This article discusses the factors that have led to the relatively low microeconomic, or allocative, efficiency of Latin America, compared with other faster-growing economies, particularly in East Asia. It also identifies the major structural impediments to improving efficiency of the economies, and, finally, suggests policy and institutional reforms necessary to improve Latin America's performance in the future. The article builds on an analysis of the region's long-term economic performance and the major dilemmas and issues faced by the countries. An important conclusion of the article is that even with prudent macroeconomic policies, the problems are rooted in the micro-economy. In other words, the fundamental economic problems faced by the region can only be overcome by making major structural changes in the economies. These structural changes, in turn, would lead to higher and more inclusive growth.
The basic objective of this article is to identify the priority issues that could influence Mexico's longterm economic growth path, and to outline a balanced action program necessary to effectively address these issues. It includes reforms and actions that would simultaneously achieve much higher and more inclusive growth, and would thus restore the sense of pride and optimism among Mexicans that has been eroding in recent years. The issues discussed are of such importance that the legacy of the next presidency could be determined by the administration's willingness and ability to implement the agenda outlined in this article.
Over the next few decades, the United Nations (UN) has projected that the world will experience significant demographic shifts due to lower birth rates and longer lifespans. 1 The world's population aged 65 and above will increase from 12 percent today to 16 percent in 2050, doubling the old-age dependency ratio 2 to 25.2. These demographic shifts would have material implications. Population aging and its dynamics will influence a number of economic variables and behavioral responses, particularly economic growth, productivity, labor force participation, consumption choice, personal savings and thus investment, and public finances. Population aging is unavoidable, but public policies and technological advances may limit some of its adverse effects.
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