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Paths to Equality for Latin America and the Caribbean

Op-ed by Alicia Barcena, ECLAC Executive Secretary (January 2014)

19 February 2014|Op-ed

Latin America and the Caribbean today faces a crossroads. Historically the region has traveled a path that is barely sustainable, with insufficient growth, high levels of inequality, and little impulse toward structural change. And although it has enjoyed an auspicious decade, today the region confronts an increasingly problematic external scenario.

Since 2002, poverty in Latin America has dropped 15.7 percentage points on average. Extreme poverty also fell 8.0 points, even though the pace of that decline is waning. The unemployment rate reached a historic 6.4% and the purchasing power of median salaries held steady or grew in most countries, coinciding with low inflation, which decreased from an average 7.1% to 5.4% between 2011 and 2012.

Nonetheless, in our region, the poorest quintile (20% of homes with the fewest resources) receives on average 5% of total income, while the richest quintile gets 47%.

To secure the social achievements made, and avert another period of restrictions and shortages dictated by our cyclical destiny, through revamped institutional and political reforms, we must promote a new path of sustainable growth with increasing equality.

ECLAC contends that equality must be the fundamental guiding ethical principle and ultimate goal of development, as we stated in our position paper Time for Equality, presented during the session-the organization's biannual intergovernmental meeting-held in 2010 in Brasilia.

Placing equality at the center implies a break with the economic paradigm that has prevailed in the region for at least three decades. For the continent, this emerges as a moral imperative. Our conviction is clear: we must boost equality to grow and grow to boost equality.

It will not be an easy road to take, but it can't be put off. It requires a structural change that bridges critical social and productive gaps and ensures that the economy, production, social gains and environmental sustainability are not at odds.

As we reaffirmed in 2012, at our session in San Salvador, with the release of the report, Structural Change for Equality, equality is the future; structural change is the path, and politics, the instrument. This path requires a new equation between the state, the market and society.

This implies a shift in orientation in the face of external restrictions and limiting endogenous factors. These restrictions include the loss of dynamism and stagnation of demand within international trade, uncertainty over financial signals and access to financing, and poor regional coordination in light of shifting global production value chains.

The internal problems include an uncoordinated and lagging productive structure, highly informal labor markets, low investment levels with little incorporation of technical progress, gaps in general welfare and capacities, weak governance of natural resources, consumption patterns with insufficient public services and high environmental and energy pressures, as well as a long-standing institutional challenges in terms of regulating, attracting and orienting resources.

Today we try to reorient policies toward stronger, more dynamic investment, to ensure a virtuous relationship between growth, productivity and environmental sustainability-incorporating knowledge into production and creating more value added, making the world of work more inclusive, and promoting a greater convergence between tax reforms and social policies with a clear redistributive bias. Additionally we must balance the expansion of private consumption with the provision of quality public services, and properly govern our natural resources.

We have no doubt-and we will reaffirm this in our next session, to be held in May in Lima-that these proposals demand social pacts. Pacts that restore sovereignty to the people of Latin America and the Caribbean, giving them the power to strike agreements without tutelage, respecting the latticework that constitutes the essence of our distinctive and rich identities, and to forge a future in which there will be no unfair barriers to exercising our rights and building our life projects based on our birthplace, age, gender or ethnicity. In sum, a future of equals.

Alicia Bárcena
Executive Secretary
Economic Commission for Latin America and the Caribbean (ECLAC).