UNDP Report Questions Economic Growth in Latin America
According to a recent UNDP report, 25 to 30 million people in Latin America and the Caribbean are at risk of slipping into poverty. This number represents more than a third of those who began living on more than $1 a day since 2003 in the region.
These at-risk Latin Americans are a part of a group of over 220 million people in the region who are vulnerable, living on more than $4 a day but less than $10 a day: not technically poor, but not part of the middle class.
The report noted that between 2015 and 2016, the number of poor people in the region rose for the first time in decades. This year, Latin America is expected to experience economic contraction for the second year in a row.
While the economic slowdown is part of the reason these people are threatened with looming poverty, the report emphasizes that a large contributing factor is a lack of economic resilience. Much of the region’s jobs revolve around small enterprises the service sector, which have low productivity and high rates of informality. Also, the report noted that taxes laid an undue burden on the region’s poor.
The report stressed four factors, called a ‘resilience basket,’ that are essential in preventing regression into poverty among at-risk populations in Latin America. These four factors are: social protection, care systems (particularly for children and older persons), physical and financial assets (such as owning a car, a home, savings or bank accounts that act as ‘cushions’ when crises hit) and labor skills.
Overall, the report highlighted the importance of ‘multidimensional progress’ as a means of poverty reduction and prevention. It demonstrated that the circumstances that promoted initial economic growth in Latin America were different from factors that would create a sustainable environment for prolonged economic prosperity.
The report’s proposed solutions included improved tax policies to allow room for the region’s poor and vulnerable classes to grow without government obstacles, as well as increases in productivity of low-skilled labor jobs. It also advocated for investment into women’s policies, considering that Latin America and the Caribbean women work three times more at home than men and, despite studying on average more than males in the region, still earn less in the labor market.
Jessica Faieta, United Nations Assistant Secretary-General and UNDP Regional Director for Latin America and Caribbean, said at the report launch, “The challenges of sustainable, holistic and universal development do not end at a certain income threshold: we don’t ‘graduate’ from development challenges unless we can respond accordingly to the multiple dimensions that enable people to live the lives they consider valuable.”
Latin America, while a diverse region without a single pattern of development, still lacks many of the necessities for sustainable prosperity. Outside of improved economic growth in Latin America, improved conditions to sustain progress and further eliminate poverty in the region are necessary.
– Adam Gonzalez