 Welcome to this policy dialogue on SDG 10. How can we make the world more equal? Here we invited a panel of distinguished speakers with extensive experience in academia, decision making, or international organizations, to give us their views on how to reduce inequality in this very difficult context dominated by the dramatic effects of the pandemic, all the new conflicts, the climate emergency, or the energy and food crisis among other challenges. For that, we will have Sharangit Layle, a broadcaster with more than 20 years of experience covering international business, finance, and politics, anchoring several BBC news programs, who came all the way from Singapore to moderate this event. Before starting with the dialogue, I wanted to set the scene, highlighting a few facts about the current trends on global inequality, using the World Income and Equality Database hosted at Unwider, The Weed. So considering the distribution of income among all citizens in the world, regardless of where they live, the country of residence, what we know as global inequality, we can say that the income share of the world that reaches 10% has been declining since around 2000. While the share of the rest of the population, here the poorest 40% and the middle 50%, so between the person ties 41 and 90, have increased. Therefore, the ratio between the income held by the top 10% and the bottom 40%, a measure of inequality known as Palma Ratio, has been declining over this period. This decline, however, shows a decelerating rate in most recent years, and the pandemic implied a serious setback. Using IMF projections for GDP per capita between 2021 and 2027, and in the scenario of stable country-level inequality, which might not be the case, the declining trend might still continue in the next years. The Gini and other measures of inequality show a similar trend. They also show that the decline was entirely driven by declining inequality between countries. When you take the average income of each country and we compute, we estimate the inequality among people in the world where everybody has the income of their country. While inequality within countries has been more persistent or increased. It's also very clear that the declining inequality between countries was due to China and to a much lesser extent India and other developing countries growing faster than most advanced economies. This may raise the question about its continuity since China has already reached the global mean and will no longer contribute to this reducing inequality, and eventually will contribute to increase it. Based on the mentioned projections, it seems that the process would continue at least until 2027, sustained by the strong growth expected by India. But there is an obvious risk that the trend is later reversed, what Ravi Kanpur and co-authors called the global inequality boomerang in a wider working paper that you can check. If growth is not strong enough in the rest of the developing world, particularly in sub-Saharan Africa, or if the expectations for these projections of growth are not fully met. At the same time, the persistent inequality or increasing inequality within countries reflects a quite heterogeneous situation in which we have evidence of increasing inequality in some countries and decreasing inequality in others. With a net effect depending on where China and India stand and what's the period of reference. For example, here you have that with available evidence since around 2015 inequality increased for 54 countries, representing more than half of the world population, 55%, which included two most popular China and India. While inequality improved in other 74 countries, so a larger number of countries, but representing a smaller proportion of population, 29%. Similar results can be appreciated with the income share of the bottom 40%, which is the official measure adopted in SDG 10, since its changes are highly correlated with the Gini index. But what brought us here today is to ask our panel of experts, what can be done to make the world more equal, both between and within countries, and what are the main challenges to reducing the quality in the years to come. So I'm calling Saranjit Leil to the stage. Thank you, Carlos. What a great and engaging introduction that was, and how wonderful to be here in Bogota at this extraordinary institution and be part of this very important discussion on how to make the world more equal. It's a real privilege to be amongst all of you here, all of you development economists, students at this incredible institution of learning. Now, as you heard Carlos say, despite some strides in recent years, global inequality is actually increasing. This has exacerbated the risks of divisions, its hampered economic and social development around the world. Meanwhile, of course, we've had the COVID-19 pandemic, and that has caused the first rise in between country income inequality in a generation. Imagine that, the first rise. And it has hit the poorest and the most vulnerable communities the hardest, significantly increasing global unemployment and dramatically slashing workers' incomes. The pandemic has put a big spotlight on the fragile social safety nets that leave vulnerable communities to bear the brunt of the crisis. We're seeing it everywhere. So in this session, we're asking how we can make the world more equal. What stands in the way of reducing inequalities? What needs to be done to achieve this crucial global goal? And by whom and once achieved, how do we sustain this reduced inequalities? Can we achieve SDG 10, which calls for the reduction of inequality within and among countries by the 2030 deadline? Well, in this policy dialogue, a panel of distinguished speakers with long experience in academia, decision-making and government will join me to answer these questions. And of course, I'm going to invite them up on stage right now. And we'd love to hear from all of you at the end of the discussion as well. Lots of questions, please. So let me introduce Santiago Levy, the Brookings Institution and former Mexican Deputy Finance Minister. He was also the President of the Latin American and Caribbean Economic Association and Vice President of Inter-American Development Bank. A round of applause, please. Thank you, Santiago. We also have Anilde Sarmanto. She's the National Director at the Mozambique Ministry of Economy and Finance. Anilde, come and join us here on stage. Take a seat. And of course, no stranger to all of you. You just heard her up here on stage in the last hour. It's Marcella Eslava, Professor of Economics and Dean of the School of Economics right here at this university in Bogota. Thank you, Marcella. Join us here on stage. And we're also very excited to have your Finance Minister at any moment. Of course, this is none other than Jose Antonio Ocampo. He is slightly delayed, but we are hoping he will be able to join us in this discussion. It's a very important discussion at some point. So, let us begin. It's great to see all of you. We've got this extra seat here for the Finance Minister when he arrives. Of course, he's got a very important job. He's currently in government right now, and we're hoping to see him very soon. But let's start off this conversation first, which is, of course, it's possibly one of the greatest challenges of our time, how to reduce inequality. It's right there, big words on the screen there. So, let's hear from each of you and what you bring to this conversation in terms of, of course, your extraordinary expertise. How have you tackled the seemingly intractable problem of inequalities in your countries and institutions? And are you optimistic it can be fixed? Let's start with you, Santiago. You can grab a mic there. Thank you, and let me first begin by thanking Marcialo Sandes, Marcella, and Kunal Sen, oh, over here. Thank you, Kunal, for inviting me to be part of this conference, and I love that you and this panel will love it. So, the question is very complex, and the short answer would be piece by piece. This is not a problem for which there's a magic wand. This is not a problem for which a single policy is actually gonna provide the kind of equal or inclusive societies that we want. You want to move on various fronts, and you can make a very long list. Many of the people that are here have worked on all these dimensions, try to improve the pre-market distribution of income by investing in education, try to improve the post-market distribution of income through taxes and transfers. One bit, when you asked me what have I done, when I was in government, was to try to transfer resources to people at the lowest part of the distribution, people that we think of in extreme poverty through mechanisms that are more efficient than in the past. This helps to reduce inequality. It's far from what needs to be done to do inequality, but it's part of the piece. That said, Latin America has been doing that for the last two decades, and it's a good time for Latin America to move beyond that, and to start thinking that if they really want to make a dent in inequality, we can no longer rely only on this set of programs. We really have to think much more ambitiously of transforming particularly the structure of social protection. I don't want to take much time. We can come back to this. Absolutely, we'll get into that in the discussion. Marcela. Also, let me talk about my own emphasis in my work, which has been on, what I would say, two main issues that many people miss when we think about inequality. Particularly in the discussions within countries. One of those is the huge inequalities across countries that Carlos was talking about a minute ago. Of course, as Carlos was showing, those have been decreasing, but still we have incredibly large gaps in incomes across countries, with the richest country in the world having around 20 times the income of the poorest country in the world. And if we think of the economies of Latin America, given where we are and from where Santiago and I are talking, you are talking about countries with a fourth, a fifth of the income of the richer countries. So that's one issue that is crucial. Then there is a second issue that tends to bring tensions, and that is the potential conflict between growth and inequality. For instance, with the focus in the global debate about potentially curbing the growth of some superstar firms, which has been proven to lead to greater inequality in some of the richer countries in the world. And I would say, again, speaking from the region, I think one crucial thing to bring to the table is the lack of that tension in our economies, or that's at least my conclusion from the analysis of the data, and the need for the debate to bring in the specificities of inequalities in different countries, and for Latin America in particular, the fact that inequality in our region is so inextricably linked to poverty, to vulnerability, and the fact that people in those conditions tends to be out of a formalized, organized business sector, which is very much linked, again, to a very poor growth in the past few years. So I would bring those two issues to the table, which by the way are very related to the social protection issue that... Absolutely, yeah, we'll get into that discussion in a little bit. And Anilde, we're interested in your perspective from an African viewpoint. Thank you. Yes, we can hear you. Thank you for this opportunity to share what we are trying to do in these times to make the world more equal. For countries like Mozambique that was facing several shocks, Mozambique, for example, faced several shocks in short term. We had to deal with cyclones. We had to deal with debt crisis, internal conflicts, and now with pandemic and in these days with energy and food crisis. In fact, what we saw in terms of results is inequality increasing and poverty increasing. And the challenge is, in fact, how to fix this in the context that we have to find the fiscal space to deal with this challenge. The governments in Sub-Saharan Africa, in Mozambique, are trying to work in the short term policies and look for the other that it is a long term policy. Because in our countries with a large informal sectors, a lack of diversity, in fact, is a challenge. But they think that we can fix. We have to work in the short term policies, as I say, to look for these vulnerability families that are living near to the poverty line. We have to adjust our social programs. We have, in the short terms, we have to look for the families. How can we design policies to solve their challenge to be able to deal with, for example, the increasing of the prices of the food, these kind of issues, but I think that it's possible. Yeah, and that's what we're here to discuss. The kind of policies needed so desperately required to address a lot of those challenges you mentioned. Well, let's continue talking about those challenges because today we're facing the context of a post-pandemic situation. It's been aggravated by an energy and food crisis and, of course, this is against the backdrop of global warming. So, yeah, it doesn't sound great, does it? There's a lot of problems out there. So to what extent have these challenges made reducing inequalities even harder? Is it tough as a result, because of all of this incredibly bad news we've had in recent years, is it tough as a result to get people whether it's the government, academia, the media, the population at large to pay attention to this crucial problem of trying to reduce inequality? Who'd like to take that question, that answer? Try that one. Yes, we hear you, perfect. Thank you. I don't think the problem makes publicity. I mean, at least in Latin America, the issue of inequality is keenly and deeply filled by everybody. What COVID did is it showed how unprepared most countries in the region were to protect population from shocks, and as a result of that, you get increases in inequality. I want to see the silver lining on that, hopefully, maybe not, hopefully, governments will learn that there is no substitute for having insurance. The real reason that COVID created so much pain is because insurance mechanisms that are deployed by governments in Latin America in most places are very incomplete, very erratic, very inefficient. So we have households that, if they had had insurance against the shock, could have avoided falling into poverty. We don't have that insurance, so what we do is we wait for them to be poor, and then once they're poor, yeah, okay, we'll help you. Be much better, of course, if you prevented a lot of this from happening. Insurance would only be to shocks like income that was associated with COVID, low preservation rate, but also many other shocks that families are continuously experiencing because of disability, because of health, because of illness, because of many other things. Half of the population broadly for Latin America as a whole, but 60% in Colombia, 60% in Mexico, 80% in Peru and Bolivia is continuously exposed to shocks, and they have no protection. I'm just gonna stop you from a moment there. We have the finance minister himself. Thank you so much for making time for us this afternoon in this crucial conversation. Jose Antonio Compo, lovely to meet you. Thank you, please come and join us. Yes, a round of applause, please. Yes, so we've started the conversation without you, but of course you are an expert. You are having to deal with this on a daily basis in your job, but let's hear from you about some of the challenges that Colombia is facing because I started off asking everyone, you know, what is the situation we're in right now? How do you describe this current situation, this post-pandemic context, and what are some of the serious issues that you're trying to get to? Well, thank you very much, and let me, of course, welcome all of those who have come from abroad to this conference. Let me say that wider has been particularly important for my life. Since the very beginning, I was one of the first researchers of wider, so for me, it has been very important, and on top of that, publishing my books. The last book on the... Yes. The last book on the International Monetary System was a joint edition, fortunately also actually a free access book so I can send it to anywhere. I think that's one of the greatest innovations, but of course, someone has to pay for those books and why they're paid for mine. Excellent. Excellent. On the International Monetary System, and of course, and this is, of course, my university. This is where I started my career. I continue to be a professor when I can. Anyway, no, thank you. Well, let me perhaps say that the challenges of Colombia are, you know, there are some good things that have been happening, notably the recovery of the economy after the pandemic and the social protests of last year have been quite a striking. Unfortunately, that has finished. We are now in a period in which growth is slowing down significantly and let me say that the expectation for next year is relatively weak, less than 1% according to the last estimates of the central bank. I think we're a bit more optimistic of the government, but anyway, that's the, and that's because of probably, mainly of international shocks. The international shocks of which I would say, in order, the most important is the high interest rates associated to the fight against inflation because that has implied that Colombia has basically no, well, the cost of financing in international private markets is too expensive, so it doesn't make sense for the government to issue bonds in international markets. And of course, that translated to decisions and trends in interest rate domestically. That's right, and that's just happened recently to 10%. I believe your benchmark interest rate. Yeah, the central bank, the last decision was 10%. We have this funding system with the finance minister. Also, it's a member of the board. It's probably one of the few, actually the share of the board, but it has only one board out of seven. So it's not very powerful. But as you say, it is a tough situation. So trying to handle it with policy, particularly with interest rates is a real issue, isn't it? And that's one of the ways to tackle some of these problems we're facing. And the big question mark in Colombia as worldwide is to what extent interest rates actually help to reduce inflation. Because this is truly a supply shock internationally, which had started actually at the end of last year in commodity prices, but of course was speeded up by the invasion of Ukraine by Russia in February. And then the prices of foods, of course, of oil and coal and fertilizers, which of course has associated to the gas prices. They have skyrocketed everywhere throughout the world. And they actually have also had a negative effect on production worldwide because of the high fertilizer prices. So it's a big problem to what extent the central banks, so everything I think depends on international trends. I'm hopeful that particularly the US inflation rate has fallen last month. I guess we're not in number in the next few days because I think that will have a significant effect. So that's, I would say the interest rates because of high inflation is the toughest thing to manage. It is very tough indeed. Now, on the other hand, we have the fiscal situation, which is the one issue that I have to manage. Yes, we'll be talking about that further into the discussion. So I will just jump in there. Anilda, it's very interesting you were nodding your head in agreement with the finance minister. Let's hear about the Mozambique perspective because external shocks is something that impacts your country in a great way as well. Yes, thank you. Yes, external shocks is impacted in interest rate and I was agreed here because I don't know. In Mozambique, the central bank is increasing the interest rate to control the inflation, but we are not quite sure if this is the way this will solve this problem because on the other hand, we have this household that are facing this challenge to buy food and increasing the interest rates. For example, for countries like Mozambique that have a high internal debt, it will impact in the debt too and in the economic activity for the investors, so it's a challenge in fact. It's a challenge. This is what I can say. Okay, so we're definitely all agreed that there are vast challenges out there that need to be tackled, but let's hear from some of the kind of policy that has gone in play in the past and of course Santiago, you're a real expert at that having dealt with the situation in Mexico, putting in place social safety debts and policies that made a vast difference for Mexico. Tell us a little bit about what you did at the time, a progressor, and whether it could still work to some extent today. I'm trying to work out which mics work. I always get the lemon microphone. Very briefly, because this is something that many, many people in the audience are fairly familiar with, but broadly, what we had is a major crisis in 94-95, large fall in GDP, about 6%. It was evident that this was gonna have a large impact on the incomes of people, increased poverty. The central problem we face is that the government had no instruments to help the poor. Whatever instruments were there were extremely inefficient. So the thought was to try to provide income to households in a much direct way, literally by handing out money. However, the thought was also that you don't wanna do this forever, so let's do something at the same time that you do that to try to ensure that in the future they won't need this income transfers by investing in their human capital. And that was the birth of CCTs in which you transfer cash, conditional upon people making investments in the human capital of households on the expectations that later on that will happen. Now, more interesting and more relevant for today. 20 years later, households have accumulated human capital. There's tons of evidence. Many people here have written papers about that. And so we do know that people have better health, more years of schooling, less morbidity, et cetera. Better nutrition. But what we also know is that despite the fact that many of these poor people have more human capital, they're not getting better jobs. So the inter-temporal elimination of poverty by this mechanism of investing in human capital, the human capital has been accumulated, but the better jobs are not out there. And the reason made a major mistake, broadly speaking for Latin America, by betting too much on these programs and not doing enough to tackle the central problems in the labor market that segment our labor markets into formal and informal segments and keep people in low productivity jobs and which makes it very difficult to go ahead. So thinking about inequality about the future, if you really want to tackle inequality from the bottom up, you have to think about mechanisms to raise the incomes of people at the lower part of the distribution, not only through transfers, but through more productive jobs. And that requires tackling the fundamental problems that we have in formality, in formality. And that requires a complete redesign of social protection systems. And that passes through taxation. And that's the center core that would make our societies less unequal than what they're today. So. But as we know, taxation is tough. We'll be getting into that. And I'm sure the minister can shed some light on it. I believe you've been debating some of that tax reform here in Colombia. So what I'd like to hear is just how tough is it to get those social safety nets in play? As you say, Santiago, your incredible progress policy was emulated across South America and was incredibly successful. It addressed some of the issues around extreme poverty, but it didn't address the issue of social safety nets. So give us a sense of just how difficult, as a development economist, Marcella, how tough it is to get something like that in play. And of course, the tensions that creates when it comes to then trying to get an economy to grow. So thank you. And let me go back a little bit to what Santiago said, which is, I think it's definitely very linked to the question you're raising. To think of the complement between those good jobs where incomes are generated, and then the need for social protection that comes on top of that. And refer a little bit to what I am fearing is in the comment by Santiago, which is there is some relationship between the attempt to create strong safety nets the difficulties that we face in the labor market and the consequent difficulties to create good jobs. One particularity of the region is that we do have social security systems that are aimed at providing high protection to workers. They are very rich in that sense. They provide for workers' health, pension, some other coverages, including sometimes a recreational features. But the key thing is that when they provide that for workers, it is a very peculiar type of worker that is protected. And that is the worker who is in the formal sector who has a formal job. That job is paying for the social protections through contributions. And in fact, this person does have some protection while he or she is in that formal job. But the complement to that is that because the job is paying in the end for some of these features, then the job may be very costly. And it is very costly, for instance, for an employer in the context of low productivity in general. So when the average worker that you have has low productivity, that means that for the employer, the amount of income that this person is going to generate for the business may not cover those costs. And that seems to be in several studies part of the reasons why it is so difficult to generate this job. So in the end, what you have is the system that is geared up to provide very good protection. Some people do get that very good protection, but then a lot of people is left out. That, of course, generates gaps, generates a, let me call it segmentation, even though it's not perfect segmentation of people who are, say, in the middle class and then people who are really vulnerable and poor. And again, there may be an answer, there may be an answer now going back to your question of how to better do that in taxation, in how to really assign these things so that we can protect workers, that we can provide that social protection that is needed, but that the cost is not necessarily put upon the generation of the job. Absolutely. So let's hear from the government perspective now. We've got the minister and obviously Anil there also works within the ministry of finance and economy. So give us a sense of the kind of social protections that are in place right now and what steps are you taking to try to improve them so that they're targeted to the poorest? Let me start by saying I don't like the term social safety net. Okay. What's the term you would use? I like social protection or social security, perhaps because I have already been a social democrat. That's right. So it's the same expression. This debate I have quite a bit in the U.S. because the term safety net is used extensively in the U.S. I have always complained. That's not a good concept. Anyway, social protection, social security. Let me say in that regard that I mean, first of all, the problems of the labor market are important, but first of all, let's say employment is at the end the most important instrument for poverty reduction and a good mix of employment generation, the best way to improve income distribution. So now, on the one hand, you have the same, in the social policy area, we have, first of all, the instruments that you aim to become universal. I have always been a good defender of universal systems and targeted systems. A universal basic income? Is that something you're talking about? Not right. So it's universal systems. I mean, in education, in health, in housing, access to utilities, water, sewage, electricity, I mean, all of those things, you have to aim at universal systems. You will never have, and the more universal the system is, the more the distributiveness. So now, on the other hand, it is quite clear that because of, for example, the issue of reformatting labor markets, the traditional instrument that we have had in Colombia and in Latin America and probably in the U.S. in Latin America and probably in many other developing countries of the contributory systems of social security, of course, mean that many families and people are left out. So for those, in fact, you have to have a part of the system of the specific policy, let's say for the poorest in the country, which can be in kind or can be money payments of different sort. In the case of Colombia, we have developed many forms of money payment. One of the basic problems, there are two problems, I guess, of those systems. The first one is that they are too fragmented. So it's quite unclear. And sometimes, I mean, sometimes they duplicate and sometimes they leave some people out of the system. So one of the, for example, this government, we want to have probably just one system with characteristics of the household that can be depending, let's say, on the small children, young children or older people and see how the system is. But it's one system with characteristics of the household. Anyway, so that has to be financed as well as universal systems in the case of education, health, poor housing, et cetera. They have to pay by budgets. That's right. By the general budget. So then the essential issue is, first of all, how much money you raise and second, of course, how the system of payments, including, by the way, the issue which is very important in Colombia, which is how much you do nationally or regionally or locally in terms of the government that is responsible for the provision of a specific service, which is, of course, a complex topic in terms of the contributions that are given to the. And we don't have time in this discussion, sadly, to get to it. Now, Santiago, you were nodding your head in agreement, I believe, when the minister said that, of course, a lot of systems are in place, but they're very fragmented. So this is the issue, isn't it, to have a cohesive, simple system that is able to address a lot of the situation. I look at the time and I know we're running out a little bit, so I wanna skip forward and get to the fiscal capacity. So how do we fund these systems? How do we fund these great? And of course, I'm looking to you, Mr. Finance Minister, again, because you are facing this problem right now. You've had social unrest in the last year because of the controversial tax reforms that are coming into play, and you are currently working on that situation now. Actually, I'm late because I was in Congress approving the tax reform. In the first day, we were successful, the tax reform. But you embody the challenges there are in terms of getting this stuff put in place in terms of policy. So give us a sense of the challenges. No, they're top negotiations. I mean, in the case of Colombia now, in the fiscal area, we really have two problems. Because the first one, in a sense, is somehow the inheritance of the COVID-19 crisis and other problems, for example, the subsidies on gasoline prices, for example, in which the fiscal deficit is still very high. So we have to correct the fiscal deficit. We have in Colombia a fiscal rule, the legal fiscal rule that we have to follow. So that's one challenge. It's a big challenge, actually. For example, this year, the central government, including the subsidies for fuel, is 7.1% of GDP. And according to the rules, the fiscal rule, we have to get to 4%. So it's 3% of points on GDP in terms of adjustment. So it's not an easy task. But on top of that, there's social demands, which were reflected quite clearly in the social protest last year. That's right. And actually years before also, but also in the elections. I mean, the president who was elected was because of the social objectives, let's say. So the tax reform that we're going through Congress is a tax reform that includes, first of all, a much more restrictive personal income tax system. And basically by limiting the benefits that people of a certain level generate. That's one element. Eliminating some elements of the sector of subsidies for household firms. So that's also because there are many fragmented system of subsidies to different sectors that we're trying to simplify and get very few subsidies in place for clear, basically for social and environmental objectives. That's right. That's good. And then we have a windfall tax on oil and coal, which is actually very important in terms of revenues. So that's an international trend now that Colombia is following. I mean, the Europeans just go through a European tax, let's say, for oil companies to pay the price. And let me say, perhaps finally, I mean, there are many other elements, but strong rules against tax evasion. Tax evasion is very high in Colombia. And by strengthening the tax administration through actually basically through different, they say, access to different formation system, they say. Which is possible today, but also certain rules on what can be deducted so they sell and how they can capture those who are. Yeah, those are real serious challenges, aren't they? Yes. Who would want to pick up on that? Because I know I can see Santiago Nodding who said, Neil Day as well, obviously within government and Mozambique, you're dealing with similar issues, but again, from a different perspective, from an African perspective. So give us a sense of what's going on there. Yes. We are dealing with the same problems. It's difficult to put in place good social programs without fiscal space. So we have to find space in some way. And in the context of Africa, in which it's the same in Mozambique, the most challenge is to bring people that are in the informal sectors to the formal sector so that they can pay taxes. And it's a challenge because we have a large informal sectors. And we, now in Mozambique, we are working in some tax reforms, specific on VAT, but it's difficult because even the formal sectors, they are facing too much challenge. When we have to, for example, eliminate some exceptions that we have on the VAT, they are saying that they are not prepared to pay taxes, but in the same time, we need to bring new exemption for the sectors like agriculture, which is the one of the most largest sectors in terms of employment in Africa, specifically in Mozambique. So it's difficult for the government, but we have to work in the way that we can increase our revenue, bringing more people to formal sectors, to pay taxes, and now we are on this way because it's the only way that we can improve the social protection, the social programs. For example, when we had to deal with the cyclones, we have to ask to our partners to help us with the programs, with the cash transfers, and in the same time with pandemic, so we have to, in some way, to find solutions, and I think that the solution is coming from this side, tax reforms, increasing revenues, bringing people that are in the informal sector to the formal sector, more people paying taxes, this is the way. Yeah, and that's what we're trying to get at, is solutions, yeah, I don't think we'll be able to do it in the hour and a half that we have, but you know, Santiago, I'm really interested to hear your perspective, because this is something you've talked about, this tension between formal and informal, and just the issue of trying to get some kind of tax from these groups, and how this can benefit all of the social systems that we're trying to talk about here. It's the curse of the microphone with him. Yes? They like me now? Now they like you, yes. So, I was not here yesterday morning for Chico Ferreira's lecture, but I don't know whether he mentioned this or not, but in some of the research that he's done, together with some other people, Nora Lustig, they show the following, which is really interesting. You take the average OECD country, and there, income inequality gives you a genie, roughly, of about 0.48 before taxes and transfers. But then once you have taxes and transfers, you get a genie of about 0.33 or something like that. So what that says is that taxes and transfers, and taxes permanently, really matter in terms of lowering the cost. Now if you do the same calculation, have you done it, but Chico and Nora and these people have done it? You get the genie coefficient in Latin America slightly higher before taxes and transfers, like 0.51 or so, and then you go through taxes and transfers, and you go down to 0.49. In other words, almost no change, 0.02, in the genie coefficient as a result of taxes and transfers. What that really says is that your tax and transfer systems, from the point of view of inequality, is extremely inefficient. There are many reasons behind them. Part of the reasons is the segmentation of insurance between formal and informal sectors, which generates by itself a lot of inequality. I don't have time to go into that one, but there's also a component, and that's connected to what Antonio was doing here, having to do with the structure of taxation. Another interesting piece of data. In the average OECD country, the difference between countries in Europe, Canada, US, and Latin America, in personal income taxes as a share of GDP, is five points of GDP, not 5%, five points of GDP. So, bottom line, in Europe, citizens pay taxes and they get back social protection. In Latin America, we sort of pay taxes and we sort of get back social protection. So we're in a really bad equilibrium, in a really bad equilibrium, because, and this is something Marcella has researched a lot, that equilibrium also implies a low productivity distribution of firms. It's a terrible equilibrium, and the real trick is to convince society that we're all losing where we are. We're all losing, but there's no way of getting out of this equilibrium without paying more taxes. And that's where the challenge is. Of course, not only raising taxes, you've got to do all these reforms, combat corruption and all that, but you've got to start somewhere and in the region, the room for starting with a bigger tactic, particularly in personal income tax, as the current government is trying to do in Colombia, is probably the right place to start. Okay, good to know. That's excellent, Marcella. So let me pick up where isn't the aisle left. So definitely raising our abilities to raise taxes is fundamental and easy to talk from my position, not from yours guys. But then the other challenge that arises there is how is it that we're able to raise more money and at the same time, foster the productive capabilities that will bring down the 0.51 to start with and be able to create more income from jobs before having to redistribute and protect people afterwards. And I think that's the other great tension. The other interesting feature of economies such as the Latin Americans is that the little taxes they're able to raise, they raise them from businesses rather than people, which is sort of the other way around in the richer economies. And that has a good reason for it. We have very weak capabilities to raise money to start with for the government. And it is easier to raise it from the businesses which are easier to follow, which are where it is easier to enforce things. But then the other challenge is not only raise money but be able to raise it in a way that does foster those capabilities. And that means making it easier for the business sector to grow and to generate those jobs precisely for the people in the lower bottom of the, let me call it, human talent and productivity distribution. And then not only how you raise that money but also how you spend it is going to matter. So if we raise it and we spend it, for instance, in subsidies that are unconditional, such as the ones that we saw prominently during the pandemic all over the world, then you also have great perils. So the other question is how do you spend that money in a way that is complementary to the generation of incomes, where people are not supplementing, not substituting that generation of income by the households? Yeah, big questions indeed and very good questions. But I'm gonna move on a bit because in the, I'm taking a look at the clock there. What I'm going to talk about next is really interesting because in the last two days, many of you gave very fascinating, interesting presentations. I'm sure many of you've been paying attention to them. These are really innovative ideas. They're very academic ideas, aren't they? On ideas on reducing poverty, on reducing inequality. But really what is the main challenges in taking these academic ideas, which are great, and making them into policy? Because this is something that we don't see enough of. We're not seeing governments take into account some innovative policy ideas that perhaps are slightly risky. Progressa was risky when you first suggested it. So give us an idea of that challenge that policymakers have to face when they come up with coming up with these great ideas, taking into account the work that everyone here is doing. What is the challenge in implementing these ideas? Is it fiscal, political, social, and how do we overcome them? I'd love to hear from any of you with some perspective on that. And I know Santiago does have some perspective on that, but let's hear from the minister. Well, the challenge is, first of all, political. So, you know, but it's also because, of course, of the influence of private interests into the political life, let's say, to be clear about that. So that's the big, big challenge. Also sometimes, I mean, there are complex ideas that are sometimes the agenda. I mean, here, for example, Santiago has been one of the big champions of not, actually, Colombia in general, also because he has also been a researcher in Colombia. So, you finance some social spending with contributions associated to employment. The former workers in Colombia, they have to pay, you know, conditions to pension, conditions to health, others, other contributions, and to what extent that generates informality, let's say, for reduced former workers. So that's one, that's one big issue that is always in this, it's an academic topic and a big discussion about how effective that is, but also how difficult it is to finance it with public, with the public, the central, let's say, the budgets, the central government budget. Because if you don't have contribution, for example, let's say, generally education doesn't have contributions, I mean, very little from the families, so everything is more or less, the public education is fully financed by budgets. In health, you have a mix system with pensions, but then you have the problem that access is limited because of the, you see the topic, let's say, of discussion, and to what extent, but you decide not to have social security contribution, let's say, then the central government has to back Columbia, for example, not only the health system, and it's quite expensive, let's say, it's a lot of resources, let's say that. And you can say, for example, also, pensions, the pension system, you have the same problem, but it's tougher because in Columbia, in Columbia, only one fourth of the workers get any pension, so the big issue is how you complement that with a special program for the older people who don't have a pension, for example, which is income support. So it's very complex how you mix the two issues. By the way, let me mention two issues that I think are important for the discussion. The first one, I forgot when I talked before, that we also have a wealth tax, and it has not been a continuous wealth tax, but we are proposing a continuous wealth tax, which is what Columbia had actually from 1936 to 1989. And so what happened after 89 to get rid of the wealth tax? Yeah, in most countries of the world, wealth taxes were eliminated, including Columbia. But Columbia, the wealth tax is coming back in many countries, and in Columbia actually had been used this century in several years by different governments, but we're proposing a permanent wealth tax. Let's say that's one point. But the other is what we call the, let's say for the small business, let's say, where we have the program for the popular economy. So how you support micro and small businesses, which are, let's say, the informal part of the economy. That's right. And how you support them so they get more productivity, more income, et cetera, et cetera. So that's a, you know, this government, but it has a long tradition in Columbia, in different forms, but it's not too strong, let's say, and doesn't reach, let's say, many small businesses. So that's one program which includes, let's say, access to credit, which, for example, we have to manage because the Ministry of Finance manages a system of development banks that we have in Columbia. The second is technology, access to technology and training, which today also is the use of digital technologies, which you have to use in all businesses today, particularly when you have payment systems that are increasingly using digital systems, and then for commercialization. How you support the, you know, the small business selling their products. And in my way of thinking, let's say, supporting cooperatives of different systems for cooperation is essential, particularly for that, for the commercialization. I'm gonna jump in there because I just think, you know, everyone here in this room has some idea on how to reduce inequality, and I know we've heard some of those papers and projections over the last two days. So, and Santiago, I know you have a personal experience yourself of trying to get progress off the ground. So how difficult it is, and as you say correctly, Minister Ogambo, it is political. It's a political challenge, isn't it? You need the political capital to back up some of these policies to really put them into play. So give us a sense of the struggle that you went through when you first introduced Progresa to your president at the time in Mexico in the 1990s, and just how you overcame some of those challenges. The answer is fairly easy. Yeah. The president of Mexico was a very smart man. So I basically had to convince him, and he understood. The rest of the cabinet thought this was nuts. Most people that we discussed this said this was nuts, but the president understood, and he was willing to take risks. These are not contexts that you face very often, particularly, this is a political context in which the party in power at the time had sufficient power in Congress to actually carry the day. That's more difficult. So I wanna connect that to the earlier point that you made, which is we've generated a huge amount of knowledge over the last two decades. Many of the people in this room have contributed to that. We know a lot about the impact of individual policies on individual outcomes. We do that very carefully with very, a lot of technique, a lot of good econometrics. We have papers from all of Latin America, and probably, Kunal will know the literature from other regions of the world from all over the world. So we know a lot about individual trees. What we need to do now is to think about forests. If you are a researcher, but you're talking to a policymaker, if you come to the policymaker and you say, look, I have this wonderful paper that shows that the impact of this of X on Y is W, and the policymaker says, yeah, that's great. However, there's also X, Y, Z, all these other policies at the same time. They tell me about, what about the rest of the story? Well, that I can't tell you. What I can tell you is that the impact of X on Y is Z. But how do I put the rest of the, you know, look, trees don't grow on forests by magic. It's important to understand the tree, and therefore, it's very important to understand the mechanism and the econometrics behind the identification of what you're doing, but it's also extremely important to place the individual tree in the forest and to look at the forest. And to come to your question, what the profession needs to do now, if they want to influence more policymakers, is to develop a language by which they have a view of the forest, and they convey to the policymakers, look, this is sort of the forest. We don't know the exact details of everything. It'll take us at least 25 more years of research to do that, but what we know right now, this is broadly what I think makes sense. That said, the second challenge would then be to communicate to the general public the sort of point that Jose Antonio was making. But first, you've got to communicate from the academic community into the policymaking community to let them know that what you're doing and your research can actually be used in a real world context. And I think that's sort of where we're at. And Kunal organized a conference a year from today about looking at forest and not looking at individual trees, and how we think about the general equilibrium of all these systems in a more systemic way, even though the profession has been moving away from that because of all the identification, which I sympathize, agree with, but it's not enough. And I think everyone here can probably take some lessons from you, Santiago, in the kind of language needed to communicate these ideas to policymakers, to convince them. You were very lucky that you convinced your president, but obviously these are issues that you'll probably have to struggle with in Mozambique, and everyone does when you're a policymaker. So give us a sense of what you're having to deal with because you are actually faced with rich gas deposit fines in Mozambique and the idea of then trying to get that revenue redistributed the struggle that you're having, trying to find the right models to find that revenue being redistributed to the general population. It's incredibly hard, isn't it? This is a good example of a mark to the government, but this is a good example of how we have to discuss and to convince the politician that this is the right way because it's really difficult. For example, now we are working in the sovereign and world-found law, trying to describe how we will be using these resources in the benefit of the population and the next generation. But when we start to discuss with the politician in a high level, they have an opinion, so it's really difficult. It's just to say that it's a challenge. But getting in the point of the huge amount of resources and the revenue that will coming from these LNG that we have in Mozambique, what we expect is to use these resources to push the inclusive growth in order that we can transform our... It's probably a battery here, try this one. We haven't tried that one yet. Does that work? Hello, yes. Yes. Good. Yes, the idea is to work in the social transformation. First, we have to deal with the investment of human capital. We did a huge problem in our countries in Africa, in Mozambique, it's the same. So we think that we can use this research to invest in human capital for poor people, to increase the access of education, health, to design better social programs that will help us with more employment. So we have a kind of a roadmap, a plan, but we don't know if it will work. We are now trying to get some experience of the countries that have this kind of resource, but in fact, it's a challenge. But we, as a country, we all agree that we have to use this money to reduce inequalities, to invest in the country so that we have inclusive, a proper goal. So we have a common sense in this. Great. Now, I'm gonna try to open up the session to the audience now. You've all been listening very interestingly, and I can see there's a real sense of attention that you all have. So let's have these microphones roam around and get some questions. Yes, question in the front, and there's another one there. So let's hear from, yes, it's Rachel, isn't it? You presented this morning, so yes, very, very excited to hear from you. Oh, it's one of the ones that don't work. No, I'm gonna hear about it in a, oh, here you go. Yes, we hear you. Okay, Raquel Fernandez. And so I wanted to make one quick comment and ask a question. Quick comment is, to your question, is this world that in some sense looks worse because we have pandemics and we have climate change coming upon us, is it gonna make getting rid of inequality harder? And you could say yes, but a more optimistic view is that these are global problems that actually depend critically upon reducing worldwide inter-country inequality because you can't have countries cutting down trees or polluting lakes or overfishing. In oceans, without that affecting all of us. So you might think that's gonna be a reason you would see financial incentives transfers towards poorer countries. And for that same very same reason, when it comes to health, you're going to keep on having mutations as long as people cannot get vaccinated, they don't have the roads for the vaccines, et cetera. So that part might make you optimistic or it might make you think we're going to hell in a hand basket. And then the question for the two of you, you know, Santiago, you said very convincingly, we saw intergenerational improvements because of conditional cash transfer programs and others on health and education, good things happen, but then we didn't see that carry over to higher income for these individuals later on and you say they need good jobs. And Marcella, you completely agree, we need more jobs, that's going to be creating growth, that's a challenge for the economy. And what I still don't understand is why don't we have the good firms and the good jobs, given that we have more educated people, healthier people, what's the big roadblock there? Fantastic question and a fantastic point that you made as well, but let's take the next question. I think there was a gentleman there, yes? Thank you. This is David Castell, thanks for the discussion. And you guys, I liked it. So one key variable here is productivity, right? So the point here is how to increase productivity and according to basic economic theory, so two ways is basically technological change and then structural change, right? So my point here is why this is not happening in Latin American countries, productivity levels are still very low and this may relate to moving up in the value chain, right? So Latin American countries still specialize in commodities. So how to move up in sort of agricultural products to more sophisticated, sort of again in the value chain or in the mineral sector, in the textile sector, because again, so one thing is redistribution from top to the bottom, but as you guys highlighted, it's also creating income at the bottom and the key here is to increase productivity. Okay, so how does this Latin America get to the next step? So let's get another question back there. Thank you very much. Hi, Abonga from South Africa. I found the discussion very fascinating. Santiago, when the discussion started, you spoke about pre-market distribution or outcomes and I guess post-market distribution as a way to confront and reduce inequality and I've got one question and it's something I certainly have not heard even in the discussions over the last few days or so which is around the redistribution of productive assets and in particular land reforms. I mean, if we look at the examples of India in China as countries that have narrowed the gap from an equality perspective if we compare across countries, one of the distinctive features of both countries in the post-colonial moment has been the institution of land reforms and I'm quite interested to hear from Finance Minister Jose Antonio what your view would be on the role of the redistribution of productive assets like land in a policy package, especially in light of I guess the resumption of the peace talks over the last few days or so. Okay, great. Let's stop there with the first three questions so we can remember them. So the first one was all about why haven't we got there yet in terms of the jobs and companies to produce that incredible employment. Second one was how does Latin America go up the value chain in terms of digital, structural, et cetera, et cetera and the last one, land reforms. So let's take it. I think the first question was to Marcella and yourself. Great, so I would actually say that the first two questions are basically the same question. Why don't we have better productivity? And of course that's the question of a very large literature that has created some more questions than answers and it does have some of those answers. And here's my list of priorities thinking of Latin America. Though I see the puzzle that Santiago is placing on us, I also see that it is very clearly the case that in terms of human capital, the quality of education that people have on average and as a distribution in Latin America, we are starting from a distribution of human talent that still displays a very large gap with respect to the distribution that people are starting with in this very advanced economies. If we try to put a name and a face to this informality problem, then you can go out to the street and see the person who's selling a package of something in the street or the person who sells you something in a beach and that person is clearly endowed with a very poor education to start with and capabilities for the productive sector. So I think that's the first answer to that. By the way, that's part of what technological advancement may mean. You're starting from people who are better able to use technology. So I think that's point one. Then there is the second point. Now moving to what firms do, if you think of firms, the way I like to think about them, these are organizations that bring people together to produce things. So one of the symptoms of underdevelopment that we have been talking about during this conference is the fact that the firms that we have in Latin America are bringing very few people that are very poor capabilities to start with. And then the other question is why don't they put together more people? Why don't they raise in terms of scale? So part of the answer is the place where Santiago started, a labor market that makes it very difficult to really hire these people and put them together. So I would say even though there are very deep differences across the countries in the regions in the specific labor market institution, the overall result is that the labor market as a whole still is very against the formation of these organizations that bring people together. I would say that's the second factor. That factor in itself also implies that growing as a firm will be difficult, will be costly, and therefore will not be as profitable. So it also becomes a disincentive to invest in the other technologies that will be complementary to bringing people together. So I would say that's a third reason. And I think that set of reasons is very coincidental with the fact that we not only not have that many firms, we don't have that great firms, but the types of firms that we're mostly missing is the firms that are transit from being these tiny things to being small businesses rather than micro than being middle sized firms. So I would say that's a set of things that we need to address to start with. And of course then there are the other more traditional problems that even advanced economies face in terms of fostering competition, et cetera. Now the other issue is the structural composition of the economy. There is obviously a challenge that these economies have faced. I'm sure Jose Antonio would be happy to talk about that and disagree with me in many versions of what I say about this. But of course one of the big problems that people have pointed out is we never really developed a manufacturing sector that was strong. I'd love to have here a picture that I'd like to see from my most recent research. What's striking is we didn't lack the manufacturing sector so much in terms of value added. We missed it in terms of job production. So the gap in terms of the share of the overall employment that manufacturing generated in Latin America as a whole compared to the US, the UK, all other European economies, the Asian economies that are richer today is huge. Then if you go look at the gap in the share not in employment but the value added as a percentage of the total, that's not so much. In the peak of industrialization, value added in manufacturing as a percentage of GDP in the richer economies was around 27%. We were definitely below that even at the peak but the number is like 24. When you look at employment, you go from around 25 in the richer economies to 15, some of us 13. So again, I would go back to the labor market. I think we do have a huge thing to talk about there. And then I worry that in the discussion of the missing manufacturing, we're gonna keep trying to jump into the third revolution when the world is in the fifth revolution. So I think that's a great danger in this discussion. Yes, and we are certainly running out of time to really tackle it all. Santiago, your remarks on that? No, I think Raquel's question is extremely pertinent and a really relevant question. So just to compliment most of what Marcella said, the issue is that we don't, it's not that we don't have enough firms. In fact, we have way too many firms. The issue is that we don't have enough productive firms. And you know, roughly numbers. The US GDP is at least 10 times the GDP of Mexico. Mexico has half the number of firms that the US has. So it's absurd. So we have a huge number of firms. So why is it that in Mexico, the more productive firms don't get out of the market, the unproductive firms? We all learned from Schumpeter that there's this creative destruction process in which productive firms get big, they innovate, they do all these good things, and then the bad firms get out, and then the new firms come in and they create good jobs and productivity goes up. That process in Latin America, arts, electronics, 30 years ago, the informality rate in Mexico was 59%. Today is 57%. Exports went from 5% to 35%. So all this thing about value change and increasing, moving up the volume. Yes, yes, I'm for it. It is not going to solve the problems in the labor market. Because the problems in the labor market are in the areas that Marcella was talking about, I was talking about. This vast number of firms that create very low productivity jobs. Thank you. And of course, the question for the finance minister on the land reforms. Well, let me say that one peculiarity of Colombia is that there are several agricultural ministers who become finance ministers. Very funny. I don't know many countries. I am one of those. Okay. So you will have some knowledge of land reform then. I was a agricultural minister and actually the current agricultural land reform. The land reform law of Colombia was passed when I was a culturalist. So I said, I'm the author of it. Colombia has had three ways of agrarian reforms. One in 1930s and early 40s, one in 1960s. And then this began and was not pursued too much. So let's say by later governments, but it's still the law. But in the peace agreement with the major guerrilla of Colombia five years ago, the topic number one is integrated role development. And one of the elements is land reform. I mean, in our view, the previous government did very little. In that regard, so one of the tasks of this government is actually to undertake a significant land reform. And then that includes, that includes let's say two issues. Actually a redistribution of land. Actually, not through expropriation actually, through the use of public lands, actually lands that have been expropriated from illicit activity, let's say, drug trafficking and paramilitary groups, which are held by one institution in the government, and then purchasing land. And public sector lands actually, because there are many role areas. So that's one element too. So to do a significant redistribution of land, Colombia has actually several parts of the country in the traditional of the small holders. So it's a mix of small holder and large land holding activities. So it's a mix of those. So it's to support that, which means that aside from the land reform itself, we have to have the support to a small holder, which is part of the thing we call the popular economy. So how you support a small holder culture in a significant way. The three ways I mentioned, credit, technology, access to technology, or knowledge, let's say, and commercialization. So how you support them in the three areas in a significant way. So we do have institutions that were actually put in place actually five years ago, when the peace agreement was negotiated, I was asked by the government at the time to head this rural mission commission, which is one of the frameworks for the current activities that we're now holding. So it's actually, again, a significant support with the, by the way, the issue of using associations as a major topic that has to be supported in a significant way in order to support the small holders. So it's both land and support to the economy. Excellent. Okay, there were more questions, so let's get them now. I saw some hands up this side just now. Yes, a gentleman there. And another gentleman there, yes. Hi, I have a question regarding Santiago's comments on the role of academia in implementing all the knowledge that we as a field produce. And I wanted to ask you, what do you see the role of our field going forward? You see it as a field that is called to have more people interacting with politicians and making these knowledge apply to the field. Do we see the field as something that we make like literature reviews in which we calculate the marginal value of public funds, compare them together and see what are the most efficient policies that governments should implement but without getting involved in the politician discussions? Or do we see, do you see this as something that should be done in every paper and have like a kind of like a implementation revolution in which a responsibility of the researchers should be also to have some type of discussion about the potential of implementation of all the policies that are being studied. Okay, interesting question. And then follow up, yes. But I think there was a gentleman just there first. And then we'll get a question out for them. Yes, the gentleman in the third row, fourth row rather. Good afternoon. My question is going to be focused on Colombia, particularly because it's a country that is also in regions that have great fiscal inequalities and also in economies, because particularly Antiochian Bogotai are the ones that concentrate the biggest weight on the GDP. So how to improve productivity in regions like Chocó, Bajira, El Cauca, and the Amazonas, which are regions that have been dedicated to primary activities, extractivists, who are still dominated by illicit economies. So how to improve that part? Maybe yesterday, Lainer, in a talk, we were told, let's say, a proposal that has been proposed that the departments or regions with better fiscal performance could transfer resources to regions that obviously don't have those income capabilities. I'm sorry, I cannot help that, because I do not have a translation, Mike, but I'm assuming you all know what that question was. And then a final question here from Amelia. Yes, thank you. Thank you so much, and thank you to the panel. I am Amelia Santos from ONTAT. And my question relates to one of the issues that Marcella raised, but then also later it went to the international domain. Marcella mentioned that one issue in Latin America and the same in other countries is that businesses pay taxes, but these are domestic firms, they pay taxes. And then we have in the other side of the question, multinationals, whereby governments in developing countries, especially Latin America, use fiscal incentives, especially corporate income taxes, part of the value proposition. So here we have two wars, one where the domestic firms pay taxes, and then foreign firms that need it for an income, for an investment, whether domestic or through big public private projects coming to the country based on corporate income times, holidays or incentives. So we have here at Wall Street, how policy makers can deal with this and how research can help to address, to bring this to the forest of policy, the issue of investment and inequality. Thank you. Okay, so the first and the last question, they're somewhat related, just how do we make some of these academic policies, the work, the hard work that everyone in this room is doing in terms of research, how do we make him into policy and be able to communicate that? So thank you for the question. I mean, your question is very complex and sort of has a lot. I mean, looking forward, I think there's still a lot of room for research along the lines of what we've been doing for the last two decades, trying to understand how certain things work. I don't know if you're wearing Raquel's lecture this morning, for instance, right? Raquel's lecture was excellent. It sort of gives you a deep sense of why certain phenomena that we observe, why do they occur and sort of, there's an economic interpretation of that and then you learn and it helps you to think. That kind of research is fundamental. So it's not either or, it's we need to widen and say, I've learned a lot from this. There are many other facts here. Next, let me do some research in which I try to put all these facts together and try to see how in the particular context of a country, they translate into policymaking. I emphasize in the particular context of the country because that really matters. That really, really matters. And in my view, we need to pay more attention about the institutional context of individual countries when we try to think about policymaking in countries. So that's sort of broad research. The last one is you mentioned about talking to politicians. I think it's essential. I mean, if you want to influence policy, you need to talk to the people who make policy. And you have to understand their constraints. You have to understand where they're coming from and you have to understand how the issue that you're trying to put can be framed in such a way that from the point of view of a policymaker, it makes sense. And there, I think economists need to understand a little bit more the political economy, things in political dynamics, and sort of get their hands dirty to be able to be more useful and more constructive. Thank you. So let me take first this last question where I think you're raising a crucial issue. And I think it's a good example also of the forest versus trees stuff that Santiago was talking about. The justification for holidays, specific benefits for some very large investors, multinationals, especially economic zones, if you read through the literature is generally, well, these countries not competitive in terms of its taxes for enterprises. Therefore, let's give benefits to some enterprises so we can grab some of that investment. So the solution rather than going to the first diagnosis and looking at the overall system is to try to focus on some specific investors and give those benefits. And that's very extremely prevalent and we have to say that this country is heightened in that domain. The answer may be, maybe there is a way to reconcile those two things. Maybe one way it's, let's remember we have an overall business sector that we need to foster, that we have this predominance of tiny firms that hopefully will become small firms someday. That's what we don't have. We have this plethora that Santiago was talking about, way too many firms, but many of them don't even respond to the conception of a firm. So why don't we think that rather than giving some benefits and holidays and stuff to some specific sectors, firms, et cetera, why don't we create a system that as a whole is much more friendly to these creations of jobs and things that we were talking about before. So if we were to talk about these countries specifically, having better tax treatment for everybody, that would be a lower corporate income tax rate, less benefits for others. And then at the same time, once you have that, then you open the space for things such as the discussion of assuring a minimal effective payment of taxes by the very largest corporations, which we all, is very clear now, have the ability to play countries against each other to have that. We have run out of time, but I think the minister, the second question was aimed at you. The Spanish question. Yes, the Spanish question. The Spanish question was about how to, the regional inequalities, from rich regions to poor regions, and how you can support the poor regions and to what extent you should make transfers from the rich to the poor, they said. And let me start actually by stating one thing that is very important when you are in government. And in a sense, it's not always well researched, which is how effective your system of implementation, action, or delivery is not, which is creating, how do you create public sector institutions that actually do the job? And that's also relevant for this issue because how you strengthen local governments or regional governments that are weak and therefore cannot deliver is one of the major challenges. It's not only financing, but actually how you develop those institutions and actually those institutions also help to develop private sector activities, either small holding or large holding activities in those regions. So it's a very important issue. Let me say that that is basically a state building or institution building effort that has to be done and how it has to be a long term. So it's a state, it's an issue for a state, not for governments. All governments have to build up and continue to build on the system that have been created in education, in health in every area, let's say. And I think that development of institutions is very important. And now, of course, a very major responsibility is how you help develop that at the local level in backward regions. So I think that's one element which is very important. So the institution building support which can come from national governments, but many times it's much better to use local or regional governments to support even across one region that is successful to support in a region that has not been successful. That's one more. In terms of financing, the state system that is used in Colombia for distribution is actually national taxes that are given to local governments or to regional governments. And there is a very clear system by which you have to guarantee that the system is resuited. So it doesn't look as a transfer from region to region to poor regions, but in fact, it is. Because the most tax revenues, for example, in Colombia are from Bogota. But Bogota gets a very small transfer from national government and it has a lot of capacity to do local taxes. So the national governments really resuited which are with taxes that are generated in Bogota or Medellin or Cali or Barakilla, let's say, are transferred to the localities that have a much lower capacity. Actually it's quite a good resuited system, but it's basically done through national taxes. Well, we have run out of time. I know you've all got great questions out there. I do have one solution to what you just said, Minister, around building good public institutions. I think you need to hire more people from your old school who obviously have done great research. They know what they're doing and they have tried to look at issues, how we can make the world more equal, which is what this subject is all about. Now, forgive me, I'm gonna ask a final question if there's nothing more, but I'd beseech all of you just to give me a 10-second answer if you can because we have run out of time. I know we are testing the patience of our audience, so I'm gonna return to my opening question about whether you're optimistic we can make the world more equal. Is this an achievable ambition in our lifetimes? So maybe just a yes and no answer if you can. Yes, let's start with you, Anilde. Yes, it's a kind of difficult question. I don't know, I think. We're talking in our lifetimes, so let's say 50 years in the next 50 years. Yes, maybe in the next 25 years, maybe. So you're much more optimistic than I am, but it's still a couple. Well, there are two dimensions because the international dimension and the national dimension, let's say. Let's say in the international dimensions, there are institutions but they're very weak at the funding that they transfer are very small. I mean, when you think how much is official development assistance, the 0.7% target that was defined in the UN half a century ago is only followed by four or five countries. So that's one, and for example, now for climate change, there was a target that it has been also not met. So that's one issue. Now you have the system that has been improving, I think, in terms of size, which is the system of multilateral development banks in which they have been growing, the regional development banks faster than the world bank, but the world bank also growing. And this system actually can be very supportive for development, and it is in many cases, particularly during crisis, for example, during the COVID-19 crisis. Yes, it was very critical at the local level. You know, it's a question of national policies. And I think I am optimistic. Of course, I'm part of the world wants to do it. So yes, I'm hearing yes from you. So I hope we can make progress in that regard. Excellent, Maricela. I think it's possible, definitely, if we play it right, but there are very many challenges to playing it right, one convincing the world that there needs to be the kind of redistribution across countries that Raquel was mentioning, rather than the race to the bottom that you were also mentioning. But also if we're able to convince, or if people get convinced that this really is a priority and that more pockets would need to be touched than people think. If we're really able to prioritize the poorest and being able to move everybody to a more middle back, I think that's a possibility. But the challenges are definitely great. The social movements in Latin America are only approved to that, okay? So your answer is possible, possible, Santiago. If you're not optimistic, you've got to commit suicide. Okay. And I'm not planning to commit suicide. Excellent. Well, a big round of applause to our amazing panelists. And thank you all for such great questions. That was fantastic. Yes?