Latin America’s tentative improvements

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Latin American witnessed millions leave extreme poverty over the past fifteen years. The middle class is growing, but current advances are still tenuous.

Fewer people are living in extreme poverty, but the Latin American poor are not graduating into the middle class. The ‘vulnerable group,’ made up of people living on between $4 and $10 a day, remains constant. Meanwhile, progress has moved at different rates across the region.

Economic growth took off across Latin America in the early 2000s. Benefits were felt across the entire economic spectrum, said said World Bank report, ‘Shifting Gears to Accelerate Shared Prosperity in Latin America and the Caribbean’. As a result, extreme poverty fell from 25% of the population to 13% in the matter of a decade.

Income inequality remains a major issue for countries in Latin America, despite the fact that some measures show the incomes of the poorest 40% were growing faster than the overall average. The current rate of economic growth and levels of inequality point to protracted progress towards economic prosperity.

“The researchers reckon that on current trends it won’t be until 2052 that the average Latin American has the standard of living that rich-world inhabitants were enjoying back in 2000” explained the Economist.

To speed up progress and reach the level of top global performers, the World Bank says Latin America needs to more than double its rate of economic growth.

The current extreme poverty rates reflect the uneven progress across Latin America. Southern Cone countries, such as Argentina, Brazil and Chile, witnessed speedy reductions in extreme poverty over the past fifteen years while countries in Central America and Mexico were much slower. Half of the 80 million people living extreme poverty live in the populous nations of Brazil and Mexico.

Tackling the problem of inequality will be an important part of ensuring that growth continues and it reaches the poor. As much as one-third of individual earning inequality can be attributed to inequality of opportunity, in Brazil, Mexico and Colombia. Improving access to health and education are ways that more opportunities can be made available to Latin Americans.

“Enabling people who are currently marginalized to improve their living conditions will unleash their inherent economic potential,” says the report. “This, in turn, leads to higher growth, which makes more fiscal resources available to improve the quality of life for all.”

Social services, such as public cash transfers that were used in Brazil and Mexico, can help to some extent. The report concludes that making fundamental changes that enable equality of opportunity and give every person the ability to take part in public policy will change the course of poverty in Latin America.

Latin America may also look to Pope Francis, an Argentinian, who has increasingly drawn attention to the issue of inequality around the world. He has taken a strong stance against the excesses of capitalism and how it contributes to inequality.

“As long as the problems of the poor are not radically resolved by rejecting the absolute autonomy of markets and financial speculation and by attacking the structural causes of inequality, no solution will be found for the world’s problems or, for that matter, to any problems,” said the Pope in his Evangeli Gaudium, in November.

“Inequality is the root of social ills.”

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About Author

Tom Murphy

Tom Murphy is a New Hampshire-based reporter for Humanosphere. Before joining Humanosphere, Tom founded and edited the aid blog A View From the Cave. His work has appeared in Foreign Policy, the Huffington Post, the Guardian, GlobalPost and Christian Science Monitor. He tweets at @viewfromthecave. Contact him at tmurphy[at]humanosphere.org.