Lagos probes government’s place in crisis

Senior Staff Writer
Thursday, September 17, 2009

Watson Institute’s Joukowsky Forum overflowed Wednesday afternoon during former Chilean President Ricardo Lagos’s lecture, “Coming Through Crisis: A New Economic Model Emerges in Latin America.” A simulcast was set up down the hall to accommodate the roughly 80 people in attendance. Lagos, who led Chile from 2000 to 2006, is currently a professor-at-large at the University.

Lagos discussed how Latin America can best learn from and respond to the current global economic crisis. Prior to the downturn, he said, there was much discussion of a policy plan called the Washington Consensus, which views government action in the economy as a problem, not a solution.

“When we were in the middle of this discussion, the (economic) crisis arrived,” he said.

Now, he said, one of the big questions in Latin America is, “What is the area to be defined by the market, and what is the area to be defined by those in the government?”

In addition to the crisis, there have been long-term changes in Latin America. Lagos pointed out that many countries in the region, including Chile, Brazil and Mexico, are described as “middle-income,” meaning they don’t qualify for foreign aid. These middle-income countries look at the crisis differently than more industrialized G8 nations would, he said.

Lagos discussed the importance of creating “contra-cyclical” economic policies in national budgets that would plan for and help “smooth” the natural ups and downs of the economy.

He said countries will need to regulate the private and public sectors to establish a partnership, utilize new technology to improve productivity and add value to their exports.

The intersection of public and private sectors will be especially important in Latin America’s response to climate change, Lagos said. Countries are currently classified by their income, Lagos said, but in the future they will also be classified by their carbon emissions. By reining in deforestation, Latin American nations can significantly reduce their emissions and put themselves on top of this list.

Lagos also questioned who would establish the rules in the new “financial architecture” of a globalized world. Though he said he recognized it will not be easy, he emphasized the need for Latin America to “speak with one voice” during this time.

Among those in attendance were 15 Bryant University students in an international finance class there, who traveled to the lecture as a group. One of the group, sophomore Andres Orobitg , said he liked that “more people are going to have a say on what goes on in the world,” as Lagos mentioned during his discussion of the G20.

Maria Suarez ’13 took advantage of the question-and-answer portion after the presentation. “It’s what made me so happy about coming (to Brown),” she said. “I get to see presidents.”

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