Sustainable Transitions and Post Covid-19 crisis in Latin America

Thinking & Analysis

Blog written by Adriana Marotti de Mello – University of São Paulo

Sustainable Transitions and Post Covid-19 crisis in Latin America

In recent weeks, with the remission of cases and deaths by Covid-19 in Europe and the USA, Latin America has become the global epicenter of the pandemic. The region has been leading growth in cases and deaths, without showing a downward trend, at least in the short term. At the same time, several governments in the region have been showing plans to resume economic activities, contrary to recommendations from WHO and scientists.

Latin America, a region marked by a colonial history and acute socio-economic inequality, has in recent years suffered the consequences of a long economic crisis, driven mainly by Brazil and Argentina (two of its two largest economies). The necessary measures to restrict production, circulation and consumption, caused by the pandemic, will certainly deepen the economic crisis in the region in the coming years.

In view of this scenario, it is pertinent to question how the health and socioeconomic crisis caused by Covid-19 would impact, in the short and long terms, the recovery of the economy, and the transition to sustainable socio-technical systems.

This article, based on a presentation made by the authors in the “Post Covid-19 Transitions in Global South Webinar”, seeks to contribute to the debate, bringing some reflections on lessons learned from the pandemic and scenarios (with opportunities and threats) for sustainable transitions in Latin America (notably in Brazil).

These reflections take into account six themes, discussed by the Global South Sustainable Transitions group: inequality, fragility of states, informality, social practices, local experimentation and innovations and policy learning.


Latin America – Diverse Continent, with same problem – Inequality

Latin America comprises 20 countries on the American continent (from Mexico to Argentina), with approximately 640 million inhabitants[1]. In common, these countries share colonial pasts and  deep socio-economic inequality – the countries of Latin America have an estimated Gini coefficient of 0.5[2]. Although this index has been decreasing over the past decade, the region still has the highest index in the world. This high inequality index reflects differences in income, access to infrastructure (basic sanitation, electricity, telephone and internet), education, health and work opportunities.

The high levels of inequality are the background that explain how Covid-19 has been impacting in different ways in different regions and social strata of the continent. The role of governments, in order to slow the advance of the pandemic, is fundamental in this scenario. There are examples, so far, successful in combating the pandemic, as in the case of Argentina, Uruguay, Costa Rica and Paraguay. In common, these countries had consistent responses against the pandemic, with lockdowns and assistance to the population, in the form of financial compensation, or with efficient responses from the health system, in the case of Costa Rica.

On the other hand, countries like Mexico, Peru, Chile, Ecuador and notably, Brazil, have been failing in their mission to control the growth of cases. In common, these countries had little coordination and support from central governments for measures of social distancing, favoring the maintenance of economic activities instead.

The case of Brazil will be discussed in more detail. The country has about 30% of the population of Latin America, but it concentrates more than 50% of the cases in the region.


Brazil – Inequality, Fragility of state, Informality shaping the spread of Covid-19

Brazil has been experiencing a deep economic and political crisis since 2015. In 2018, in an election marked by reports of the use of “fake news”, an extreme right government with authoritarian inclinations was elected, promising an end to corruption and economic growth based on reform liberalisation. However, the government has been accumulating wear and tear due to allegations of corruption, has not presented a consistent plan for resuming economic growth, in addition to accumulating wear and tear at the national and international level due to poor management in the areas of education and the environment. Unemployment and informality rates were already high since the beginning of the pandemic.

The arrival of the Covid-19 pandemic further evidenced the lack of strategy and coordination in different areas of the government; more than that, it exposes how the ultra liberal plan adopted by the government is unable to provide the urgent responses necessary to face this crisis, nor will it be able to maintain economic activity. The federal government acts deliberately to undermine the efforts made by state and municipal governments to stem the spread of the pandemic. The government even issued decrees liberating economic activities, churches and health clubs, amid the growth of cases and deaths by Covid-19. The president declared that the epidemic is “just a little flu” and that “dying is everyone’s destiny”. Since the beginning of the pandemic in March, the president has dismissed two ministers of health (who were in line with WHO recommendations) and replaced, as interim minister, with a military man with no experience in health management.

The financial assistance provided by the federal government (of approximately US $ 100 / month) is insufficient to maintain the income of most informal workers. The result is low adherence to measures of social distance, especially in the poorest strata of the population.

There are differences in the impact of the pandemic between regions, cities and social classes. The poorest black population is most affected, and the mortality rate is higher in these strata. The poorest regions of the country, with less health infrastructure, have been more affected, such as the Amazon region.

However, there is a consensus that the public health management structure (SUS – Unified Health System, established in 1988 and inspired by the British NHS) has been decisive so that the effects are not as devastating as seen elsewhere in Latin America – as in Ecuador.

However, in the midst of the biggest crisis facing the country in more than 100 years, some initiatives developed by universities and communities demonstrate how local innovation and experimentation, associated with social practices associated with initiatives coordinated by communities, can help to alleviate the impacts of the pandemic in the short term, and in addition, offer alternatives for the sustainable resumption of economic growth in the post-pandemic.

Initiatives such as the development, in 60 days, of a low cost ventilator, critical equipment for the care of the seriously ill in Covid-19, by researchers from the University of São Paulo [3]show that the innovation developed locally can be an alternative to mitigate short-term effects term.

In underprivileged communities, there are several ongoing solidarity initiatives, which emphasize the empowerment of local leaders, the role of health workers, coordinate the distribution of humanitarian aid and promote awareness and education actions. An example is the “Corona na Quebrada” initiative[4].

In the Paraisópolis favela, the inhabitants got together and, with the support of sponsors, trained community leaders and hired a private emergency service (the public service does not reach the narrow and steep streets of the community) to answer emergency calls and promote constant cleaning of the streets[5] .


Post Pandemic Learnings

The pandemic, still at its peak in Brazil, already brings lessons that must be incorporated into management practice and the formulation of public policies.

The first is inequality as the main factor generating social tensions and constant crises. Development and innovation policies must have the reduction of inequalities as a principle. In this sense, the institution of a universal basic income, previously considered a utopia, is beginning to gain prominence in mainstream economic debate. In addition, ultra liberal economic policies and fiscal austerity, so far considered essential for the resumption of growth, are being doubted.

The second is the importance of a public and universal health system, combined with a safe and local supply chain. External dependence on critical inputs must be avoided.

Third, the need to recover the role of the federal government as the guardian of public policies that benefit the entire population and democratic values. A question to be discussed is how to resume growth in a fragile economy, with the goal of generating formal jobs.

The way out may be in the transition to more sustainable production and consumption systems. Social entrepreneurship, which generate jobs and income, developing technology in needy communities[6], can be an alternative of public policy in this sense.  In the same sense, other examples of public policies are the encouragement of innovations in small and medium-sized companies, including investments in Circular Economy.

Brazil already has outstanding expertise and experience in clean energy, sustainable agriculture and biotechnology – these strengths must be taken into account in the development of plans to resume the economy.

On the other hand, the existence of very traditional sectors of the economy, with great influence on the definition of public policies can put this sustainable transition at risk: the country is a major producer of oil (whose low price favors expansion and its use), of automobiles and ores. In addition, the feeling that sustainability would be bad for business is still very strong in productive sectors (notably in agriculture). There are difficulties, certainly, but there is a way out of the crisis.

[1] https://data.worldbank.org/indicator/SP.POP.TOTL?locations=ZJ-1W

[2] Source: United Nations – https://nacoesunidas.org/america-latina-e-caribe-e-regiao-mais-desigual-do-mundo-revela-comissao-da-onu/

[3] https://www.poli.usp.br/inspire/diario-de-bordo-projeto-inspire
[4] https://www.instagram.com/p/B_dD52PnjBa/

[5] https://www1.folha.uol.com.br/equilibrioesaude/2020/05/contra-coronavirus-240-socorristas-comecam-a-atuar-em-paraisopolis-nesta-quarta.shtml

[6] See for example: https://www.projetodraft.com/reformar-de-casas-de-favelas-em-cinco-dias-por-ate-5-mil-reais-este-e-o-negocio-da-vivenda/)