As economic policy plays a pivotal role in reducing poverty in Latin America and the Caribbean (LAC), the World Bank strives to help LAC policymakers implement sound economic policies that address current challenges. Recognizing that a high growth rate helps to reduce poverty, the Bank favors policy frameworks that promote sustainable broad-based growth. Policy design requires comprehensive examination of factors that impact growth, including trade and investment openness, taxes, public expenditures, and achieving macroeconomic stability. Sound economic policies also need to be integrated with important policies in other areas, including population size, lack of education, inadequate access to services, and poor health. To support LAC countries in its ability to withstand economic shocks and achieve a level of sustained growth necessary to lift people out of poverty, the LAC Economic Policy Unit at the World Bank monitors and evaluates the unique economic realities that characterize each country through different tools: - Country and Regional Studies to provide analysis, advice and support countries in creating policies that promote good fiscal performance, trade expansion, and macroeconomic and growth stability.
- Through Development Policy Lending, we use the knowledge generated in our research to endorse and support LAC governments in implementing such policies.
- Macroeconomic Monitoring ensures an integrated approach of the various economic policies recommendations and the compilation of lessons learned from our projects throughout the region.
Finally, the World Bank's advice on economic policy is the product of a holistic approach to economic performance that takes into account important areas such as: - Fiscal Sustainability: This area concentrates the analysis and dissemination of knowledge of issues relating to the quality of fiscal adjustment, including notably fiscal risks and sustainability. Public Expenditure Reviews are one of the main tools for analyzing fiscal sustainability.
- Economic Growth: This area focuses on understanding the sources of growth, distribution of the proceeds from growth, and volatility of growth as well as the role of policy and non-policy factors, as derived from cross-country and individual country experience. Please see a list of Country Economic Memorandums for LAC for samples of the World Bank work on economic growth.
- Trade Expansion and Regional Integration: International trade can be a key to cutting poverty—providing jobs and driving economic growth for a developing country. The Bank is supporting efforts by LAC countries to seize the opportunities offered by trade liberalization. For example, it is providing policy analysis and advice to Central American countries negotiating a free trade agreement with the United States.
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