Extreme inequality, which characterizes Latin America and the Caribbean across multiple dimensions, constitutes a trap that hinders progress towards sustainable development. It is unacceptable from a rights and social justice perspective, counterproductive for economic growth, and corrosive for social cohesion and for the stability of social compacts. It also perpetuates two other structural development traps in the region: the inability to grow in the long term and low institutional and governance capacity.
From an economics perspective, inequality is inefficient for a number of reasons. Access and quality gaps in areas ranging from health and education to basic services and housing hamper both skill-building and labour market and digital inclusion in an increasingly digitalized world, which curtails economic productivity and individual income.