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Op-eds and articles by the Executive Secretary |
| Poverty and Inequality in Latin America and the Caribbean From 2002 to 2007, Latin America and the Caribbean experienced the greatest economic growth of the past 40 years, with the best results in the main indicators of social development. In effect, during this five-year period, the number of people living in poverty diminished in almost 10 percentage points; that is, 37 million people rose above the poverty line. With respect to extreme poverty, or indigence, the data also reflects very positive results: extreme poverty dropped nearly 7 percentage points, equivalent to 29 million people. This figure is almost double the population of Chile. Certainly, it was a very positive quinquennium. It is already commonplace to say that Latin America is the region with the worst income distribution in the world. Therefore, it is good news to see that from 2002-2007, income distribution improved in eight countries in the region, worsened in only three and in the rest it remained fairly the same. This progress was moderate, but knowing how difficult it is to change the structure of inequality in a country, these results are nonetheless very good news. Poverty and inequality have decreased. However, in 2008 food prices began rising and already by the third quarter of the year a financial crisis had unleashed in the United States, which is now spreading throughout the world. Its precise depth and scope are still unknown. The significant price hikes of products that comprise the basic food basket of the poorest has had a direct effect in 2008, in that poverty dropped only one percentage point. Even worse is that extreme poverty is expected to rise from 12.6% in 2007 to 12.9% in 2008, equivalent to three million people. The positive cycle has ended; the negative cycle has begun. The global crisis that has sunk the main developed economies into recession will negatively affect the economic and social progress that Latin America achieved between 2002 and 2007. The Economic Commission for Latin America and the Caribbean (ECLAC) expects the global slowdown to lead to less demand for regional exports and lower productive investment. In addition, migrant remittances will drop and emerging countries will suffer restrictions in international financial markets. Unemployment will likely increase and real wages will not rise. Restrictions to credit will severely affect micro and small enterprises, and its negative effects will impact, above all, on the families of independent and informal workers. In this context, the forces that push up poverty, extreme poverty and inequality will be very strong and powerful in the coming year. There will be differences between countries. The countries most affected by lower remittances or their direct ties with the United States market will suffer most, as will countries whose export structures are less diversified and concentrate on goods whose markets were most vulnerable to the crisis, and countries with weak financial systems. The question, then, is simple and direct: What should countries do to avoid the entire weight of the crisis from falling on the shoulders of the poorest? It is obvious that, given the context of the crisis, it is impossible to demand or expect the results in the next few years to be similar to those in 2002-2007. That is more illusion than reality, nearer to demagogy than to responsibility. But what can be expected, and demanded, is that the poor of Latin America and the Caribbean not lose what they have gained in the past six years. For this there are social policy strategies and instruments in the fiscal arena (effectively countercyclical policies), in labour and employment, in conditional transfer programmes, in loans to micro-enterprises and in other areas. What can also be expected, and demanded, is that countries invest to maintain conditions so that when the negative cycle begins to recede, they may resume with strength and optimism the path to well-deserved poverty reduction and the construction of more equal societies, with greater social cohesion. Alicia Bárcena, |