NEW YORK – The trade war between the United States and China has a substantial impact in Latin America, with the dispute over 5G affecting the development of a region with insufficient technological innovation, a United Nations official said on Thursday.
Alicia Barcena, executive secretary of the United Nations Economic Commission for Latin America and the Caribbean, warned that the battle between the two largest economic powers in the world was negatively affecting the continent.
“It is true that there is a commercial part, but the technological part is fundamental,” she said.
Barcena told EFE that China has advanced more in the technological industry than the rest of the world, including the US.
Latin America is divided among those whose main trading partner is the US, Mexico and Central America, and the countries that have China, those of South America.
“China has gone very fast in 5G, in electromobility, in renewable energy, what does that mean for Latin America, a lot, because South America’s main trading partner is China and the second is the US,” she said.
She cited the dispute over 5G as one of the elements of the Washington-Beijing dispute that affects Latin America, a region in which the 4G network is not yet even widespread.
She said that 5G is important because it can lead to higher levels of information technology such as telemedicine.
To reduce the level of dependence on the US and China, Barcena, who is Mexican, advocated greater productive and commercial integration among Latin American countries, especially if there is external demand for raw materials.
“We (Latin America) are the ones that buy less among us,” she added.
Out of all Latin American exports only 17 percent are intraregional, compared to 70 percent in Europe and 45 percent in the Pacific.
Barcena continued that the development of domestic value chains added to the strengthening of intraregional trade would contribute to an increase in productivity, with more employment and inclusion of small and medium enterprises.
The level of productivity in the region has been stagnant in recent years, which represents a “trap” for regional growth, she said.
“We have not been able to move forward, our level of productivity is 20 percent in the US, and 40 percent in Europe, and we have stagnated there for two decades now, we lack innovation, added value,” she added.
Other “traps” are social vulnerability with high inequality and 40 percent of households at risk of returning to poverty, institutional fragility with high levels of perception of corruption and lack of transparency, and finally “little vocation” for environmental sustainability, Barcena said.
“We are a region very rich in biodiversity, but we do not take advantage of that wealth, rather we destroy it,” she added.
Speaking about the current economic situation, she said that unlike in the recent past, the current cycle is distinguished by a more expensive dollar, higher interest rates and greater capital restriction, motivated by greater global financial uncertainty.
She described economic growth in the region in recent years as “slow” and “mediocre,” which also has not translated into social inclusion.
She said that there was an improvement in the Gini index, which can be used to measure inequality, between 2002 and 2014, with a focus on labor and fiscal policies for inclusion, but added that the social situation has deteriorated again since 2015.
“Poverty and inequality continue to fall, but not at the same pace as in the previous period,” Barcena continued.