sábado, 28 de junho de 2025

A diplomacia brasileira, historicamente e em 2011 - Paulo Roberto de Almeida

 De vez em quando a internet me traz um texto próprio, do qual eu já me havia esquecido. Talvez sirva para alguma coisa:

As grandes linhas da política externa brasileira

 

Paulo Roberto de Almeida *

Publicado, sob o título “Trajetória Coerente”, no suplemento Pensar Brasil”, caderno especial “De Igual para Igual”, do jornal Estado de Minas (Belo Horizonte, Sábado, 9 de abril de 2011, p. 17-19).

Blog Diplomatizzando (05/06/2011; link: http://diplomatizzando.blogspot.com/2011/06/grandes-etapas-da-diplomacia-brasileira.html).

 

A diplomacia brasileira seguiu, ao longo do último meio século, uma trajetória relativamente uniforme e coerente, embora marcada por alguns desvios momentâneos e por orientações políticas contrastantes,segundo as conjunturas políticas e os grandes alinhamentos observados em cada uma das grandes etapas do cenário internacional. Com algumas poucas exceções – possivelmente no imediato seguimento do golpe militar de 1964 e agora, recentemente, durante o governo Lula – ela seguiu invariavelmente algumas orientações básicasainda que animadas por preocupações diversas, todas elas comprometidas com o desenvolvimento nacional, a defesa da soberania e o comprometimento com o direito internacional, consubstanciado na Carta da ONU e em alguns outros instrumentos básicos das relações internacionais. 

A política externa foi, pode-se dizer com total segurança, persistentemente “desenvolvimentista”. Aexemplo da tendência dominante na política econômica, ela esteve engajada no processo de industrialização brasileira, embora atuando bem mais na política comercial (na qual o Itamaraty sempre conservou o “monopólio” negociador) do que na política industrial, onde ele foi ator coadjuvante. Essa foi a linha básica da diplomacia econômica brasileira desde a era Vargas até a atualidade: fazer com que as negociações comerciais externas –multilaterais ou regionais – não dificultassem o processo de industrialização, consumado com base em velhas receitas de substituição de importações e em forte protecionismo tarifário (que o Itamaraty se encarregou de defender junto ao Gatt, ao longo dos anos).

A outra grande vertente de atuação da diplomacia econômica consistiu na sustentação das dificuldades cambiais e de balanço de pagamentos, o que exigia do Itamaraty um bom trabalho junto aos principais credores, todos eles situados na América do Norte e na Europa ocidental. Empréstimos externos e atração de investimentos estrangeiros foram os dois elementos básicos nessa frente e pode-se dizer que o desempenho foi relativamente satisfatório, a despeito de crises desafiadoras no último terço do século XX (petróleo, dívida externa, crises financeiras nos mercados emergentes nos anos 1990). Mas esse tipo de negociação financeira estava mais bem afeta aos responsáveis econômicos e monetários do que aos funcionários do Itamaraty, que ainda assim ofereciam todo apoio nesse tipo de missão, quando não assumiram eles mesmos a responsabilidade pela condução do processo.

Outra área, entretanto, teve a colaboração crucial dos diplomatas para que ela pudesse se desenvolver, pelo menos até certo ponto: a capacitação do Brasil em matéria de enriquecimento nuclear e de domínio das tecnologias industriais ligadas à indústria nuclear para fins civis (energia), o que foi materializado no célebre acordo nuclear Brasil-Alemanha, de 1975 (depois descontinuado, a partir da crise dos anos 1980 e também por causa de fortes pressões contrárias dos Estados Unidos). Ocorreu, nesse setor, durante o governo militar, notável cooperação entre os militares e os diplomatas, inclusive porque ambas as corporações recusavam a adesão do Brasil ao Tratado de Não-Proliferação Nuclear (oferecido em 1968 à comunidade internacional pelas três potências nucleares signatárias, EUA, Reino Unido e União Soviética). Foi o momento de maior independência brasileira em relação aos EUA, depois de algumas décadas de alinhamento, no geral, coincidente com os grandes objetivos da maior potência ocidental, durante os anos da Guerra Fria. 

De fato, o Brasil exibiu uma política externa razoavelmente alinhada com os EUA desde antes da Segunda Guerra Mundial, a começar pela renegociação das dívidas contraídas nos anos de entre-guerras e pela própria participação brasileira no conflito, a partir da qual os dirigentes diplomáticos e os líderes políticos brasileiros esperavam uma retribuição à altura, em especial a inclusão do País no seleto clube de grandes potências, experiência logo frustrada pela intransigência do Reino Unido e da União Soviética. Ainda assim, os anos do pós-guerra foram de colaboração e de quase pleno entendimento político, com a compreensão dos militares brasileiros e da grande maioria dos diplomatas em relação às prioridades e à grande estratégia dos EUA na era da Guerra Fria: a contenção da União Soviética e a luta contra a penetração e a influência comunistas em diversos países da periferia ou da própria Europa ocidental. 

Os únicos pontos de desacordo se situavam justamente na cooperação econômica, com o Brasil e a maioria dos latino-americanos pedindo uma extensão ao continente da generosa ajuda para recuperação e reconstrução que os americanos prestavam à Europa no quadro do Plano Marshall. Os EUA nunca consentiram nessa extensão, inclusive porque consideravam, não sem razão, que os problemas da América Latina não eram exatamente de reconstrução, e sim de desenvolvimento, para o que recomendavam não ajuda estatal, mas reformas econômicas e abertura aos investimentos estrangeiros. A questão do financiamento ao desenvolvimento latino-americano foi resolvida mais adiante, com a criação do Banco Interamericano de Desenvolvimento, apenas depois de intensa pressão brasileira, notadamente através da Operação Pan-Americana, proposta pelo presidente Juscelino Kubitschek: tratou-se da primeira grande iniciativa brasileira em termos de liderança regional e de diplomacia multilateral, mesmo se limitada ao hemisférioamericano.

Ainda assim, ela serviu para formar os diplomatas brasileiros nos novos temas da diplomacia do desenvolvimento e do multilateralismo econômico, bem como nos seus procedimentos específicos (em relação, por exemplo, à velha escolha da diplomacia bilateral, de caráter essencialmente político), o que iria ser extremamente útil nas negociações do Gatt, com a nascente Comunidade Econômica Europeia e nos novos acordos em torno dos produtos de base (café, cacau, açúcar, etc.). O Brasil tornou-se um dos principais promotores do movimento em favor da reforma do Gatt desde o final dos anos 1950, num sentido de não-reciprocidade e de concessões sem contrapartida, assim como participou ativamente do processo que conduziu à criação da Unctad (Conferência das Nações Unidas sobre Comércio e Desenvolvimento), tornando-se um dos líderesdo grupo dos países em desenvolvimento (que veio a ficar conhecido como G77, do número de membros no momento de sua criação, em 1964).

O ponto alto dessa fase foi, evidentemente, a chamada “política externa independente”, quando o Brasil se liberta do estrito alinhamento aos cânones da Guerra Fria e passa a buscar oportunidades comerciais e de relacionamento político com os países socialistas e com as nações periféricas de modo geral. Entre os grandes temas debatidos nessa época esteve o de Cuba, cujo regime socialista foi considerado pela OEA como “incompatível com o sistema interamericano”, tese americana a que o Brasil se opôs por não haver, na Carta da OEA, nenhum caracterização quanto a regimes políticos. O Brasil, em todo caso, se absteve, quando a decisão foi votada, apoiado em argumentos essencialmente jurídicos esgrimidos pelo chanceler Santiago Dantas.

Ocorreu, então, a primeira ruptura, embora relativamente breve, nas linhas tradicionais da política externa brasileira, quando os militares, talvez para “agradecer” aos EUA a ajuda preventiva dada durante o golpe, concordam em sustentar a postura americana na região, participando da invasão da República Dominicana, contra uma revolução democrática em 1965. Foi, porém, um breve interlúdio, já que a partir de 1967, a diplomacia retomou sua postura desenvolvimentista e pela autonomia tecnológica (já dando início a um programa nuclear independente, que sofreria as referidas sanções americanas). Pelo resto do regime militar e também durante a fase de redemocratização, a diplomacia brasileira atuou com plena independência e profissionalismoassumindo uma postura moderadamente terceiro-mundista e, certamente, desenvolvimentista. Conflitos pontuais se manifestam nas relações com os EUA, tanto no plano bilateral – fricções comerciais, política nuclear, justamente – como no plano multilateral – resoluções da ONU e temas da agenda do desenvolvimento nos quais os EUA geralmente se singularizavam pela postura oposicionista. 

Desde essa época, e praticamente até hoje, a diplomacia brasileira vem construindo seu espaço próprio nos contextos regional e internacional, estimulando parcerias seletivas com alguns grandes países em desenvolvimento – em especial com a Índia, com a qual havia uma grande interface negociadora em temas comerciais – e colocando as bases de um grande espaço de integração econômica na América do Sul, primeiro via Alalc e Aladi, depois via Mercosul e outros esquemas sub-regionais. Ao promover a integração regional, a diplomacia brasileira sempre foi extremamente cautelosa em não proclamar qualquer veleidade de liderança brasileira no continente, muito facilmente confundida com pretensões hegemônicas e, portanto, recusada peremptoriamente pela maior parte dos vizinhos (com a possível exceção dos menores, interessados em algum tipo de barganha preferencial). Essa postura cuidadosa foi no entanto descurada pelo governo Lula, gerando resistências e contrariedades nos vizinhos mais importantes, que inclusive se mobilizaram contrariamente a um dos  objetivos de alguns governos brasileiros: a conquista de uma cadeira permanente no Conselho de Segurança da ONU. 

O governo Lula, justamente, representou uma ruptura nos antigos padrões profissionais da diplomacia, introduzindo uma agenda partidária e ideológica que redundou, em diversos casos, em um infeliz alinhamento com ditaduras e violadores dos direitos humanos em diversos continentes, numa demonstração de anti-americanismo infantil e, em última instância, prejudicial à credibilidade da política externa brasileira. Felizmente, o novo governo Dilma restabeleceu padrões de comportamento e de votação nos foros multilaterais bem mais conformes à tradição diplomática brasileira, condizentes inclusive com princípios constitucionais sobre valores democráticos e a defesa dos direitos humanos e com o espírito verdadeiro da Carta da ONU. 

 

* Diplomata de carreira e professor universitário; autor de diversos livros de relações internacionais (www.pralmeida.org).

ChamadaDiplomacia brasileira sempre se caracterizou pelo profissionalismo e por uma diplomacia de caráter nacional; regime militar e governo Lula representaram exceções nessa linha cautelosa e guiada por interesses nacionais, não partidários. 

 

[2554; Brasília, 11 de março de 2011; rev. 12/03/2011]



Senhor Deus dos desgraçados ( mas isto não é um poema) - Paulo Roberto de Almeida

Senhor Deus dos desgraçados

(mas isto não é um poema):

Paulo Roberto de Almeida 

Aviso aos navegantes, de direita e de esquerda, semitas e antissemitas, sionistas e antissionistas (e já vou avisando que eu não sou nem uma coisa, nem outra, muito pelo contrário, pois não tenho partido, nem religião, sequer um timezinho de futebol):

Os maiores inimigos de Israel, do povo judeu, da ideia mobilizadora do sionismo e daquele velho ideal da “única democracia” no Oriente Médio são a clique fascista e genocidária atualmente instalada no poder em Israel e seus auxiliares, que conduzem um morticínio sistemático contra o povo palestino, a pretexto de combater um movimento terrorista fascista e genocidário, e que estão se igualando a outros grandes, talvez os maiores, criminosos de guerra da história recente da humanidade (digamos nas últimas nove décadas).

Estou desistindo de ver noticiário na TV (e vejo quase todos os canais nacionais e várias internacionais (em inglês, francês, italiano, espanhol, lusitano etc., além de rádios e ferramentas de comunicações sociais) porque não suporto mais ver, todos os dias, dezenas de mortos, civis, desarmados, na fila da farinha (nem é comida de verdade), mulheres, crianças, velhos, todo mundo.

Alguém aguenta ver?

Tem alguma justificativa?

Quem pode ficar indiferente a essas imagens ou relatos?

Tem alguém com alma de Castro Alves para compor um novo poema do morticínio absoluto e irrestrito?

Por que tanto horror perante os céus?

Qual é a ideia que sustenta o genocídio? A impossibilidade de limpar o terreno para construir um balneário, um resort de luxo?

A ONU está muito distante e a clique dos criminosos de guerra, Netanyahu e snypers, muito perto?

O que dirão, vários anos à frente, os filhos e netos de judeus e palestinos aos seus antecessores que sobreviveram à tragédia? Vocês não fizeram nada? Assistiram a tudo aquilo absolutamente impassíveis?

Não posso crer e também não posso fazer nada, além de me comover e desejar não saber mais dessas coisas.

Só tenho este minúsculo espaço para expressar minha inconformidade. É pouco, muito pouco…

Paulo Roberto de Almeida

Brasília, 28/06/2025


quinta-feira, 26 de junho de 2025

Debate sobre o livro de Amado Luiz Cervo, O Espírito das Relações Internacionais

Um debate sobre a obra-síntese do Professor Emérito da UnB, Amado Luiz Cervo, O Espírito das Relações Internacionais,

Dia 30/06/2025, 19hs (informarei sobre o link de visualização):



quarta-feira, 25 de junho de 2025

Book: Capitalism and Freedom in the United States and in Brazil: rereading Milton Friedman’s classic with a Brazilian perspective - Paulo Roberto de Almeida

4959. Capitalism and Freedom in the United States and in Brazil: rereading Milton Friedman’s classic with a Brazilian perspective

(Brasília: Diplomatizzando, 2025, 68 p.).

English version of the work 4597.

Inserted in Academia.edu (25/06/2025): https://www.academia.edu/130165149/4959_Capitalism_and_Freedom_in_the_United_States_and_in_Brazil_rereading_Milton_Friedman_s_classic_with_a_Brazilian_perspective_2025_

Research Gate: https://www.researchgate.net/publication/393019236_Capitalism_and_Freedom_in_the_United_States_and_in_Brazil_Rereading_Milton_Friedman's_classic_with_a_Brazilian_perspective_Diplomatizzando


Table of contents

Preliminary note: my own series of “revisited classics”
Revisiting a classic: Friedman reread six decades later

Introduction
    Introduction
I. The Relation Between Economic Freedom and Political Freedom
    1. The Difficult Connection Between Political Freedom and Economic Freedom in Brazil
II. The Role of Government in a Free Society
    2. The Weight of the State in a Partially Free Society
III. The Control of Money
    3. Currency and Finance in a Highly Volatile Environment
IV. International Financial and Trade Arrangements
    4. International Financial and Trade Agreements: The Long-Term Dependence
V. Fiscal Policy
    5. Public Accounts: Rarely in Balance
VI. The Role of Government in Education
    6. The Insufficient Role of the State in Education
VII. Capitalism and Discrimination
    7. The Persistence of Slavery and Corporatism
VIII. Monopoly and the Social Responsibility of Business and Labor
    8. Monopolies, Cartels, and State-Supervised Trade Unionism
IX. Occupational Licensure
    9. The ultra-exacerbated regulatory bureaucracy
X. The Distribution of Income
    10. The non-distribution of income: a persistent trend throughout history
XI. Social Welfare Measures
    11. Social welfare policies: between focus and scope
XII. Alleviation of Poverty
    12. Poverty reduction: a task never completed
XIII. Conclusion
    13. Conclusion: what separates us from a developed society?

Note on the author

Dispensable Nation: America in a Post-American World - Kori Schake (Foreign Affairs)

 Dispensable Nation: America in a Post-American World

Kori Schake

Foreign Affairs, July/August 2025

Published on June 24, 2025


KORI SCHAKE is a Senior Fellow and Director of Foreign and Defense Policy Studies at the American Enterprise Institute and the author of Safe Passage: The Transition From British to American Hegemony. She served on the National Security Council and in the U.S. State Department during the George W. Bush administration.


President Donald Trump’s rise to power and enduring political appeal have been fueled in part by his depiction of the United States as a failure: exhausted, weak, and ruined. In a characteristic act of self-contradiction, however, his foreign policy is based on a significant overestimation of American power. Trump and his advisers seem to believe that, despite the country’s allegedly parlous condition, unilateral action on Washington’s part can still force others to capitulate and submit to American terms.

But since the end of World War II, American power has been rooted mostly in cooperation, not coercion. The Trump team ignores that history, takes for granted all the benefits that a cooperative approach has yielded, and cannot envision a future in which other countries opt out of the existing U.S.-led international order or construct a new one that would be antagonistic to American interests. Yet those are precisely the outcomes the Trump administration is hastening.

The political scientist Michael Beckley has argued in Foreign Affairs that the United States is becoming “a rogue superpower, neither internationalist nor isolationist but aggressive, powerful, and increasingly out for itself.” That portrait is accurate but incomplete, since it does not fully capture the extent to which American dominance can be undercut or constricted by others. In the Trump era, many have speculated about whether or to what degree the United States will withdraw from its leading role in the world. But a more pressing question might be, what if the rest of the world beats Washington to the punch, withdrawing from the cooperative U.S.-led order that has been the bedrock of American power?

Some may counter that even if U.S. allies and neutral countries don’t like the way Trump exercises American power, they have little choice but to go along with it now and will accommodate themselves to it in the longer term, placating the United States as much as possible and hedging only when absolutely necessary. After all, they might come to loathe and distrust the United States, but not as much as they already loathe and distrust China, Russia, and other American rivals. In this view, the United States that Trump wants to create would be the worst possible hegemon—except for all the other possible candidates. Besides, even if other countries wanted to opt out of the U.S.-led order or work around Washington, they don’t have the ability to do so, individually or collectively. They might yearn for the days when a more internationalist, open, cooperative United States shaped the world order. But they’ll learn to live with a more nationalist, closed, and demanding United States.

That view results from a failure of imagination—a common source of strategic failure, since statecraft requires one to anticipate how other actors in the international system will react and what forces they might set in motion. Lacking the ability to do that, the Trump team has instead taken an approach predicated on a pair of faulty assumptions: that other countries, international organizations, businesses, and civil society organizations have no alternative to capitulation in the face of U.S. demands and that even if alternatives emerged, the United States could remain predominant without its allies. This is solipsism masquerading as strategy. Instead of producing a less constraining order in which American power will flourish, it will instead yield a more hostile order in which American power will fade.

DON’T KNOW WHAT YOU’VE GOT TILL IT’S GONE

Despite Trump’s disparagement, the United States is incredibly strong and dynamic. No other advanced country relies so much on its domestic market and so little on trade. Around half of global trade and almost 90 percent of global foreign exchange transactions are conducted in U.S. dollars, an extraordinary repository of value that affords Washington the luxury of deficit spending that would be outrageous anywhere else. Unlike almost every other developed country, the United States has a growing prime-age workforce. The country boasts abundant natural resources, has friendly neighbors, draws the world’s most talented people to its universities and companies, fosters social and economic mobility that reduce ethnic and religious animosities, and is governed by a political system that is well adapted to a diverse society.

But Trump and his team are burning through those advantages at an alarming rate. Since he took office in January, elements of the country’s constitutional democracy have been undercut—or, worse yet, weaponized to serve partisan ends or indulge Trump’s personal vendettas. The White House has aggressively expanded the executive branch’s power by trampling on Congress’s authority, refusing to comply with court orders, and calling into question the independence of vital institutions such as the Federal Reserve. Trump has targeted elite American universities, starving them of the federal funding they use to create innovative technologies and medical advances. He has allowed Elon Musk, a billionaire tech titan who donated massive sums to his campaign, to run roughshod over the federal bureaucracy, forcing out many of the talented career civil servants who make the federal government work and carry out U.S. foreign policy.

Meanwhile, Trump’s erratic trade war, which targets rivals and allies alike, has whipsawed markets, spooked investors, and convinced Washington’s partners that they can no longer trust the United States. Trump has threatened the sovereignty of allies and publicly berated their leaders, all while lavishing praise on the dictators and thugs who threaten them. The administration’s radical and peremptory elimination of U.S. foreign assistance removed a lever of American influence and telegraphed a level of indifference that will not go unnoticed. As the country’s friends have looked on in horror and its rivals have watched with glee, the United States has gone from indispensable to insufferable.

Trump at the White House, Washington, D.C., June 2025Trump at the White House, Washington, D.C., June 2025Kevin Lamarque / Reuters

The American experience of dominance in the international order is historically anomalous because it has occasioned so little hedging on the part of others. Typically, a rising power creates incentives for other countries to counterbalance its influence: in the fifth century BC, the rise of Athens caused neighboring states to seek protection from Sparta; in the Great Northern War of the early eighteenth century, the ambitions of King Charles XII of Sweden provoked an anti-Swedish coalition; a century or so later, France’s growing power fostered the coalition that eventually defeated Napoleon. But the international order that the United States and its allies created out of the ashes of World War II prevented that seeming inevitability. Its agreed-on rules and consensual participation maximized the influence of small countries and midsize powers that enjoyed the safety provided by American power. The United States voluntarily restrained itself to encourage cooperation. As a result, the American order was remarkably cost-effective, because the rules so seldom had to be enforced. No dominant power has ever had so much assistance from others in maintaining its dominance.

That order is now collapsing. Trump has a deep-seated ideological conviction that allies are a burden. His tactic in negotiations is to use U.S. leverage to wring concessions from all counterparties at all times. But this approach fails to account for how cooperation can act as a force multiplier. Take the case of Iran. The United States has maintained draconian sanctions on the Islamic Republic since 1979. American pressure alone, however, was not enough to get Tehran to come to the negotiating table over its nuclear program. Doing so required China, Russia, and Washington’s European allies to sign on to a sanctions regime.

The war in Ukraine offers another example. To bring an end to the war, the Trump administration may want to relax sanctions on Russia or force Ukraine to capitulate to Moscow’s aggression. But it would take European acquiescence for the Russian economy to recover, and European countries could continue to support Ukraine even without American assistance. Instead of securing the cooperation of European allies in the negotiations, however, Trump has frozen them out. Similarly, the United States wants to restrict China from acquiring certain kinds of advanced technology, such as tools and components critical to manufacturing semiconductors. But without the compliance of countries that manufacture such things, including Japan and the Netherlands, U.S. restrictions won’t work. Threats to exclude countries from the U.S. market or to strip their ability to use the U.S. dollar for transactions won’t be effective if Washington is going to restrict market access no matter what, or if the dollar loses its centrality to the global economy.

Trump’s approach is solipsism masquerading as strategy.

The Trump administration has hardly been alone in abetting the corrosion of an international order advantageous to the United States. Washington has been weaponizing economic interdependence for decades, and in response to a widespread belief among American voters that free trade harmed U.S. manufacturing and hollowed out the American economy, the last three presidential administrations have all been hostile to providing market access, even to preferred trading partners whose inputs are essential to U.S. production.

For many years, U.S. allies—particularly those in Asia, which fear China’s growing power—have pleaded with Washington to pursue an economic strategy that would allow them to reduce their reliance on China. During President Barack Obama’s second term, his administration negotiated the Trans-Pacific Partnership, which offered a collaborative way forward. The deal would have linked 12 economies, taken advantage of Asia’s economic dynamism, and used the promise of access to American markets to compel higher environmental and labor standards that would, in turn, make U.S. production more competitive. But the Obama administration let the deal languish instead of pushing for congressional ratification. Both major-party presidential candidates disavowed it in 2016, Trump withdrew from the negotiations in 2017, and Joe Biden chose not to join the pact after he became president in 2021.

When it comes to burning bridges, however, nothing matches the speed and destructiveness of Trump’s policies in the past few months. According to a recent survey conducted by the opinion-research firm Cluster 17 and the journal Le Grand Continent, 51 percent of Europeans “consider Trump to be an enemy of Europe.” And this sentiment is strongest in countries that had previously been most supportive of the United States, such as Denmark and Germany. “Americans—at least this part of the Americans, this administration—are largely indifferent to the fate of Europe,” said Friedrich Merz, now Germany’s chancellor, after his center-right party prevailed in elections in February. As a result, he said, “my absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the United States.” His words captured what would have been a fringe belief a decade ago but has become conventional wisdom in Europe today.

AMERICA ALONE

In recent years, U.S. adversaries including China, Iran, North Korea, and Russia have stepped up their cooperation in the face of Washington’s efforts to isolate them, helping one another skirt sanctions, arm their militaries, and carry out various acts of aggression. This hardly comes as a surprise, and American policymakers have plenty of experience in dealing with such machinations. What they lack, however, is any experience of a world in which traditional American allies and more neutral countries also start working together—but against the United States.

The first signs of this process might look like little more than symbolic protests, as countries and institutions seek ways to strip Washington of its traditional convening power. Heads of state might avoid Oval Office meetings, foreign officials might be unavailable for phone calls to coordinate policy with their American counterparts, and the heads of international organizations might not schedule the kinds of summits that grant U.S. officials stature and allow them to set the agenda and meet with many world leaders at once. Fearing that Washington plans to withdraw U.S. troops stationed in Europe, the NATO secretary-general might cancel the alliance’s annual summit to avoid giving the American president a platform to announce the move; the UN secretary-general could choose not to accommodate U.S. scheduling requests for Security Council meetings or decline to give U.S. representatives the floor for arguments. Although such acts might seem trivial, they would erode Washington’s ability to make sure that its policy proposals form the basis of international debate and action.

A global retreat from Washington would quickly begin to have far more palpable effects by taking a toll on the American economy. Countries might choose not to invest in U.S. Treasuries or might buy them only at higher interest rates, imposing higher costs on Washington for servicing the national debt. The United States can sustain the eye-popping profligacy of its national debt only because investors consider the U.S. dollar to be a safe haven. But Trump and his Republican allies in Congress are destroying that hard-earned privilege with tariffs and a budget that will push debt levels to unprecedented heights. (It should have come as no surprise when, in May, Moody’s downgraded the United States’ credit rating.) Over time, the United States might suffer an exodus of investors, who cherish not only the growth they have come to expect from U.S. markets but also the stability, rule of law, and regulatory independence that undergird the American economy. Meanwhile, foreign governments might begin to use subsidies and regulations to create supply chains that avoid American-made components.

If Washington continues to erect significant barriers to foreign goods, its trading partners will seek out other markets, increasing their integration with one another at the expense of American companies. In March, Japan and South Korea, the two Asian U.S. allies most dependent on the United States, held a trade summit with China, after which the three countries jointly announced a plan to pursue a new trilateral free trade agreement and pledged to work together to develop “a predictable trade and investment environment” in the region. Washington needs Tokyo and Seoul on its side to create economies of scale and circumvent Chinese supply chains. Japan and South Korea are the two anchors of Asian economic dynamism; without them, American efforts to marginalize China cannot succeed.

Trump’s disdain for multilateralism is also imperiling the International Monetary Fund and the World Bank. For decades, they have helped shape the global economy to Washington’s advantage. But the Trump administration has accused them of “falling short” and has demanded they align their agendas with the president’s, creating concern that Washington might withdraw from them—or starve them, as it has the World Trade Organization.

WATCH YOUR BACK

U.S. national security would also suffer if countries started to decouple from Washington. Consider intelligence sharing, another area in which Washington can expect less cooperation. That practice requires U.S. partners to trust that any information they share with Washington won’t be used to disadvantage them and that the sources and methods for acquiring that intelligence will remain secret. In Trump’s first term, U.S. allies quickly learned that the president was cavalier about classified information. In May 2017, The New York Times reported, Trump casually discussed classified information about a terrorist plot, which Israel had provided to the United States, with Russian officials visiting the White House. The cause for concern has only grown in his second term. In March, a number of Trump’s cabinet officials used Signal, an unclassified commercial mobile app, to share and discuss classified details about an imminent U.S. strike on Houthi militants in Yemen. Such laxity might cause other countries to become more cautious about what they share with Washington, as well as how and when they share it.

Trump’s approach to managing the U.S. military could also contribute to a flight from American leadership. Some of the military’s most highly trained units are now being diverted from high-intensity combat preparations at the army’s National Training Center in order to assist with immigration enforcement at the border with Mexico. In pursuit of such presidential priorities, the country’s armed forces will lose operational proficiency, making them a less valuable partner and a less available one, as well. Allies may choose to avoid acquiring U.S.-made weaponry for fear that Washington or an American company might deny them permission to use it in a crisis—just as Musk denied Ukraine the ability to use his Starlink communications network to carry out an attack on Russian forces in Crimea in 2022. That avoidance, in turn, may pose problems for interoperability. Getting militaries to work intimately together is difficult enough when they’re using compatible equipment; increasing the degree of difficulty will chip away at one of the central advantages Washington and its allies enjoy over potential adversaries.

A banner depicting the Russian pro-war symbol “Z,” Moscow, March 2025A banner depicting the Russian pro-war symbol “Z,” Moscow, March 2025Yulia Morozova / Reuters

The U.S. military’s ability to project power across the globe relies on partners and allies. The Pentagon cannot provide a surge of forces to the Middle East without using ports in Belgium and Germany, or dispatch forces across the Pacific (much less sustain combat operations against China) without using bases in Japan and the Philippines. The United States cannot carry out airstrikes on terrorists in Afghanistan without permission to transit Pakistani airspace, and many more American service members would have died in the wars in Afghanistan and Iraq had the U.S. military not maintained access to its Ramstein Air Base and Landstuhl hospital in Germany. Washington would not be able to carry out war plans with the requisite speed without preferential passage through the Panama and Suez Canals. American military power isn’t autarkic; it’s dependent on others. But growing antipathy to U.S. policies will alienate publics in other countries and make it more difficult for their governments to provide support to American military operations, much less participate in them. Imagine if terrorists carried out a massive attack on the United States and allies didn’t rush to help, as they did after the 9/11 attacks, in part by supporting U.S. forces in Afghanistan.

The United States’ dense web of alliances and partnerships also enables the “extended deterrence” that protects Washington’s friends from their enemies. But Trump has already weakened that pillar of the post–Cold War order. In 2019, for example, after Iranian proxies attacked major oil processing facilities in Saudi Arabia, American allies took note that Trump chose not to retaliate.

The Trump administration seems to believe that if Washington forces its allies to stand on their own, they will make choices that would benefit the United States. That is unlikely to be true. Although most American allies have militaries superior to those of their potential adversaries, they generally lack the confidence to use them. Washington’s European allies could unquestionably defeat the Russian military in a conventional, nonnuclear war. Finland alone could probably defeat Russia in such a fight if backed by security guarantees from at least one of its nuclear-armed allies, France or the United Kingdom.

Trump has hardly been alone in abetting the corrosion of the U.S.-led order.

But U.S. allies in Europe have too little confidence in their own strength. And if the United States walks away from them, they are likely to make compromises with aggressors that would harm their interests and Washington’s, as well. That is what France and Germany did after Russia invaded Ukraine in 2014, and the Obama administration barely reacted. The European powers pressured Ukraine into accepting the so-called Minsk agreements, which formalized a buffer zone of Russian occupation on Ukrainian territory. But that didn’t stop the fighting: Russia reinforced its positions, violated the accords, and invaded again in 2022.

In the years to come, a Russian encroachment onto the territory of a Baltic member of NATO, coupled with threats to use nuclear weapons if NATO resisted, could fracture the West. The Trump administration might be unwilling to trade New York for Tallinn—and France, Germany, and the United Kingdom might fold, too. A Europe consumed with such insecurity wouldn’t be particularly keen to help Washington deal with Chinese military and commercial aggression or to help constrain the Iranian nuclear program.

Trump routinely calls into question the reliability of U.S. security guarantees by demonstrating his indifference to the security of treaty allies that do not spend what he considers to be the proper amount on defense. And the shameful way that he equates Russia’s aggression against Ukraine with that country’s heroic defense of its sovereignty has eroded the sense of basic American morality—imperfect and inconsistent though it might be—that attracts cooperation from like-minded countries. If U.S. policies are overtly amoral and thus indistinguishable from those of China and Russia, other countries might opt to side with those powers, betting that at least their behavior will be more predictable.

A BAD BET

The Trump administration may be relying on the antipathy that U.S. allies feel toward the ideologies that guide American rivals such as China, Iran, North Korea, and Russia. In this view, even if U.S. partners don’t like certain things Washington does, they’re ultimately going to stick with the United States out of a sense of democratic solidarity. But U.S. allies easily overcame whatever ideological objections they may have had and continued trading with Russia after the 2014 invasion of Ukraine, and with China despite its repression of Uyghurs and its crackdown in Hong Kong in recent years. Besides, the Trump administration itself hardly considers ideological differences to be an obstacle to cooperation. A mismatch between American and Russian values has not prevented Trump from taking Moscow’s side in the Ukraine war. Under his administration, Washington won’t be “giving you lectures on how to live or how to govern your own affairs,” Trump assured a gathering of investors and Saudi leaders in May. If Washington doesn’t act as if ideology matters, it shouldn’t expect that others will.

Trump and his team may also believe that the convergence of Chinese, Iranian, North Korean, and Russian power is of such magnitude that European resistance would prove futile without American heft. Better, in this view, to revive the nineteenth-century practice of the great powers dividing up the world. Doing so, however, would concede Europe to Russia and Asia to China, which would constitute a colossal loss. Moreover, there is no reason to assume that such concessions would slake Chinese and Russian ambitions: consider, for example, what Beijing’s massive investments in Latin America and attempts to corrupt the Canadian political system suggest about Chinese intentions.

Another potential explanation for the Trump administration’s approach is that it sees most forms of alliance management as at best a distraction from and generally an impediment to winning the contest with China. Trump administration officials would hate the comparison, but that position is a continuation of the Biden administration’s argument that the most important thing for the United States is to strengthen itself at home: to have the best economy, the most innovative technology, and the strongest military.

According to this logic, winning in those dimensions will draw global support because people like to be on the side of a winner. But that won’t be the case if others don’t have access to the American market or if they consider American technology dangerous to them or believe the U.S. military offers them no genuine protection. The United States should, of course, strengthen itself. But when it does so without benefiting others, they will try to shield themselves and limit their exposure to American power.

And if Trump is truly aiming to make the country stronger abroad by making it stronger at home, he is doing so in a curious way. The administration’s ill-conceived tariffs are increasing market volatility and making business planning practically impossible. Republican legislation advocated by Trump is likely to explode the deficit and increase inflation. The association of U.S. technology titans with the administration’s assault on government agencies and the rule of law is damaging their brands and imperiling their market values and adoption rates. And according to the defense analyst Todd Harrison, the budget proposal Trump has championed would result in a $31.5 billion reduction in defense spending in 2026 compared with what the Biden administration had projected for that year, which was itself inadequate to the security challenges the country faces. This is an agenda for weakness, not strength.

NEITHER FEARED NOR LOVED

Trump and his team are destroying everything that makes the United States an attractive partner because they fail to imagine just how bad an order antagonistic to American interests would be. The United States’ indispensability was not inevitable. In the post–­Cold War world, the country became indispensable by taking responsibility for the security and prosperity of countries that agreed to play by rules that Washington established and enforced. If the United States itself abandons those rules and the system they created, it will become wholly expendable.

The self-destruction of American power in the Trump years is likely to puzzle future historians. During the post–Cold War era, the United States achieved unprecedented dominance, and maintaining it was relatively easy and inexpensive. All of Trump’s predecessors in that period made errors, some of which significantly reduced U.S. influence, aided the country’s adversaries, and limited Washington’s ability to induce cooperation or compliance on the part of other countries. But none of those predecessors intended such outcomes. Trump, on the other hand, wants a world in which the United States, although still rich and powerful, no longer actively shapes the global order to its advantage. He would prefer to lead a country that is feared rather than loved. But his approach is unlikely to foster either emotion. If it stays on the path Trump has started down, the United States risks becoming too brutal to love but too irrelevant to fear.

In the years to come, the alliances it took decades to foster will begin to wither, and U.S. rivals will waste no time in leaping to exploit the resulting vacuum. Some of Washington’s partners may wait for a while, hoping that their American friends will come to their senses and try to reestablish something akin to the traditional U.S. leadership role. But there is no going all the way back; their faith and trust have been irreparably damaged. And they won’t wait long, even for an American return to form that would amount to less than a full restoration. Soon, they will move on—and so will the rest of the world.

Stanley Fischer (1944–2025) - James Boughton (IMF)

 Stanley Fischer (1944–2025)

James Boughton

Analytical Series

Published on June 9, 2025

 

Stanley Fischer, who passed away in May at age 81, was one of the most important figures in the recent history of the IMF and of macroeconomics. He spent just seven years (1994–2001) at the Fund and was only the number two official in management (first deputy managing director), but he left a huge footprint.

Part of Stan’s influence resulted from the era during which he served. He arrived at the Fund in September 1994 from the Massachusetts Institute of Technology (MIT), where he had been professor of economics and chairman of the economics department. Three months later, the Mexican economy descended into financial chaos. The managing director, Michel Camdessus, was on holiday for the Christmas break, and so Stan was in charge at headquarters. Mexico’s highly respected finance minister, Pedro Aspe, had been one of Stan’s students at MIT, as had Luis Téllez, chief of staff to President Ernesto Zedillo. Even after Camdessus returned and took over the reins, Stan’s knowledge of the issues and his relationships with key officials placed him at the center of the Fund’s management of the crisis.

One of Stan’s key insights in responding to the Mexican crisis was that its potential to spread to other emerging markets—even those far from the Americas—was very real and very dangerous. At first he was almost alone in holding this view and in arguing that it justified a massive and rapid response from the IMF and other official creditors, but he soon convinced most of his colleagues. Events proved him to be prescient. The Mexican experience segued into a series of financial crises across the globe, as one emerging market after another called on the Fund to bail them out.

Crisis analysis

Throughout the rest of his time at the IMF, Stan led and oversaw much of the Fund’s crisis analysis in Washington. He also traveled to many crisis countries—Thailand in 1996 and 1997, Indonesia and South Korea in 1997, Brazil and Malaysia in 1998, Ecuador in 1999, Argentina on several occasions, and others—to negotiate with senior finance officials, several of whom he already knew quite well personally. If he had not been there with his commitment to work closely with each country to find sustainable solutions, the path through the thicket would most likely have been longer and thornier.

Stan believed strongly that the Fund had to stay engaged with countries in crisis both financially and with its policy advice. He also had strong views on the thrust of that advice: that heavily indebted emerging market economies had no choice but to implement sound macroeconomic policies, allow exchange rates to respond to market pressures, and live within the limits of available financing. That commitment attracted critics, and Stan listened carefully.

Although he did not shy away from defending his position, he was remarkably open to changing his mind. The Fund’s policy prescriptions were often caricatured under the rubric of the “Washington Consensus.” Rather than run from that tag, he defended it in a 2003 lecture as “an important component of the right approach to economic policy.” More controversially, however, he initially responded to the financial crisis of the 1990s by formulating a “bipolar” view of exchange rate policy, arguing that the only sustainable policies were either a firm peg to an external anchor such as the US dollar or a clean float with the rate determined only by market conditions. He eventually admitted, in a 2001 article, that he and others “probably have exaggerated their point for dramatic effect.”

Strength of personality

A second reason for Stan’s pervasive influence at the IMF was the strength of his personality. He inspired the staff by working harder than anyone else in the building, by at least seeming to be smarter than everyone else, and arguably being nicer than everyone else. By listening to and engaging with the staff, he became a natural mentor to all who worked with him. He could also be single-mindedly persistent. For 50 years before he arrived, the Fund had always zealously guarded the privacy of its activities and information. Stan fought hard against an entrenched culture to remake the IMF into an open and transparent organization.

On a personal note, when Stan arrived at the Fund in summer 1994, he sought me out because he wanted to learn more about the history of the IMF, and he had found the official histories to be hard going. Make it more lively! he urged me. I already admired Stan, but now I was a fan. He was particularly interested in the founders: Britain’s John Maynard Keynes, of course, but also the US official Harry Dexter White. As he prepared to leave MIT, he paid a visit to Paul Samuelson, who asked him to look into allegations that White had been secretly disloyal to the United States. Stan asked me to investigate, and that led to a 25-year quest on my part, culminating in a full biography (and vindication) of a remarkable man.

Perhaps the most remarkable aspect of Stan’s story is that his time at the IMF was just one stage in a long, varied, and highly successful career. The first stage was academic, as a professor at the University of Chicago and then MIT. He made his name practically synonymous with macroeconomics in three ways.

Varied career

First, he wrote articles that quickly became classics, most notably a 1977 paper in the Journal of Political Economy that reconciled neoclassical and Keynesian macroeconomic models and essentially created the New Keynesian school of thought. Second, he coauthored widely adopted economics textbooks for undergraduate and graduate students. Third, his courses at MIT attracted graduate students of the highest caliber, many of whom became famous in the field as academic stars (Olivier Blanchard, David Romer, and many others), central bankers (Ben Bernanke, Mario Draghi, Frederic Mishkin, and others), and other leaders.

Stan first interrupted his academic career in 1988 to spend two and a half years as chief economist at the World Bank. He returned briefly to MIT until he was lured back to Washington as Camdessus’s deputy at the IMF. After Camdessus retired in 2000, Stan stayed on for a time to guide the transition to new leadership. In 2002, he branched out further to try his hand in the private sector, becoming a vice chairman of the vast banking conglomerate Citigroup. Three years later, the governorship of the Bank of Israel opened up. Stan held dual citizenship in the United States and Israel, and he had long harbored a desire to help Israel directly. He accepted the offer to head the central bank and spent the next eight years in Jerusalem, most notably playing a major part in stabilizing the Israeli economy throughout the global financial crisis that struck in 2008.

In 2011, he made an effort to return to the IMF by becoming a candidate for managing director. That effort failed when the Fund declined to waive its rule that blocked candidates over the age of 65. Finally, for a last act, he served three years as vice chairman of the  Federal Reserve System. He retired in 2017, ending a career of nearly five decades.

These professional pursuits took Stan from a quite humble beginning, as a child living above a grocery store in Mazabuka, Northern Rhodesia; to Israel (where he met Rhoda Keet, his wife until her death in 2020); England (where he studied at the London School of Economics); the United States for much of his life; and Israel again. It was a remarkable life, well lived.

James Boughton

JAMES BOUGHTON is a former historian of the IMF. He has published several books, including Harry White and the American Creed: How a Federal Bureaucrat Created the Modern Global Economy (and Failed to Get the Credit).

 

Further reading:

Blanchard, Olivier. 2005. “An Interview with Stanley Fischer.” Macroeconomic Dynamics 9: 244–62.

Blanchard, Olivier. 2023. “‘Stan the Man’: On Stanley Fischer and MIT.” Policy Brief, Peterson Institute for International Economics.

Blanchard, Olivier, and Stanley Fischer. 1989. Lectures on Macroeconomics. Cambridge, MA: MIT Press.

Boughton, James M. 2021. Harry White and the American Creed: How a Federal Bureaucrat Created the Modern Global Economy (and Failed to Get the Credit). New Haven, CT: Yale University Press.

Dornbusch, Rudiger, and Stanley Fischer. 1983. Introduction to Macroeconomics. New York, NY: McGraw-Hill.

Fischer, Stanley. 1977. “Long-term Contracts, Rational Expectations, and the Optimal Money Supply Rule.” Journal of Political Economy 85: 191–205.

Fischer, Stanley. 2001. “Exchange Rate Regimes: Is the Bipolar View Correct?” Journal of Economic Perspectives 15 (2): 3–24.

Fischer, Stanley. 2003. “Richard T. Ely Lecture: Globalization and Its Challenges.” American Economic Review 93 (2): 1–30.

Loungani, Prakash. 2013. “A Class Act.” Finance & Development 50 (3): 4–7.

 

Chile Can Grow Faster – But it Won’t Be Like the 1990s Again - Si Guo, Andrea Schaechter (IMF)

 

 

(Credit: Igor Alecsander/iStock by Getty Images) 

 

(Credit: Igor Alecsander/iStock by Getty Images) 

 

Many of Chile’s current socioeconomic debates—such as those related to fiscal sustainability, pension adequacy and college loans—can be attributed to the country’s growth slowdown over the past two decades. Back in the 1990s, Chile grew 6.2 percent per year on average and was Latin America’s posterchild success story. Over time, this robust growth trend steadily waned, and by the 2020s, growth barely went above 2 percent. The IMF’s recent annual economic health check of the country (Article IV consultation) addresses how Chile can reverse this trend.

 

Many of Chile’s current socioeconomic debates—such as those related to fiscal sustainability, pension adequacy and college loans—can be attributed to the country’s growth slowdown over the past two decades. Back in the 1990s, Chile grew 6.2 percent per year on average and was Latin America’s posterchild success story. Over time, this robust growth trend steadily waned, and by the 2020s, growth barely went above 2 percent. The IMF’s recent annual economic health check of the country (Article IV consultation) addresses how Chile can reverse this trend.

 

 

chart showing Chile's growth rate in percent from the 1990s

 

Comparing Chile to its peers, there is scope to grow faster. Higher-income countries that were once at a comparable income level to Chile grew at a rate of around 2.9 percent per year. However, Chile faces challenges that most of those economies did not encounter at the same stage of development: such as an aging population and a global slowdown, both of which will make it more difficult for Chile to reach this pace.

 

Historical patterns

 

As countries get richer, sustaining rapid growth simply becomes harder because of diminishing gains from investment and less scope for technology catch-up. To evaluate Chile’s growth potential, we compared its trajectory with other countries when they reached similar income levels, such as Australia in the late 1980s and Korea in the 2000s. According to the Penn World Table and our calculations, Chile’s GDP per person tripled from US$8,200 in 1990 to around US$26,000 in 2025, in constant 2017 U.S. dollars after purchasing power parity (PPP) adjustment.

 

Comparing Chile to its peers, there is scope to grow faster. Higher-income countries that were once at a comparable income level to Chile grew at a rate of around 2.9 percent per year. However, Chile faces challenges that most of those economies did not encounter at the same stage of development: such as an aging population and a global slowdown, both of which will make it more difficult for Chile to reach this pace.

 

Historical patterns

 

As countries get richer, sustaining rapid growth simply becomes harder because of diminishing gains from investment and less scope for technology catch-up. To evaluate Chile’s growth potential, we compared its trajectory with other countries when they reached similar income levels, such as Australia in the late 1980s and Korea in the 2000s. According to the Penn World Table and our calculations, Chile’s GDP per person tripled from US$8,200 in 1990 to around US$26,000 in 2025, in constant 2017 U.S. dollars after purchasing power parity (PPP) adjustment.

 

 

chart showing average GDP growth in decade after reaching US$26,000 per capita in economies with income levels similar to Chile

 

Among 28 economies that crossed the US$26,000 real GDP per capita threshold between 1950 and 2010, median annual GDP growth over the subsequent decade was 2.9 percent. This benchmark is well below Chile’s 1990s boom, but still above its current trend.

 

Demographic and external drags

 

While the comparison is useful and offers some optimism, Chile faces an aging population and a less favorable global growth environment – impediments that many of these other higher-income economies did not face during their development stage.

 

Though still relatively young, Chile’s population is aging. According to the UN’s median population projection, Chile’s working-age population (15-64) will grow by just 0.15 percent per year during 2025-35. With modest gains in labor participation, employment will likely grow by 0.2-0.3 percent annually – below the 0.8 percent seen in the comparison group. This demographic drag alone saps ¼ percentage point from Chile’s potential growth.

 

Global technological trends could also weigh on Chile’s outlook. In the 1990s, information technology boosted productivity across countries. Our comparison group of countries benefitted from a U.S. GDP growth rate – taken as a proxy for global technological trends – of 3.1 percent per year on average. In contrast, economists now expect more modest U.S. growth of 2.1 percent for the next decade. We estimate that a one-percentage point reduction in 10-year U.S. annual growth translates to a further 0.8 percentage point restraint on Chile’s potential growth.

 

Transformational reforms

 

While these are rough estimates, and outcomes could vary widely, the exercise suggests a long-term growth trend of around 1.9 percent, if Chile were to perform in line with the median country and the demographic and external headwinds persisted.

 

So, how can Chile increase its potential and defy these drags on growth? Short-run macroeconomic stimulus is not the answer, and Chile’s economy is already balanced. The solution lies in deepening supply-side structural measures, consistent with the policy messages in our latest annual review of Chile’s economy (the Article IV consultation).

 

First, it is critical to make regulatory requirements more efficient. As an extreme example, it can take up to 10 years to sort out permits and navigate bureaucracy to get a large mining project off the ground. Streamlining this lengthy process would help reduce barriers to investment and support technology adoption. Similarly, modernizing regulations related to maritime transport could lower trade costs and improve Chile’s competitiveness. 

 

To address demographic challenges, Chile could stimulate labor participation, for example by improving the access to quality childcare that would enable more women to enter the labor force.

 

Chile’s R&D spending is also substantially below the OECD average. Greater public-private collaboration here is essential, given limited budgetary resources. The proposed technology transfer bill, enabling university researchers to create tech companies and commercialize their work, could help narrow this gap.

Finally, as the world’s largest copper producer, second largest lithium producer, and as a nation richly endowed with solar and wind resources, Chile can benefit from the high global demand for these critical minerals and through use of low-cost renewable energy.

 

While there is no silver bullet for growth, together these reforms improve the chances of a better outcome. Lifting Chile’s growth potential is critical for improving living standards and addressing social and fiscal pressures. Chile has an established track record of prudent macroeconomic management. Building on this solid foundation, the country can achieve stronger growth in a challenging global environment.

 

Among 28 economies that crossed the US$26,000 real GDP per capita threshold between 1950 and 2010, median annual GDP growth over the subsequent decade was 2.9 percent. This benchmark is well below Chile’s 1990s boom, but still above its current trend.

 

Demographic and external drags

 

While the comparison is useful and offers some optimism, Chile faces an aging population and a less favorable global growth environment – impediments that many of these other higher-income economies did not face during their development stage.

 

Though still relatively young, Chile’s population is aging. According to the UN’s median population projection, Chile’s working-age population (15-64) will grow by just 0.15 percent per year during 2025-35. With modest gains in labor participation, employment will likely grow by 0.2-0.3 percent annually – below the 0.8 percent seen in the comparison group. This demographic drag alone saps ¼ percentage point from Chile’s potential growth.

 

Global technological trends could also weigh on Chile’s outlook. In the 1990s, information technology boosted productivity across countries. Our comparison group of countries benefitted from a U.S. GDP growth rate – taken as a proxy for global technological trends – of 3.1 percent per year on average. In contrast, economists now expect more modest U.S. growth of 2.1 percent for the next decade. We estimate that a one-percentage point reduction in 10-year U.S. annual growth translates to a further 0.8 percentage point restraint on Chile’s potential growth.

 

Transformational reforms

 

While these are rough estimates, and outcomes could vary widely, the exercise suggests a long-term growth trend of around 1.9 percent, if Chile were to perform in line with the median country and the demographic and external headwinds persisted.

 

So, how can Chile increase its potential and defy these drags on growth? Short-run macroeconomic stimulus is not the answer, and Chile’s economy is already balanced. The solution lies in deepening supply-side structural measures, consistent with the policy messages in our latest annual review of Chile’s economy (the Article IV consultation).

 

First, it is critical to make regulatory requirements more efficient. As an extreme example, it can take up to 10 years to sort out permits and navigate bureaucracy to get a large mining project off the ground. Streamlining this lengthy process would help reduce barriers to investment and support technology adoption. Similarly, modernizing regulations related to maritime transport could lower trade costs and improve Chile’s competitiveness. 

 

To address demographic challenges, Chile could stimulate labor participation, for example by improving the access to quality childcare that would enable more women to enter the labor force.

 

Chile’s R&D spending is also substantially below the OECD average. Greater public-private collaboration here is essential, given limited budgetary resources. The proposed technology transfer bill, enabling university researchers to create tech companies and commercialize their work, could help narrow this gap.

Finally, as the world’s largest copper producer, second largest lithium producer, and as a nation richly endowed with solar and wind resources, Chile can benefit from the high global demand for these critical minerals and through use of low-cost renewable energy.

 

While there is no silver bullet for growth, together these reforms improve the chances of a better outcome. Lifting Chile’s growth potential is critical for improving living standards and addressing social and fiscal pressures. Chile has an established track record of prudent macroeconomic management. Building on this solid foundation, the country can achieve stronger growth in a challenging global environment.

 

****

 

****

 

Si Guo is a senior economist and Andrea Schaechter is an assistant director in the Western Hemisphere Department.

Postagem em destaque

Livro Marxismo e Socialismo finalmente disponível - Paulo Roberto de Almeida

Meu mais recente livro – que não tem nada a ver com o governo atual ou com sua diplomacia esquizofrênica, já vou logo avisando – ficou final...