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New lenses for an old problem: how to promote territorial development in Latin America

Aerial view of Buenos Aires.Katarzyna Druzbiak – World Bank

Long before the COVID-19 outbreak, access to study or work opportunities and public services were a problem for many Latin Americans. Moving to study or to get a job was a daily occurrence due to the strong population concentration in few large cities that exists both in the region and worldwide. In fact, barely 1.5% of the earth’s surface is home to half of the almost 8 billion people on the planet.

In addition to its repercussions on public health, the covid-19 pandemic made it possible to make the infrastructure and services gap between different areas even more visible, generating different economic and social impacts depending on where you live.

“In a pandemic scenario, actions to achieve recovery have the potential to support not only immediate needs, but also the challenges to achieve an integrated, coordinated and sustainable territorial development, improving the quality of life of people,” he says. Nancy Lozano Gracia, urban development specialist at the World Bank.

Along with other experts, Lozano Gracia recently presented a report which analyzes the main dimensions of territorial development in Argentina. In this interview, he discusses the opportunities and challenges facing not only this country but the entire region to ensure that all people have good access to services, education, health, and job opportunities no matter where they are.

Question. What is territorial development and why is it important for the countries of the region?

Answer. Territorial development is a perspective that starts from analyzing where social and economic relations take place. Economic activity, people, jobs and standard of living are often not evenly distributed across a country. All the countries of Latin America and the Caribbean present profound regional differences. It is key to understand the main challenges and benefits of each territory, to be able to identify opportunities for growth, development, and poverty reduction.

A vision from territorial development can help reduce territorial gaps and contribute to promoting economic activity in countries. It is, then, about using a geographic lens to analyze the opportunities and challenges of a country, and thus identify the policies necessary to support economic growth, and improve the standard of living of citizens. This lens helps prioritize actions according to the needs of each area and facilitates coordination between different sectors and actors.

P. What are the keys to thinking about the territorial approach?

R. The ultimate goal of a territorial development policy is that people have access to services, education, health, and job opportunities regardless of where they live. This was, for example, our objective with the study for Argentina.

To structure the research, we analyze the challenges based on three pillars: scale, specialization and convergence. It scales because people and companies are often spatially concentrated in a few places, which shows that proximity is valuable. Specialization because when places are better connected, they can specialize in what they produce best, or diversify and innovate, allowing the benefits of concentration to spread across territories. And Convergence because the spatial concentration of people and companies in some places can be used to improve living conditions in all territories.

P. What results did you find in your report regarding Argentina?

R. In Argentina, as in other Latin American countries, population and economic activity are concentrated in a few places. This is also seen in high-income countries, but the difference is that the quality of life is the same no matter what region you are in. There is scale, there is specialization and there is convergence in quality of life.

In Argentina we see that there is concentration, but there is no scale; business density is low compared to other countries in the region: while in Mexico there are 34 companies per 1000 inhabitants, in Argentina there are only 13 and in northern Argentina the number drops to just six. At the same time, micro-enterprises without the possibility of growth predominate. Between 2008 and 2015, 40% of microenterprises closed, and of those that remained active, 57% remained micro after five years.

We also found that there is low specialization both at the provincial and city levels, given the poor quality or absence of physical and soft connectivity in certain parts of Argentina. According to Logistics Performance Index (LPI), a study that seeks to identify challenges and opportunities in its trade logistics performance, in 2018 Argentina ranked 61st, behind Chile (34), Mexico (51) and Brazil (56).

Finally, our diagnosis shows that Argentina has taken important steps towards convergence in first-level indicators, such as access to water, but important gaps persist in second-level indicators such as the quality of secondary education or connection to sanitation services.

P. Which countries in the region have worked to build a territorial development program?

R. Colombia is a good example in the region, territorial development is the common thread of the last National Development Plan, establishing clear objectives for each of the regions. It has also sought to promote the development of its cities, integrating the municipalities in territorial planning and extending the benefits far beyond the urban border.

Brazil has also made great strides towards territorial development. For example, the government developed a national information system for regional development, which makes it possible to monitor the evolution of the regions and evaluate the results of the policies implemented and thus be able to introduce new adjustments. In 2019, the different efforts led to the National Policy for Regional Development, with the aim of creating new economic opportunities and improving the quality of life in all territories.

P. Thinking back to the post-pandemic, what opportunities do you find to implement this approach?

R. The pandemic further evidenced the territorial gaps. The responses to the health and economic crises have been different in different regions, some with less capacity to defend themselves and react to the challenges of the coronavirus, making recovery more difficult. Achieving convergence in quality of life throughout all territories and supporting economic development are two central priorities for post-pandemic recovery.

In the case of Argentina, this urgency can drive the country to act along three main lines: strengthening its institutions, generating capacities, and aligning the budget towards these challenges. By creating institutions sensitive to territorial differences, strengthening subnational capacities, and establishing constant funding, Argentina could close quality of life gaps between territories, while supporting the productive growth of the economic poles.