By: Staff Writer
October 17, 2025
The Economic Commission for Latin America and the Caribbean (ECLAC) in their, “Panorama of Productive Development Policies in Latin America and the Caribbean,” report said that the Latin American and Caribbean (LAC) region needs a transformation to escape the development trap it has found itself in.
ECLAC, said: “Most countries in Latin America and the Caribbean are caught in three development traps that are limiting progress in the well-being of their populations: one of low capacity for growth, another of high inequality and low social mobility and cohesion, and a third of weak institutional capacities and governance. These challenges are compounded by climate change and the need to move towards environmentally sustainable development.
“One imperative for escaping the first trap is a redoubling of efforts to promote the productive transformation of economies with a view to boosting productivity and achieving higher, sustained, inclusive and sustainable growth.
“This transformation, understood as a process of sophistication, diversification and positive structural change, is a priority that can no longer be postponed in the region’s countries.
“It will not come about spontaneously or by the agency of an invisible hand, but requires deliberate, long-term public policies that are coordinated with all key stakeholders.
“This effort to set a direction for collective action is first and foremost an effort of governance and is the central feature of the new generation of productive development policies that are required.”
José Manuel Salazar-Xirinachs, ECLAC’s Executive Secretary, said at the launch of the report that the trap of low capacity for growth can be attributed largely to a slow productive transformation and more than a decade of corresponding stagnation, and even decline, in the region’s labour productivity rate, which has fallen below average global productivity since 2017.
The report continued: “The transformation called for is more important than ever in the current international context, one that is characterized, first, by geopolitical tensions and technological rivalry, which have intensified in recent years and led to a new phase of increasing trade barriers that in turn have heightened global economic uncertainty and affected international investment flows and global value chains; second, by the climate emergency, which requires an accelerated energy transition that entails costs in the short term but is opening a strategic window for sustainable productive transformation; and, third, by a technological revolution driven by advances in digitalization, artificial intelligence and other technologies that is changing production paradigms, opening up great opportunities but also disrupting labour markets and the geographical distribution of production.”
The lowest productivity rate is seen in the agriculture, livestock and forestry sector, representing just 44 per cent of the region’s average productivity, according to data from 2023. It is followed, among the sectors with the lowest productivity, by commerce, with 69 per cent, and construction, with 77 per cent.
Meanwhile, microenterprises account for a mere 12.5 per cent of the productivity of the region’s large companies, which is a much bigger gap than what is seen in more developed economies.
“The quandary facing Latin America and the Caribbean is substantial: either we begin a new era of high, sustained, inclusive and sustainable growth, or we head for a third lost decade,” said Salazar-Xirinachs.
He said to avoid the latter scenario, countries must scale up and improve their productive development policies based on a new vision that includes, among other things, working on strategic agendas around driving sectors, multilevel and multi-stakeholder.
“Let’s raise the political profile of these policies and delve deeper into the ‘hows,’ meaning how to carry out these transformations in practice,” Salazar-Xirinachs said, recalling that the Panorama’s 2025 edition being presented today joins other documents and projects by ECLAC that aim to provide practical guidance on how countries and their territories can use PDPs to accelerate their productive transformation.