Latin America Poverty And Inequality Essay Research

Latin America: Poverty And Inequality Essay, Research Paper

Latin America

Poverty and Inequality

This avalanche of negative points summarizes problems that have persisted in Latin American countries for decades. In addition, as usual, the group in these countries to pay the highest price is the poor. However, what factors have been the main causes of persistent high levels of poverty, and high-income differentials in Latin American countries. Furthermore, just how serious is the situation of the poor today in each individual Central and South American country. In essence, the major factors working against decreasing the existent levels of poverty, and bettering the income position of the poor in relations to the rich are 1.) The inherited complex political structure 2.) The adopting of protectionism policies in favor of the elite, and 3.) The increases in foreign dependency that these countries both possess and have, regarding the last factor, engaged in.

The political arena of Latin American countries has been one of constant government instability, great tension, and social chaos. In fact, countries such as Nicaragua where revolutions took place and countries such as Chile, Cuba, and Panama where dictatorships persisted had only considerable increases in economic growth until the early 90’s, which signaled the end of revolutions and dictatorships. For instance, Nicaragua went from a –2.0% during the 1980’s to a positive 0.5% annual economic growth in the early 90’s, Chile from 4.1% to a substantial 7.5%, and Panama from a 0.3% to a superb 7.0%. However, why have poverty levels in these countries persisted when economic growth took place for the late 80’s early 90’s period. The main cause lies within a political structure where a minor group of privileged leaders govern a country with a deeply rooted system of corruption and of immense abuses of power. In fact, most of the movements intervening to overthrow an existing corrupted government, specifically the case of Central America, brought with them similar ideals to that of the previous rulers. Ideals that set out to benefit the leaders in power and the rich aristocrat’s “the elite” that had supported the new authoritarian government. As a result, the solution presented by new leaders to a recurring political problem consisted in a similar camouflaged form of corruption that had as main objective the welfare of a few privileged citizens.

According to the modernization theory, one of the positive outcomes of industrialization, and economic growth is an increase in the number of educated people in the population. Therefore, as the number of literate citizens within the population increases, governments begin to experience a great deal of pressure from a more participant educated working class, demanding that governments follow more democratic economic policies fair to all social groups. However, the modernization theory did not prove to be 100% true in Latin America. Despite a better educated population share in most Latin countries, even in 1994 we find that largely this outdated system of abuses is still alive and functioning with some of the old criteria’s. This conclusion derives from the fact that on average in 1994 most Latin American countries’ gini-ratio oscillated between the incredibly high figures of 50 and 55. Supported by both a continuing paternalism, and the government’s fidelity to the welfare of the “elite”, the economic policies adopted by Latin American leaders have made no, or very little, attempt to share any economic growth with the helpless poor.

For the assessment of economic growth and inequality in Latin American countries, let me analyze the changes in both the agriculture and industrial sector by country, and compare the results obtained to the levels of inequality during the 1980’s and early 90’s. From the 1996 World Development Report we observe that all throughout the 1980’s and early 90’s 7 countries transferred human capital from the agriculture to the industrial sector, 3 decreased human capital from agriculture while keeping that of industry constant, and 8 decreased human capital in both the agriculture and industrial sector. Statistically speaking, 38% of Latin American countries were able to supply better paying jobs by transferring labor from agriculture to industry, 18% experienced decreases of employment in the agriculture sector and no decreases or increases in industry, and 44% had employment downfalls in both agriculture and industry. However, by analyzing the gini-index within each Latin American country, I find that even those countries within the 38% group, that had labor increases in industry, where prior-agricultural employees began to receive better salaries, still had ski-rocket inequality figures. Within this group we find, Costa Rica with a gini-ratio of 46.1, Nicaragua of 50.3, Dominican Republic of 50.5, Colombia of 51.3, Honduras of 52.7, Paraguay not available, and El Salvador not available. Moreover, those countries suffering both reductions in either only agriculture or in both agriculture and industry had considerably elevated gini-ratios. For example, Bolivia, Peru, and Chile belonging to the 18% group show the following results, 42.0, 44.9, and last Chile with 56.5. Consequently, the unemployed numbers in total population rose, and even worst, given that no government followed income redistribution policies, the existent wid