Social dimensions of economic development and productivity: inequality and social performance

Abstract Stable, sustainable economic development cannot be achieved unless and until social development also takes place. Consequently, the social dimensions of economic development and productivity are as important as the economic dimensions. In Latin America, inequality is the social dimension of utmost concern. Income and social inequality in Latin America and the Caribbean is the highest in the world, and the performance of the social sector is inadequate. These conditions are severely hampering economic growth and individual prosperity. More attention and investment is needed to reduce inequality and improve social performance. Part of this process of change is the improvement of social measurement and international statistical standards in the social areas. International development agencies are working to measure and analyse social dimensions of economic development and productivity with more frequency and precision, and these efforts are helping to better define social progress. In education, a large disparity in educational achievement exists among and within countries, which is borne out by the international analysis published annually in Education at a Glance: OECD Indicators. Culture also plays an important role in the development equation. The cultural indicators compiled by the United Nations Educational, Scientific and Cultural Organization (UNESCO) for the first World Culture Report suggest that cultural statistics as currently collected are primarily based on the market place and consequently exclude poor people. ECLAC/CELADE analysis shows that the implications of the recent demographic trends in Latin America and the Caribbean and the continuing social equity concerns arising from the demographic and epidemiological transition have relevance for health conditions and the effects of population characteristics on national and regional development. The relation between economic growth on the one hand and income inequality and poverty on the other is borne out by ECLAC analysis from household surveys in a number of countries in the region. While economic growth reduces absolute poverty, it does not reduce income inequality. For solid social analysis to take place, a flow of reliable social data are needed. World Bank research has led to a new instrument to improve poverty monitoring and make it more affordable and timely.