The Costs Of Inequality In Latin America

From the United States to the United Kingdom and from China to India, growing inequality has led to social discontent and the emergence of populist parties, also contributing to economic crises. We urgently need a better understanding of the roots and costs of these income gaps. The Costs of Inequality draws on the experience of Latin America, one of the most unequal regions of the world, to demonstrate how inequality has hampered economic growth, contributed to a lack of good jobs, weakened democracy, and led to social divisions and mistrust. In turn, low growth, exclusionary politics, violence and social mistrust have reinforced inequality, generating various vicious circles. Latin America thus provides a disturbing image of what the future may hold in other countries if we do not act quickly. It also provides some useful lessons on how to fight income concentration and build more equitable societies.

"From the United States to the United Kingdom and from China to India, growing inequality has led to social discontent and the emergence of populist parties, also contributing to economic crises. We urgently need a better understanding of the roots and costs of growing income gaps. The Costs of Inequality draws on the experience of Latin America, one of the most unequal regions of the world, using historical examples from different countries to demonstrate how inequality has hampered economic growth and contributed to a lack of good jobs. Across the region, the wealthy have faced limited incentives to move into new sectors and the poor have not had enough resources to invest in new projects. In fact, low growth, exclusionary politics, violence and social mistrust have reinforced inequality, generating various vicious circles. Latin America thus provides a disturbing image of what the future may hold in other countries"--

Concern about the pervasiveness of poverty and income inequality in Latin America goes beyond the issue of social justice. The persistence of mass poverty and inequality pits different social groups against one another and leads to a polarization that makes consistent economic policy formation difficult. National productivity may also suffer in economies with poorly educated workforces lacking adequate health care. Statistics on poverty and inequality in Latin America are rudimentary and often conflicting. Yet it is known that poverty became more widespread in the region during the last decade as it experienced economic decline. About 180 million people, or two out of every five in the area, are now living in poverty—some 50 million more than in 1980. It is also known that income and wealth are far more unequally distributed in Latin America than in most other developing regions. This book provides a much-needed assessment of how poverty, inequality, and social indicators have fared in several Latin American countries over the past decade. Experts from Latin America and the U.S. focus attention on the extent of poverty and inequality and how they have been affected by the debt crisis and adjustment of the 1980s. They explain that issues of poverty and inequality were neglected as governments in Latin America struggled to restore stability and growth to their economies. Social sector spending declined sharply, affecting both the quality and quantity of services provided. The contributors examine how poverty and inequality are—or are not—being addressed in each country. They also explore the viability of alternative approaches to combating poverty and reducing inequality. They explain that virtually no one denies that governments must take a leading role in the provision of health, education, and other social services. Yet there are sharp debates--over the compatibility of social spending with economic adjustment and stabilization; the priority of social expenditures in relation to other governmental spending; the allocation of funds among different social programs; who should, and should not, benefit; and who should pay the costs. They show that the poor and middle sectors had to pay dearly because their governments, the international community, and the families themselves were not prepared to deal with austerity. The book contains eleven chapters by contributors from universities and research institutions in the U.S. and Latin America, as well as from international financial organizations. It is the result of a project cosponsored by Inter-American Dialogue.

Latin America and the Caribbean has been one of the regions of the world with the greatest inequality. This book explores why the region suffers from such persistent inequality, identifies how it hampers development, and suggests ways to achieve greater equity in the distribution of wealth, incomes and opportunities. The study draws on data from 20 countries based on household surveys covering 3.6 million people, and reviews extensive economic, sociological and political science studies on inequality in Latin America. Four broad areas for action by governments and civil society groups to break the destructive pattern are outlined: (1) build more open political and social institutions, that allow the poor and historically subordinate groups to gain a greater share of agency, voice and power in society; (2) ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution institutions, that avoid the large regressive redistributions that occur during crises, and that allow for saving in good times to enhance access by the poor to social safety nets in bad times; (3) increase access by the poor to high-quality public services, especially education, health, water and electricity, as well as access to farmland and the rural services, and protect and enforce the property rights of the urban poor; (4) reform income transfer programmes so that they reach the poorest families.

Over the past decades, inequality has risen not just in advanced economies but also in many emerging market and developing economies, becoming one of the key global policy challenges. And throughout the 20th century, Latin America was associated with some of the world’s highest levels of inequality. Yet something interesting happened in the first decade and a half of the 21st century. Latin America was the only region in the World to have experienced significant declines in inequality in that period. Poverty also fell in Latin America, although this was replicated in other regions, and Latin America started from a relatively low base. Starting around 2014, however, and even before the COVID-19 pandemic hit, poverty and inequality gains had already slowed in Latin America and, in some cases, gone into reverse. And the COVID-19 shock, which is still playing out, is likely to dramatically worsen short-term poverty and inequality dynamics. Against this background, this departmental paper investigates the link between commodity prices, and poverty and inequality developments in Latin America.

Over the last two decades, economic, political, and social life in Latin America has been transformed by the region’s accelerated integration into the global economy. Although this transformation has tended to exacerbate various inequities, new forms of popular expression and action challenging the contemporary structures of capital and power have also developed. This volume is a comprehensive, genuinely comparative text on contemporary Latin America. In it, an international group of contributors offer multidimensional analyses of the historical context, contemporary character, and future direction of rural transformation, urbanization, economic restructuring, and the transition to political democracy. In addition, individual essays address the changing role of women, the influence of religion, the growth of new social movements, the struggles of indigenous peoples, and ecological issues. Finally, the book examines the influence of U.S. policy and of regionalization and globalization on the Latin American states. Sandor Halebsky is professor of sociology at Saint Mary’s University in Halifax, Nova Scotia. He coedited Cuba in Transition: Crisis and Transformation (Westview, 1992). Richard L. Harris is chair of the faculty at Golden Gate University in Monterey, California. He is one of the coordinating editors of the journal Latin American Perspectives and the author of Marxism, Socialism, and Democracy in Latin America (Westview, 1992).

"A study prepared by the United Nations University, World Institute for Development Economics Research (UNU-WIDER)

Unlike other regions around the world, several Latin American countries have managed to reduce income inequality over the last decade. Higher growth rates and growing employment, but also innovative wage policies and social programs, have contributed to reducing poverty and narrow income disparities. Yet, despite this progress, nation-states in the region demonstrate little capacity to substantially change their patterns of deeply rooted inequalities. Focusing on the limits and challenges of redistributive policies in Latin America, this volume synthesizes and updates the discussion of inequality in the region, introducing the perspective of global and transnational interdependencies. The book explores the extent to which redistributive policies have been interlinked with the provision and quality of public goods as well as with structural changes of the productive sector. Inspired by structuralist and neostructuralist thinking of Latin American economists, such as Raúl Prebisch and Celso Furtado, authors question the redistributive impact of the interplay of recent macroeconomic, fiscal and social policies, particularly under left and center-left administrations committed to greater equality. Bringing together experts in social, fiscal and macroeconomic policies to investigate the interdependent and global character of inequalities, this book will appeal to scholars of sociology, economics, development and politics with interests in Latin America, inequality and public policy.