FROM THE OFFICE OF PUBLIC AFFAIRS

October 2, 2004
js-1994

Statement by Secretary John W. Snow
Meeting with Ministers from Bolivia, Chile,
Colombia, Ecuador, and Peru
October 2, 2004

I had an excellent meeting this morning with economic leaders from Bolivia, Colombia, Chile, Ecuador, and Peru to discuss our joint efforts to raise living standards and reduce poverty in our region.

I am pleased to report that economic performance in these countries has strengthened dramatically over the past year. Economic growth in these five countries is set to average 4.5 percent this year. A large portion of these gains has been powered by exports, which are growing at high double-digit rates in several countries. I commended my colleagues on the significant improvements in macroeconomic policies that have underpinned the stability that has allowed their countries to reap the benefits of the global economic recovery.

My colleagues and I agreed that the critical challenge now is sustaining high levels of economic growth, since faster growth is the most important tool for reducing poverty and raising the incomes of the poor. We discussed the various elements of our strategy for achieving higher growth and ensuring that the benefits of growth are shared by all.

Free trade is clearly central to that strategy. Chile and the United States are already deepening their economic ties in response to the new opportunities created by the recently implemented U.S.-Chile Free Trade Agreement. Further efforts to reduce trade barriers through successful negotiation of an Andean Free Trade Agreement, Free Trade Area of the Americas, and the Doha Development Agenda are essential to fueling this engine of prosperity.

We discussed the importance for growth of increasing investment in infrastructure and education. My colleagues stressed opportunities for attracting private investment in these areas. There is a real emphasis on identifying and using successful models for public-private partnerships. And we agreed that the work undertaken by the IMF now to define best practices in budgetary accounting for these kinds of arrangements is very important.

Making markets work better within countries is also critical. This means creating an environment in which businesses have incentives to invest, innovate, and create jobs and people have the opportunities to lift themselves out of poverty. Locking in the progress that has been made in improving macroeconomic policies is one pillar supporting higher levels of growth. Now countries must also take on the challenge of expanding access to capital, making labor markets more flexible, reforming tax systems so they don't discourage hiring in the formal sector, and making it easier to start and grow a business.

The United States is committed to assisting countries in the region raise growth and reduce poverty through more effective development assistance. We all agreed that multilateral development bank projects must reflect countries' priorities and lessons learned from proven successes. This requires strengthened systems for measuring results. Increasing economic growth was a major theme at the Summit of the Americas earlier this year, where leaders agreed to act together to cut the time to start a business, triple credit to small businesses by 2007 with the Inter-American Development Bank, and halve the average cost of remittance transfers to the region by 2008. On the bilateral side, the new Millennium Challenge Account will direct aid to support the poorest countries' efforts to invest in education and health, build markets, and fight corruption.