Maximizing Policy and Fiscal Space for an Inclusive Green Strategy

Latin American governments need to have the requisite policy and fiscal space to implement an inclusive green development strategy. In this chapter, I analyze two important factors which impact that space significantly: the commitments and demands under international trade and investment agreements, and the financial resources available to achieve the desired goals. I propose possible actions to broaden the space, both at the international and the national level. Internationally, the rules need to be made compatible with the Sustainable Development Goals, and thus with the implementation of an inclusive green transition, and financial resources for a green transition have to grow considerably. Nationally, governments can expand policy space by terminating international investment agreements which include an investor-state dispute settlement mechanism. And they can increase fiscal space in several ways, importantly—in the current context—by appropriating a larger share of the natural resource rent.