Latin America's Grope for Growth
Economic Solutions Elude the Region
WASHINGTON, D.C., OCT. 11, 2003 (Zenit) - The dismal economic performance of many Latin American countries has policy-makers scratching their heads over where to go next. Some recent reports try to come up with solutions.
On Wednesday the World Bank released a study, "Inequality in Latin America and the Caribbean: Breaking with History?" Presenting the report, David de Ferranti, World Bank vice president for Latin America, commented: "Latin America and the Caribbean is one of the regions of the world with the greatest inequality."
"This inequality slows the pace of poverty reduction, and undermines the development process itself," he explained. In fact, the richest one-tenth of the population of Latin America and the Caribbean earns 48% of total income, while the poorest tenth earns only 1.6%. In industrialized countries on average the top tenth receives 29.1%, while the bottom tenth earns 2.5%. Income distribution is also notably more unequal than in Asia and Eastern Europe.
In the area of education the report noted that in Mexico the average person in the poorest fifth of the population has 3.5 years of schooling, as compared with 11.6 years for the average person in the richest fifth.
The World Bank's research team drew data from 20 countries based on household surveys covering 3.6 million people, and reviewed extensive studies on inequality in Latin America. The report outlined four broad areas for action to ameliorate inequality:
-- Build more open political and social institutions that allow the poor and historically subordinate groups, such as Afro-descendants and indigenous people, to gain a greater share in society.
-- Ensure that economic institutions and policies seek greater equity, through sound macroeconomic management and equitable, efficient crisis resolution that avoids the large regressive redistributions during crises, and that allows for saving in good times.
-- 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 the poor need to make it productive.
-- Reform income transfer programs so that they reach the poorest families, including use of measures that are conditional on keeping children in school and attending health services, so as to improve their lifelong income-earning capacity.
Guillermo Perry, the World Bank's chief economist for Latin America and the Caribbean, and co-author of the study, insisted that in order to help the poor, the region's public institutions "must be truly open, transparent, democratic, participatory -- and strong."
Another recent World Bank report, "Doing Business in 2004: Understanding Regulation," looks not just at Latin America but also at the preconditions needed to facilitate business activity. The study, released Tuesday, analyzes data from more than 130 countries. It assesses each country's laws and regulations on starting a business, hiring and firing workers, enforcing contracts, getting credit and closing a business.
The report gives a number of examples on problems facing businessmen. For example, it takes two days to start a business in Australia, but 203 days in Haiti and 215 days in Congo. Enforcing a simple commercial contract can be done in seven days in Tunisia and 39 days in the Netherlands, but takes almost 1,500 days in Guatemala.
"In much of Africa, Latin America, and the former Soviet Union," the report argues, "excessive regulation stifles productive activity. And government does not focus on what it should -- defining and protecting property rights."
Two decades of macroeconomic reform have not slowed the rise in poverty in Latin America, notes the study. Resolving this is not just a simple matter of creating jobs, which the state could do. This solution has been tried, and has failed, says the report. "What is needed is to create productive jobs and new businesses that create wealth."
The report does not favor eliminating all government regulation. "The optimal level of regulation is not none, but may be less than what is currently found in most countries, and especially poor ones," it concludes.
Tips on stimulating investment may well be needed, as the World Investment Report for 2003 reveals. The report, published Sept. 4 by the U.N. Conference on Trade and Development (UNCTAD), revealed that foreign direct investment inflows to Latin America and the Caribbean declined in 2002 for the third consecutive year, falling in 28 of 40 economies.
Flows fell by a third to $56 billion -- the lowest since 1996. The report blamed the decline on a mix of global factors, gross domestic product contraction, financial crises, devaluations, and political uncertainties in a number of the region's economies. Investment this year is likely to show only a slow improvement, concluded the report.
In 2002, the largest recipient of foreign investment was Brazil, with inflows of $17 billion, down from $22 billion in 2001. Investment in Mexico plunged to $14 billion in 2002 from $25 billion a year earlier. And in Argentina, last year's $1 billion worth of inflows was only 10% of the average annual inflows received during the decade 1992-2001.
Doubts over policies
UNCTAD is not convinced, however, that greater foreign investment is necessarily the solution to Latin America's economic woes. The reforms in recent years that have opened the region's economies to market forces have given disappointing results, stated Rubens Ricupero, UNCTAD secretary-general.
Ricupero made his remarks Oct. 2 during the release of the "Trade and Development Report 2003." The report shows that after two decades of reform, many countries are facing the same balance-of-payment and debt problems that had contributed to the earlier crisis.
The report identifies a number of causes behind the failure to achieve greater success:
-- Exchange rate-based stabilization policies relying on capital inflows have led to appreciating and unstable currencies and to high interest rates, with damaging consequences for capital formation.
-- Rapid trade and financial liberalization has caused a swift deterioration in external balances; and as imports have soared and service payments have risen, growing indebtedness has increased vulnerability to external shocks.
-- Foreign investment, even when bringing needed technology and skills, has also contributed to financial instability.
-- High interest rates have damaged fiscal balances, even as governments have reduced expenditures.
The report also considers that rapid liberalization in Latin America, along with increased dependence on external capital flows, has come at a high price in terms of structural change and technological upgrading. According to the report, many countries have suffered a "premature deindustrialization," marked by labor shedding and sluggish growth.
Yet, the report holds out hope that the growth contraction that hit Latin America in 2002 can be reversed this year. Still, much rides on overcoming the fragility of the Brazilian economy, it notes.
In an Oct. 3 commentary on the report, the Financial Times noted that UNCTAD is a frequent critic of the policies of the International Monetary Fund and World Bank. The latest criticisms of market liberalization long promoted by these bodies and by the United States "is likely to prove controversial both in Washington and Latin America," observed the newspaper. Not so controversial is the region's desperate need for an economic jump-start.
http://www.catholic.org CA, US
Catholic Online - Publisher, 661 869-1000
Latin America, Economy, Policy, Liberation, Poverty
More Catholic PRWire
Showing 1 - 50 of 4,718
A Recession Antidote
Monaco & The Vatican: Monaco's Grace Kelly Exhibit to Rome--A Review of Monegasque-Holy See Diplomatic History
Dna. Maria St. Catherine Sharpe, t.o.s.m., T.O.SS.T.
A Royal Betrayal: Catholic Monaco Liberalizes Abortion
Dna. Maria St.Catherine De Grace Sharpe, t.o.s.m., T.O.SS.T.
Embrace every moment as sacred time
Mary Regina Morrell
Letting go is simple wisdom with divine potential
Mary Regina Morrell
Father Lombardi's Address on Catholic Media
Pope's Words to Pontifical Latin American College
Prelate: Genetics Needs a Conscience
State Aid for Catholic Schools: Help or Hindrance?
Scorsese Planning Movie on Japanese Martyrs
2 Nuns Kidnapped in Kenya Set Free
Holy See-Israel Negotiation Moves Forward
Franchising to Evangelize
Catholics Decry Anti-Christianity in Israel
Pope and Gordon Brown Meet About Development Aid
Pontiff Backs Latin America's Continental Mission
Cardinal Warns Against Anti-Catholic Education
Three words to a deeper faith
Relections for Lent 2009
Wisdom lies beyond the surface of life
Mary Regina Morrell
World Food Program Director on Lent
Pope's Lenten Message for 2009
Keeping a Lid on Permissiveness
Glimpse of Me
The 3 stages of life
Sex and the Married Woman
A Catholic Woman Returns to the Church
Modernity & Morality
Just a Minute
Catholic identity ... triumphant reemergence!
Edging God Out
Burying a St. Joseph Statue
George Bush Speaks on Papal Visit
Sometimes moving forward means moving the canoe
Mary Regina Morrell
Easter... A Way of Life
Papal initiative...peace and harmony!
Proclaim the mysteries of the Resurrection!
Jerusalem Patriarch's Easter Message
Good Friday Sermon of Father Cantalamessa
Papal Address at the End of the Way of the Cross
Cardinal Zen's Meditations for Via Crucis
Interview With Vatican Aide on Jewish-Catholic Relations
Pope Benedict XVI On the Easter Triduum
by Catholic Online
- 26 Coptic Christians dead after heinous attack HD Video
- St. Joan of Arc: Saint of the Day for Tuesday, May 30, 2017
- To honor the lost: A brief history of Memorial Day
- Newborn baby filmed 'WALKING' shortly after birth
- Daily Readings for Tuesday, May 30, 2017
- What does the Holy Spirit reveal to us?
- A Big Thank You from JESUS IS - The Series HD Video
- Day 5 - Novena to the Holy Spirit for a New Pentecost for the Church HD
- Day 4 - Novena to the Holy Spirit for a New Pentecost for the Church HD
- Day 3 - Novena to the Holy Spirit for a New Pentecost for the Church HD
- Daily Reading for Wednesday, May 31st, 2017 HD
Copyright 2017 Catholic Online. All materials contained on this site, whether written, audible or visual are the exclusive property of Catholic Online and are protected under U.S. and International copyright laws, © Copyright 2017 Catholic Online. Any unauthorized use, without prior written consent of Catholic Online is strictly forbidden and prohibited.