Without infringing on the role of the market, the state needs to occupy a central role in the response to development needs and should focus on various areas of public policy. these include: i) improving the mobilisation of fiscal resources; ii) professionalising the civil service; iii) engaging several actors; iv) making appropriate use of new technologies; and v) promoting mechanisms to make government more open and transparent. 

The development agenda of the region presents various challenges to the state. in order to confront them, the State needs the support of its citizens and a long-term vision that can guarantee a certain level of political, social and technical continuity. 

Five fundamental challenges can be identified (ref.9):

  • The State must guarantee a stable macroeconomic environment capable of dynamising economic growth.
  • The State needs to play an active role in promoting changes to the productive structure. this should incorporate technical progress and promote consistent policies for the reduction of productivity lags between sectors and between levels of the productive structure.
  • The State needs to play a key role in reducing regional disparities regarding productive capacity, articulation with market and access to services, and move towards decreased inequality of well-being. in order to rationalise the diversity of institutions and actors involved in territorial development, agreements for territorial cohesion must be established to harmonise regional and local development efforts from the top and the bottom. reversing regional inequalities will inevitably contribute to surmounting inequality nationwide. this highlights the need for public policies that rely upon coordination between different levels of regional disaggregation, contributing to the promotion of greater regional equality.
  • The State needs to promote active employment policies that will protect against the contingency of unemployment, close wage gaps in the interest of equality, and increase participation and employment rates. active policies are needed to improve the quality of jobs and the capacities of the workforce, as are policies regulating the minimum wage, productive support and protection of the informal sector.
  • The State should intervene more boldly in the social sector, so as to guarantee better access to welfare and capacity development for the most vulnerable and thus close the gap in this area. Moreover, the state plays a defining role for social protection and promotion, an area where the design and implementation of a universal basic social protection system (basic income security and health) should be explored. Such a system could generate or maximise non-contributory social pension mechanisms, increase the offer of cash transfer programmes, formulate policies to reconcile paid and unpaid work and facilitate women’s access to the labour market.

These proposals must be examined in light of the level of resources available to public administrations in the region. The level of public spending is conditioned by capacity for tax collection. Taxes constitute a decisive policy area for increasing the financial capacity of the State to proactively promote development and social equality, as proposed in this report. It is also necessary to study governance of natural resources. At least in the case of many South American countries, the rise of raw materials should motivate a debate on the use of income derived from the exploitation of natural resources.