Latin American Economies- Destiny or Choice

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“How many numerical indicators would have to be created in order to let us realize that we are getting closer to solve the poverty problem?”- question put to a World Bank economist discussing a report on Latin American poverty (Poverty Reduction and Growth: Virtuous and Vicious Circles).

The report points out that ‘Latin America needs to cut poverty to boost growth’;

Two of their main conclusions are a breakthrough for the bank: that private-sector growth is not a panacea for the poor and that inequality must be targeted directly. A third conclusion is almost heretical for the bank: that the state needs to take on more responsibility rather than less. "Converting the state into an agent that promotes equality of opportunities and practices efficient redistribution is, perhaps, the most critical challenge Latin America faces in implementing better policies that simultaneously stimulate growth and reduce inequality and poverty," the report says.

Some statistics from the report;

- On average, for every one percent of economic growth, poverty declines by 1.25 percent in Latin America.

- About 25 percent of Latin Americans live on less than $2 a day. While China experienced annual per capita growth rates of about 8.5 percent between 1981 and 2000, reducing poverty by 42 percentage points, Latin America's per capita GDP declined by 0.7 percent during the 1980s and increased by about 1.5 percent per year in the 1990s, with no significant changes in poverty levels.

- On average, a 10 percent increase in poverty reduces annual growth by 1 percentage point . A 10 percent increase in poverty is likely to be associated with a decline in investment of about 6-8 percentage points

- Latin America and the Caribbean is the most unequal region with the exception of Sub-Saharan Africa. If Latin America had the level of inequality of the developed world, its income poverty levels would be closer to 5 percent than to the actual rate of 25 percent

- In 2000, income per capita in the poorest municipality in Brazil was barely 10 percent of that in the richest; in Mexico, per capita income in Chiapas was only 18 percent of that in the capital

- Having a mother with only primary education increases the risk of school dropout by as much as 1.6 times in Chile and 60 percent in El Salvador compared to having a college-educated mother. A low educated father additionally increases school failure risks by up to 1.4 times in Chile and 40 percent in the Dominican Republic


Related Links:

- IMF F&D edition with a focus on Latin American economies

- Interview with Dr. John Edwards (Radioeconomics podcast- download now, available for only limited time)

- Latin America goes South (podcast from Hoover)

- The Future of Reforms in Latin America (webcast from World Bank)

- Podcasts from BBC on Brazil and Argentina

- Political and Economic Future of Latin America (podcast from Institute for Policy Studies)

- Latin America and the Caribbean: What Lies Ahead? The Search for Life After Debt- a webcast (real video, 300k) of a discussion at Princeton by David de Ferrenti

- Cato events; The Roots of Poverty in Latin America, A Modern Vision for Latin America, Dollarization for Latin America?, Liberty for Latin America: How to Undo Five Hundred Years of State Oppression

- The Latinobarómetro poll- Democracy’s ten year rut

- Chilie and the World

-After the Washington Consensus: Restarting Growth and Reform in Latin America

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This page contains a single entry by Paul published on March 27, 2006 11:22 PM.

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