Introduction
In much of Latin America, the deterioration of the rule of law, corruption, and incompetence in public management have ceased to be exclusive political issues. Today, these factors directly impact the business agenda, making projects more expensive, discouraging investments, and forcing business leaders to decide whether to adapt silently or take an active role in changing the environment.
The Impact of Institutional Deterioration on Business
Working in five Latin American countries, I have experienced firsthand the challenges of navigating an environment where legal insecurity, regulatory capture, abrupt policy changes, and discretionary judicial decisions are commonplace. This environment translates into invisible yet evident overcosts:
- Endless litigation due to ineffective courts
- Permits subject to political discretion
- Daily extortions affecting operations
- Loss of global investor confidence
These factors erode competitiveness, creating an ecosystem where businesses struggle to thrive.
The Dilemma for Business Leaders
Faced with this scenario, business leadership faces a dilemma: conform to a fragile environment or actively participate in building stronger institutions. Silent adaptation implies accepting a vicious cycle where corruption and inefficiency become normalized, ultimately weakening not only businesses but the entire region.
The Strategic Role of Business Leaders
Business leadership cannot solely focus on maximizing profits and meeting quarterly targets. Today’s executives must address the need to speak up. Silence in the face of corruption and incompetence is accepting a faltering economic model. This is not a political act but a strategic one: defending legal certainty is defending the viability of businesses they lead.
International Experience and Lessons Learned
International experience confirms that economic growth becomes fragile and highly dependent on external cycles in countries with weak institutions. Conversely, those that strengthen the rule of law and its institutions—with impartial courts, autonomous regulators, and clear competition rules—attract capital, innovate with greater confidence, and achieve more sustainable development.
The Necessity of Business Leadership in Latin America
Therefore, business leadership in Latin America today should be measured not only by its ability to innovate, internationalize, or generate profits but also by the strategic acumen, integrity, and courage of executives to defend long-term institutional certainty as an indispensable condition for development. This leadership is more necessary than ever.
Key Questions and Answers
- What challenges do business leaders face in Latin America due to institutional deterioration? Business leaders confront a more expensive and insecure business environment, with endless litigation, discretionary permits, daily extortions, and loss of global investor confidence.
- Why is it crucial for business leaders to take an active role in improving institutions? Silent adaptation implies accepting a vicious cycle of corruption and inefficiency, ultimately weakening businesses and the entire region. Active participation helps defend legal certainty, which is vital for business viability.
- How do countries with weak institutions fare economically compared to those that strengthen theirs? Economic growth becomes fragile and externally dependent in countries with weak institutions. In contrast, those that strengthen the rule of law and its institutions attract capital, innovate more confidently, and achieve sustainable development.
- What qualities should modern business leaders in Latin America embody? Business leaders must possess strategic acumen, integrity, and courage to defend long-term institutional certainty as a necessary condition for development.
