Former Mexican president calls for world leaders to heed past

“I want to use this occasion to reflect on the immediate future through the pertinent lens of our past experiences,” Zedillo said.

Zedillo, who served as the president of Mexico from 1994 to 2000, currently directs the Yale Center for the Study of Globalization, which focuses on developing policies to help the world’s poorest populations benefit from a global market economy. He is also an international economics and politics professor at Yale.

Zedillo said the process of globalization has presented Latin America with “greater opportunities and greater risks than it has faced in a long time.” Until recently, most Latin American countries have benefited from a growing international economy, favorable terms of trade and global capital markets with very high liquidity and very low interest rates, Zedillo explained.

All this has come to an end with the current economic crisis, he added, calling the recession a “global pandemic.”

“In confronting this crisis, Latin American leaders must be very conscious of history and avoid making the kind of mistakes that led to dire consequences in the past,” Zedillo said. “They must revisit the ways in which governments dealt with the shocks in the global economy in the ’70s and ’80s and realize the dreadful effects they had on our countries.”

Zedillo noted that excessive reliance on internal savings is “quite risky,” adding that this risk has been demonstrated many times in Latin American history and, more recently, in the United States.

“No country has been able to maintain high levels of growth without public spending,” he said, stressing the importance of public investment, which he said was “far from displacing private investment.”

While increasing competition, governments should also promote the flexibility of labor markets, Zedillo added. “Labor must be mobile,” he said, adding that there is a lot governments can do to increase this mobility, including educating workers and creating social safety nets.

Zedillo explained that for growth to be sustained, it is essential for the results of economic success to be distributed more equally and for governments to build an “infrastructure of popular capitalism.”

Policymakers, Zedillo added, must also address the “vicious cycle” of institutional weaknesses which undermine the democracy necessary for building strong institutions.

Even in the Latin American countries with the largest economies, the “rule of law” is “palpably inefficient,” Zedillo said, adding that these nations’ failings stem from their inability to protect citizens’ rights and make citizens comply with obligations. Reforming the legal system, he concluded, is key to a successful economy.