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This article previously appeared on News@Northeastern. It was written by Peter Ramjug.

Latin American business executives are used to dealing with the region’s political and economic ups and downs, but they never faced anything quite like an international health crisis.

The world is undergoing a shift, said Joseph E. Aoun, president of Northeastern, leading off an online discussion on the Latin American economy with regional business leaders organized by Northeastern’s Young Global Leaders program.

“We are seeing some fundamental changes in society now, and in interactions across societies and across nations,” Aoun said. “It is fair to say that we are seeing that the world is retrenching, that nationalism is on the rise, populism is on the rise, and tensions between nations are on the rise.”

In Latin America., the pandemic has also exposed raw inequality and devastated whole industries. But regional entrepreneurs said there is a sense of optimism in the business community that the region may one day compete on a global scale and even pose a threat to China as a worldwide trading power.

Gabriel Echavarria Obregon, an executive at one of Latin America’s largest privately-owned companies and founder of Colombia’s biggest multi-purpose port networks, pointed to the country’s economy, the region’s fourth largest after Brazil, Mexico, and Argentina.

Its tourism, hospitality, and retail industries initially took a beating when the virus hit, resulting in runaway unemployment. On the positive side, he said, Colombia’s resilience was such that other players in the country’s vast economy continued to grow, such as ports, construction, transportation, and agriculture.

The country’s economy didn’t just sputter back to life after the initial shock of the virus, it took off. With more people venturing out and businesses reopening, Obregon said, there was an 87 percent increase in fuel consumption and a 40 percent rise in electricity use.

“We see the recovery incredibly very fast in Colombia,” he said. So fast, in fact, that “we’re beginning to see large importers from the United States contacting companies that are exporting to the United States looking for new suppliers. We never expected that we were going to be able to compete with China.” 

Against the backdrop of the focus on Latin America was a U.S. visit by Mexican President Andres Manuel Lopez Obrador. President Donald Trump and Obrador greeted each other at the West Wing entrance to the White House in a meeting that was expected to renew economic ties and cooperation on combating the coronavirus, according to news reports.

The business climate in Mexico, as well as the Latin American sector as a whole, is dragged down by too many people living hand-to-mouth in the informal economy, said two other business leaders in the online discussion, Mexican finance executive Hector Grisi Checa and Ecuadoran entrepreneur and investor Jorge Roca Arteta.

Almost 55 percent of the working population in Latin America works in the underground economy of for-hire drivers, housekeepers, and contractors who basically live day-to-day, and 241 million have no access to social protection such as health benefits. There is a sense of urgency to get the population back into the formal economy as quickly as possible.

“The lack of financial inclusion in Latin America is one of our biggest problems,” said Checa, adding that 25 million Mexican adults don’t have a bank account. He sees promise in his bank’s initiative a few years ago that resulted in people getting their first bank account and their first debit card, enabling them to send and receive payments to one another.

Mortgages are another boon to financially excluded communities, allowing people to join the middle class.

Ecuador’s Arteta said he sees three reasons why it will be difficult to get many working class citizens on the fringes of society to re-join the economy: One reason is that existing laws make formal employment too expensive. The minimum wage is too high, and hiring someone is expensive, he said.

Another reason is the low savings rate. “In Asia the savings rate is higher than the investment rate. In Latin America, it’s the other way around,” Arteta said.

As a percentage of Gross Domestic Product, the Asian savings rate is more than double that of  Latin America, while the investment rate is almost 50 percent higher.

A third challenge for the region is the frequent political and economic instability. 

“Latin America is not in a crisis,” Arteta said. “Latin America is crisis.”

One solution could be greater investment in vocational training, said Colombia’s Obregon, citing a German model as inspiration.

“The reason Germany has had such good employment is people know how to do things. They’re not just doctors and lawyers and economists, they are mechanics, plumbers, electricians. They know how to produce goods and services that are useful to society.”

Further complicating matters is that the fallout from the pandemic is being felt hardest in Latin America.

The sector has seen an almost three-fold rise in the number of people requiring food assistance, and among urban communities in low and middle-income countries, which are being dragged into poverty by job losses, according to the United Nations World Food Programme.

Mexico reported that more than 200,000 people were infected by the coronavirus and that 32,000 died, according to Johns Hopkins University. Colombia more than 124,000 people tested positive for the coronavirus, 4,606 died; while in Ecuador more than 63,000 tested positive, and about 4,800 died.

Many of the victims were impoverished.

“This crisis is basically showing us that poor people are going to get poorer and the middle class will be hit the most, so we need to give them the means in order to get out of the situation,” said Checa.

“There’s no country in the world that is safe from the pandemic. We need to be prepared because we don’t know how long this is going to last. The people that are going to be able to adapt to the situation are the ones that are going to survive.”

Northeastern’s Young Global Leaders program is made up of more than 100 graduates who advise university leadership and help to strengthen Northeastern’s network of international alumni.

Guiding Wednesday’s Global Perspectives discussion were Federico Ramirez, who graduated from the university in 2012 with a major in international affairs; Emilio Botin, a 2018 graduate with a double concentration in finance and entrepreneurship; and Andrea-Regina Garcia. 

She graduated from Northeastern’s College of Social Sciences and Humanities last year and is currently working for the Monaco government helping young entrepreneurs.

Read more at News@Northeastern.