Poverty Increased in Lost Half-Decade
Op-ed by José Antonio Ocampo, Executive Secretary of ECLAC, published in ECLAC Notes Nr. 25, November 2002.
The recovery in economic growth between 1990 and 1997 helped to reduce both poverty and indigence throughout the region. By 1997, the percentage of the population living in poverty fell by almost five percentage points compared to 1990, although it still remained three percentage points higher than in 1980. These positive trends ceased, however, in 1997. Since then, the region has seen economic growth and the fight against poverty stagnate and, in some cases, clearly retreat. It is no exaggeration, therefore, to say that the population of Latin America has been affected by the negative consequences of this lost half decade.
Estimates from ECLAC indicate that today poverty is higher than in 1997 and that the number of the poor rose by almost 18 million people. This trend has not affected every country uniformly. Most recently (2000-2002), Mexico and the Dominican Republic managed to reduce poverty. At the other extreme, the Argentine crisis produced one of the largest increases in the region, with poverty rising at least three percentage points.
Meeting the goal established by the Millennium Declaration of cutting extreme poverty by half in 2015 therefore constitutes a tough challenge for the region and, given trends in recent years, has become virtually impossible for a significant group of countries. Achieving this goal requires total growth in output of 2.7% per year, rising to 4.0% if the goal were to cut overall poverty and not just indigence by half. While these requirements don't seem too distant from Latin America's traditional growth patterns, the outlook is more complex in the countries with the highest poverty levels. These countries would have to grow somewhere between 5.7% and 7.0% to reduce poverty.
|"... depending solely on economic growth to deal with the problem of poverty in Latin America will make it hard to meet the objective set for 2015." |
As a result, depending solely on economic growth to deal with the problem of poverty in Latin America will make it hard to meet the goal set for 2015. It is becoming ever more necessary to resort to economic policies that, aside from seeking to expand the productive base and increase national output, include the progressive redistribution of income as a viable alternative for meeting the Millennium targets.
One of the main obstacles to achieving better equity in the distribution of the fruits of growth is the poor record of quality job creation. Existing jobs are not enough to absorb the rise in the supply of workers with technical or professional qualifications, producing significant under-use of these resources, with the resulting social consequences. It is estimated that around 24% of the Latin American workforce with these qualifications is under-used due to unemployment and the very low compensation available in the market.
Progress in reducing school drop-out rates - from 45% to 37% - in Latin America at the primary and secondary levels is helping to reduce inequities in the region. The fruits of this improvement, however, will only be enjoyed in the long term and will depend on significant improvements in the quality and relevance of educational content. Although educational inequity between socio-economic strata remains an issue, countries are clearly making progress in terms of retaining the poorest students and augmenting social programs, which, aside from standing out for their application of best practices, require resources that are within the possibilities of most of the region's countries.
José Antonio Ocampo
ECLAC's Executive Secretary