Latin America improving extreme poverty but still struggling with income inequality

Friday, January 10, 2014

In a post on Humanosphere, my DAWNS colleague Tom Murphy explores how extreme poverty has been reduced in Latin America through the economic growth of the last fifteen years, though some countries have progressed farther than others. I particularly like his use of graphs from The Economist.
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.
One point in particular is that cash transfer programs, which were the focus of a lot of commentary in the global health blogosphere last year, can do a lot to make a dent in reducing income inequality. Brazil's cash-transfer program, Bolsa Família, in particular received a lot of attention when it celebrated its ten-year anniversary (see articles from BBC and the Guardian).

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