Former foreign government leaders met with New England business executives Saturday at Harvard Business School’s Latin American Business Conference, recommending governments in Latin American countries must encourage entrepreneurship if they want to strengthen lagging economies often marred by poverty, debt and social unrest.
Currently, 110 million people who live in Latin America try to survive on less than a dollar per day, said Alejandro Toledo, former president of Peru.
“Latin America is the most unequal region in the world,” he said, calling businesses’ decision to invest in the region in efforts to reduce poverty “good business.”
Toledo said many Latin American people lost faith in the wave of market reforms implemented over the past two decades because they failed to eradicate poverty. As a result, people now mistrust the leaders who touted those reforms, he said.
“In the last 25 years, people have gone from euphoria to disillusionment to disenchantment with democracy,” Toledo said, adding what sounds good in offices on Wall Street often fails when put into action.
He noted the difficulty of maintaining democracy in a region where more people would prefer an authoritarian leader who provided prosperity instead of a democratically elected one who could not make that promise, according to a United Nations Development Programme survey.
“You are putting in the minds of students in America and around the world [the idea] that there is a place in the world for Latin America,” he said.
Rudolph Hommes, Columbia’s former Finance Secretary, criticized some countries, including Argentina, Bolivia, Ecuador and Venezuela, for abandoning Washington-led economic reforms and reverting back to policies that allow the government to intervene in business.
“These reforms were revolutionary,” he said.
Hommes said business leaders did not do enough to educate people on the benefits of privatization and capitalism, however.
“We failed to capture the hearts and maybe the minds,” he said, especially of college-age students going into economics.
Though most speakers focused on the benefits of capitalism and the need to bring economic growth to Latin American countries, some expressed doubts about the merits of U.S.-led policies.
Cesar Gaviria, former president of Columbia, said although he supports the North American Free Trade Agreement — which eliminated trade barriers between the United States and Mexico — he acknowledged the pact has failed to boost local economies as its proponents had promised.
Hommes said Latin American countries lack the entrepreneurial spirit that is the lifeblood of the U.S. economy. In Latin America, citizens often value a steady job above the risks and rewards of owning a business. In addition, he said business leaders in Columbia fear becoming too successful because they would then become targets for kidnappers.
Boston University School of Management graduate student Brandon Mendoza said it was important to discuss Latin American economic issues because they are usually disregarded in favor of discussing countries with booming economies, like China and India.
“People don’t talk about anything else,” he said, citing the importance of understanding the economic and social problems of countries “in your backyard.”