by Luis Alberto Moreno
History teaches that in the lives of nations, costly mistakes are sometimes caused by ignorance, sometimes by hubris, and occasionally, by bad luck.
But all too often, they are the outcome of a lack of foresight.
In our fast-changing age, foresight is often viewed as a luxury. Governments, in particular, tend to be focused on near-term urgencies that are driven by polls, interest rates, conflicts, social needs, commodity prices or natural disasters. In ordinary times, elected officials are unlikely to take their eyes off these demands to consider long-term risks or trends that could impact their next generation.
But these are not ordinary times. As this report goes to print in November of 2016, people around the world are engaged in a passionate debate about the future. The debate is fueled by deep frustration and disagreements over the persistence of income inequality and the effects of globalization and immigration.
It also reflects anxiety about uncertainties that are looming on the horizon. Can political parties and democratic institutions regain the trust of citizens? How will technologies such as artificial intelligence affect the job prospects of today’s high school and college students? What will climate change mean for food security, biodiversity or tourism? Will economic integration accelerate in the coming years, or will fragmentation and protectionism gain the upper hand? And in a digital world, who will protect individual privacy and prevent cross-border criminal activity?
Governments and major corporations in developed countries are increasingly devoting time and resources to analyze scenarios to answer these questions and better plan for the future. In Latin America and the Caribbean, however, this kind of thinking is still scarce. And we don’t have to look far back to find examples of how this lack of foresight can hurt the region’s development.
Only a few years ago, soaring oil prices instilled a sense of inexhaustible prosperity in several Latin American countries. Governments ramped up public spending, as if $100 a barrel were a guaranteed floor to a notoriously volatile market, and few built up reserves in case their fortunes changed. And so the oil bonanza fueled one of the biggest expansions of social programs in living memory.
All that time, the “fracking” revolution that turned the United States into the world’s leading oil producer was already underway. The global energy market was transformed, as previously inaccessible oil and natural gas reserves became commercially viable.
Not surprisingly, when crude prices crashed below $50 a barrel in 2016, many oil exporting countries were caught unprepared. Instability ensued as governments were forced to wrestle with the realities of dwindling revenues. And today we’re once again in the familiar position of having to tighten our fiscal belt during a sharp slowdown.
I am convinced that we can do a better job of anticipating and preparing for such disruptions. And over the past few years, as president of the Inter-American Development Bank, I have sought to introduce prospective thinking into our work with the region’s governments.
We started on a modest scale, holding in-house events where we encouraged our staff to think out loud about the prospects for our borrowing member countries in their respective fields of expertise, looking at both opportunities and risks. We quickly concluded that change was accelerating in almost every one of the areas where we work, in ways that could have dramatic consequences in less than a decade.
Next, we started to reach out to our clients, inviting them to take part in simulation exercises where we would jointly assess possible future scenarios, taking into account political, economic, social, technological, environmental, and even security aspects. Our goal in these exercises was not necessarily to come up with actionable plans, but rather to start a sustained conversation about the big trends, disruptions and opportunities that will shape our region for decades to come.
Recognizing that there was a strong demand for such prospective analysis, the IDB decided to partner with other organizations specialized in that discipline. This report is the result of such collaboration, in this case with the Atlantic Council’s Adrienne Arsht Latin America Center and its Strategic Foresight Initiative and the Frederick S. Pardee Center for International Futures at the University of Denver.
I trust the insights contained in these pages – to my knowledge the first region-wide prospective study of its kind – will provoke fresh thinking among those working on development issues, and that it they will also inspire those responsible for guiding our countries to the future.
By looking further ahead, understanding the risks and uncertainties, and spotting potential problems and opportunities, we may yet make smarter decisions that will help us become a more prosperous and happier region.