  HIV/AIDs  Avian Flu GOVERNANCE  Building inclusive and effective institutions  Improving efficiency and targeting of public spending  Increasing accountability for service delivery  Reducing corruption  Monitoring and evaluating results GINI & Poverty (Social Inequality)  Reduce poverty and inequality  Improving equality of opportunities  Improve quality and delivery in education and health  Provide comprehensive and affordable social protection  Support direct anti- poverty programs (CCT’s)

10. 10 Looking to the future  Continued need to achieve sustainable growth with greater equity  Large unmet demand for infrastructure. LAC is still lagging behind other MIC countries  Global issues remain relevant and have a growing importance and impact on the region (e.g. climate change, trade, remittances, energy)

11. 11 Conclusion  The LAC challenge is to overcome the twin disappointments of low growth and persistently high inequality  The WB response is to energize our partnership through knowledge leadership, innovative lending and customized implementation support  Our goal is to meet the hopes and dreams of Latin American and Caribbean peoples for a more equitable, inclusive and secure society