Right to Information in Latin America & the Caribbean

By Luis Felipe López-Calva
UNITED NATIONS, Jul 9 2019 – Transparency is a critical element of making governance more effective. By making information available, it creates a foundation for greater accountability to citizens.

In recent decades, transparency has been on the rise across Latin America and the Caribbean. According to data from the Global Right to Information Rating, 23 countries in LAC have laws securing citizens’ right to information.

Colombia was the first country in the region to pass such a law in 1985, and Saint Kitts and Nevis was the most recent country to do so in 2018.

While transparency is a necessary condition for promoting accountability, it is not a sufficient condition. We can think about transparency as a first step.

While transparency makes information available, we also need publicity to make information accessible, and accountability mechanisms to make information actionable.

Information, per se, is nothing without publicity and accountability. If information does not reach the interested audiences, its effect is negligible. Similarly, even if information reaches the public, if it does not lead to consequences, its effect is not only negligible but potentially harmful.

For example, we have seen, unfortunately, many cases in our region where people can access detailed information about corruption cases, but nothing happens to those who are responsible. This leads to frustration and destroys trust.

Luis Felipe López-Calva

We can think about this progression from transparency to accountability as the “information value chain.” Recently, one way in which the information value chain has been broken in Latin America and the Caribbean is the intentional creation and spread of false information (what is known as “disinformation”).

In many cases these pseudo-facts are created for political purposes and target specific audiences, with the intention to induce certain outcomes (for example, by influencing voting behavior).

This system has been called the “fake news” industry—a term widely used by politicians in recent times. It’s important to note that false information can also be spread unintentionally (what is known as “misinformation”).

The rise of disinformation and misinformation has been facilitated by the rise of technology. Technology—particularly the rise of social media and messaging apps—has reduced the cost of disseminating information to massive audiences.

This has made the “publicity” industry more competitive and created a new social dynamic in which people often take access to information as equivalent to knowledge.

While knowledge is difficult to build and constantly update, information has become easy to get, and public debates are increasingly based on false—and often deliberately false—information.

Indeed, a recent study by scholars at MIT found that false news spreads much more rapidly than true news—and this effect is particularly salient for false political news (in comparison to false news about topics such as terrorism, natural disasters, science, urban legends, or financial information).

According the 2018 Reuters Institute Digital News Report, citizens in LAC countries are facing high exposure to false information, and are very concerned about what news is real and what news is fake on the internet.

In each of the four LAC countries included in the study (Brazil, Chile, Mexico, and Argentina), over 35% of respondents stated that they were exposed to completely made-up news in the last week—reaching as high as 43% of the sample in Mexico.

Moreover, over 60% of respondents stated that they are very or extremely concerned about what is real and what is fake on the internet when it comes to news—reaching as high as 85% of the sample in Brazil.

This high level of concern is consistent with recent experiences with political disinformation in the region—for example, the use of automated bots to influence public opinion in Brazil, Argentina, and Venezuela.

This problem carries with it the concern for broader potential consequences such as deepening political polarization or the erosion of trust in the media. Indeed, over the past few decades years, the dissemination of false information by political parties and levels of political polarization are increasing in tandem in LAC.

This is a challenge not only in LAC, but in many regions around the world. This global preoccupation was reflected in the theme chosen for this year’s World Press Freedom Day—which focused on journalism and elections in times of disinformation.

Several of the countries in Latin America are holding presidential elections later this year: Argentina, Bolivia, Guatemala, and Uruguay. There is a concern in the region about how disinformation campaigns, coupled with microtargeting of political messages and sophisticated online advertising through social networks and online platforms, could affect the outcome of elections.

There is a lot we can do in this area to protect the information value chain and the quality of elections—such as “clean campaign” agreements between political parties, the creation of independent fact-checking services, greater enforcement by social media companies, and the promotion of information literacy among citizens.

In Latin America, these initiatives are still nascent, but they are growing. It is important to recognize, however, that combatting the challenge of disinformation campaigns will require the coordinated action of multiple stakeholders such as electoral courts, the media, civil society, academia and tech businesses (such as Facebook, Google, WhatsApp, and Twitter).

Without a strong coalition of actors, it will be difficult to successfully repair the information value chain and achieve accountability.

Industrial Policy Finally Legitimate?

By Jomo Kwame Sundaram
KUALA LUMPUR, Malaysia, Jul 9 2019 – For decades, the two Bretton Woods institutions have rejected the contribution of industrial policy (IP), or government investment and technology promotion efforts, in accelerating and sustaining growth, industrialization and structural transformation.

Finally, two International Monetary Fund (IMF) staff members, Reda Cherif and Fuad Hasanov, have broken the taboo. They embrace industrial policy, arguing against the current conventional wisdom that East Asian industrial policies cannot be successfully emulated by other developing countries.

Jomo Kwame Sundaram

Miracle economies not miraculous
They argue that IP has been key to East Asian ‘miracles’, offering valuable lessons for sustaining ‘catch-up’ growth. For them, appropriate IP interventions have been key to successful entry into more sophisticated industrial activities, early strong export orientation, and fierce competition with strict accountability.

For over half a century, especially following Asian and African decolonization after World War Two, developing countries have gone their separate ways with very mixed results, with all too many falling behind. Meanwhile, very few economies have caught up with some of the most advanced economies and firms.

Between 1960 and 2014, 16 out of the 182 economies they study achieved high-income status, underscoring the difficulties for middle-income countries reaching high-income status within two generations. They distinguish three types of countries which have ‘succeeded’, namely the East Asian miracles, those discovering considerable oil and gas, and those that benefited from joining the European Union.

Cherif and Hasanov insist on the key role of industrial policy in the Asian miracles, and for the US after the Civil War, Germany under Bismarck, and Japan after the Meiji Restoration. They argue that East Asian industrial policies have much in common despite their many differences.

The conventional growth formula — of improving macroeconomic stability (typically through anti-inflationary policies), strengthening property rights, and providing physical and social infrastructure and basic services to address government failures — was not enough .

Drawing useful lessons from varied country experiences is fraught with difficulty, especially considering the exogenous and conjunctural factors affecting growth, including luck. In contrast with the conventional empirical approach emphasizing averages, their analysis of long-term cross-country growth experiences underscores the value of studying the ‘tails’ or exceptions instead.

Technology and innovation policy
Contrary to earlier formulations of industrial policy as primarily involving investment and technology, Cherif and Hasanov propose three key principles constituting ‘true industrial policy’, summarized as technology and innovation policy (TIP), namely:

    • State interventions to overcome constraints to the early emergence of national producers in more sophisticated industries, beyond conventional notions of ‘comparative advantage’.
    • Export orientation, not import substituting industrialization (ISI); this contrasts with providing effective protection in the national or regional market on condition of early export promotion to achieve export competitiveness.
    • Ensuring both national and international competitiveness with strict accountability.

Hyundai vs Proton
Cherif and Hasanov also contrast the cases of Malaysia’s Proton with South Korea’s Hyundai in support of their three principles. They argue that Proton did not export enough, reflecting failure to build sufficient managerial and engineering skills as well as an innovative automotive cluster.

Hyundai, by contrast, has successfully created a global brand. Cherif and Hasanov insist that allowing several South Korean industrial conglomerates or chaebols to develop rival auto industries and the push to export were key to its success.

Governments have directed capital and labour into industrial ventures that firms probably would not have undertaken without appropriate incentives, but market competition, market signals, and private sector accountability are also recognized as important.

Without conclusive evidence, Cherif and Hasanov claim that due to the government’s push to export, Korean automakers ‘moved first, then learnt and adjusted’. In exchange for very low real interest rate loans, Korean chaebols had to quickly secure foreign market shares, while accountability was enforced by firing senior managers who failed to reach export targets.

Pressure to compete and export forced Hyundai to increase its R&D effort and technology upgrading, producing its own engine in 1991, and later, its first electric car. Korean encouragement of several chaebols in the automotive industry later forced them to restructure, with few surviving.

But would fostering more than one automotive firm have ensured Proton’s success in light of Malaysia’s smaller domestic market and more modest industrial capabilities? And what were the economic costs of Korea’s arguably wasteful automotive industry competition?

Three development policy options
Cherif and Hasanov emphasize the importance of government ambition, accountability and adaptability. Government ambition is seen in terms of a feasible or pragmatic level of sophistication of new sectors and domestic ownership of industrial technology.

Government policy implementation must be subject to accountability, not only for firms, but also policymakers and senior managers responsible. As conditions change and new knowledge becomes available, policy interventions must adapt to continue to be effective and feasible.

* Low gear: The conventional approach to growth — of improving the investment environment, key institutions, infrastructure, macroeconomic stability, investments in education, and minimizing other government interventions — is likely to result in relatively slow ‘snail’s pace’ growth.

Such policy interventions typically address government failures, but not necessarily market failures, especially to develop more technologically sophisticated sectors beyond conventional understandings of comparative advantage.

Middle gear: This approach mainly relies on attracting FDI into more technologically sophisticated industries to participate increasingly in global value chains, or by improving the technological level of existing industries. This may accelerate growth for middle-income countries, but is unlikely to lead to sustainable development or ‘high-income status within two generations’ owing to limited national capacities and capabilities.

High gear: The East Asian miracle economies are said to be using a ‘moonshot approach’ for governments to create competitive national firms in frontier technologies, and more sophisticated industries with homegrown technologies, creating conditions for high, sustained long-term growth.

The speed and extent of the leaps to more sophisticated industries and technologies created by national firms are crucial for sustaining long-term development. Countries that manage this process well have better chances of soon becoming relatively advanced economies.

Jomo Kwame Sundaram, a former economics professor, was United Nations Assistant Secretary-General for Economic Development, and received the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.