WASHINGTON, United States (CMC) — A new report has underscored how more integration and better governance “hold the key” to greater prosperity in Latin America and the Caribbean.

The report commissioned by the Inter-American Development Bank (IDB) non-profit Atlantic Council describes a baseline “business as usual” scenario that would see 57 million more Latin Americans and Caribbean citizens joining the middle class over the coming 14 years, assuming that the governments continue largely on their current course.

Titled “Latin America and the Caribbean 2030: Future Scenarios” the report was discussed by IDB  President Luis Alberto Moreno and the Atlantic Council’s Jason Marczak with representatives of the business, academic and diplomatic communities.

The IDB said annual gross domestic product (GDP) growth rate in this scenario would be 2.4 per cent, slightly outperforming the US growth rate of 2.2 per cent.

The region would face growing challenges in the areas of income distribution, demographic changes and climate change impacts, the IDB said.

However, the report indicates that global and regional trends, combined with ambitious domestic reforms, could put Latin America and the Caribbean on a path toward faster growth and prosperity.

It offers positive scenarios in which the region embraces better governance and more integration, leading to a doubling of infrastructure investments, big reductions in homicides and less tax evasion, among other pluses.

On the other hand, less optimistic scenarios based on a more fragmented region forecast continued high crime, more political instability, low productivity, dependence on commodity exports, and difficulties in attracting foreign investments, the IDB said.

“Latin America and the Caribbean 2030: Future Scenarios,” written by Marczak, and Peter Engelke, of its Strategic Foresight Initiative, outlines several alternative scenarios as to how the region could unfold.

“Muddling Through” the base-case scenario, shows what current trends point to modest economic fortunes and relatively stable democracies.

Among its findings, the middle class increases to 345 million people by 2030.

“Governance on the Rise or an Illicit World Afloat” looks at the potential for qualitative jumps in governance on the heels of active citizen engagement and digital revolutions or, alternatively, the potential for corruption scandals, transnational crime and weakened rule of law.

With better governance, the IDB said regional economy grows by an additional seven to 10 per cent. But foreign direct investment shrinks by more than 50 per cent in a scenario of growing crime and impunity.

“Toward Integration or Fragmentation Prevails” foresees what could happen if countries cooperate in making investments and joint policies in finance, labour markets, energy, infrastructure and education.

In a contrasting scenario, the IDB said some countries may be “pulled toward different economic poles, making the region less coherent than ever”.

“The future holds great promise but also the risk of great uncertainty. Looking to 2030, middle-class growth, stronger economies, healthier people, and greater security will come only through a call to action today,” Marczak said.