Jeffrey Sachs on the political economy of the multipolar world

We all know that this is a pivotal time in the world economy at a time when very important strategies need to be adopted, we have entered the multipolar world unequivocally. Even the United States recognizes we are in a multipolar world.

That means multipolar geopolitics, but it also means multipolar economics. China is, of course, a leading driver of the world economy, a great innovator at the forefront of cutting-edge technologies. India is continuing rapid economic growth, it is becoming an economic superpower in my view, if we look ahead 10 or 20 years, because this rapid growth will absolutely continue. I believe that Africa, the poorest region of the world, is going to have a kick off to decades of rapid growth and rapid population growth, meaning that Africa is going to play a much larger role in the world economy in the decades ahead. So that brings me to Latin America. What's happening? The paradox of Latin America, I don't have to tell you, it’s a region of extraordinary human talents, extraordinary cultural adept, and extraordinary resources, the human, the physical, the environmental, the cultural resources. But there has been continuing economic stagnation or slow growth or instability or even continuing decline in many parts of the Latin-American Caribbean region. I'm taping this today from Mexico, from Mexico City, where a very dynamic government is coming in and trying to figure out what to do with its northern neighbor, Mexico's permanent question, but one that's been made even more urgent today. 

When I look at Mexico's capacity, it's completely underutilized because it's all directed to the US market, it is not directed towards the international markets. It's not directed adequately towards the Latin-American Market, and what I take from this, and of course, from frequent recent visits in Brazil and other parts of Latin America, that there has been and continues to be a kind of missed opportunity in economic strategy. We need Latin America to be one of these dynamic growth poles of the world. The United States has got to play its game.

Europe may or may not get its act together because it's a very confused place right now. As the US becomes protectionist, Europe doesn't quite know what to do. Russia will be a major economy, no doubt, as well as a world power.

Where is Latin America in this? Well, Latin America is clearly solidly stuck right now in a middle-income status, where it produces a wide range of goods, primary commodities and manufactured goods, but it has not taken the dynamic steps forward in technological advancement, and in other areas, infrastructure and human capital, research development investments, which could really lead to the kind of breakage rule that we all want and expect for Brazil and for Latin America more generally.

So, what am I basically saying? We need 2 things, in my opinion, one, a period with much higher investments in Brazil and in Latin America, in general, investments in human capital, better education with higher quality, much more high quality schooling, with high completion rates, we need investments in cutting-edge infrastructure, in transport, in digital technologies and 5.5 G, which will soon be 6G, we need, of course, investments in protecting natural capital. We need much higher investments in research and development because Latin America should be an innovation powerhouse based on bio-economy and many other things. R&D levels are in Brazil and in the rest of Latin America, far below what you find in east Asia, for example.

And this is one of the chronic weaknesses that have kept Latin America in the middle-income status. And of course, we need investments in protecting and nurturing and fostering natural capital as well. So my first point is higher investment rates, and that means, in part, governments not constrained by traditional measures of debt and finance, because if you separate a capital budget and a current budget, you can go for a much larger capital outlays and capital outlays in R&D and in physical infrastructure in natural capital and in building the bio economy, in making sure that Brazil's bio fuels are the aviation fuels of the future, for our 0 carbon world to come, and on and on.

This means a different view of the budget, not a view of austerity, but a view of high investment rates in which borrowing and equity capital flows are repaid by higher economic growth rates in the future, and it all makes sense.

But a second component of this, that I think is extremely important to bring such a high growth, high investment, high innovation, high human skills economy to fruition, is regional integration, there is just too little of it in the Latin-American and Caribbean region.

I’m a big fan, for example, of an institution that barely exists: the CELAC. The community of Latin American and Caribbean states. Make it into something! Especially at a time of Great-Power politics. Why should each Latin-American country stand by itself in the face of bullying, United States or a Great-Power competition?

You need the region to be able to be united to be integrated, in infrastructure, in policy, in finance and in geopolitics, where negotiating trade arrangements or preventing bullies from threatening the sovereignty of countries in the region and so forth are possible. Sure, you can get my drift.

So my view is a high investment rate environment for a high growth economy, based on integration of Latin America and based on a vision in which Brazil and Mexico, I think the 2 very natural leaders of this region, take the view that Latin America is going to be one of the dynamic, innovative, science based technologically leading poles of the world economy.

It's within reach. It has been delayed for some decades. I would say, but the educational base is there, it can be strengthened, the RD base is there, and by the way, many of your scientists are leading scientists, unfortunately, in other parts of the world, doing their scientific work. Encourage them to come back. Remember that Taiwan's semiconductor industry was developed because one person, Morris Chang, came back and set up the SMC. You don't need hundreds to come back, you need some of your leading scientists to come back and that by itself, will incubate whole new economic sectors for the region. So these are my very basic thoughts. Go for high growth based on science technology and human skills, quality education, and economic integration across the region. We all want to see Brazil's great success. We all want to see the great success of the Latin-American Caribbean region.

And we want to see it in good health in the age of Donald Trump as well.

Thanks very much.