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Reducing Poverty: Lessons Learned from Peru

reducing poverty

According to the World Bank, one in five people in Latin America are chronically poor.

Brazil, in particular, continues to face economic and political instability which has impacted the country’s ability to fight poverty. “We don’t have data for 2015, but we know there is an important economic crisis, with a recession and unemployment rise, and it is very likely that will negatively impact on poverty numbers,” said Alicia Barcena, head of the U.N.’s Economic Commission for Latin America and the Caribbean (ECLAC) in a Voice of America article.

Regionally, the poverty rate averages 21 percent with some countries recording poverty rates as low as 10 percent (Uraguay, Argentina and Chile) and others like Nicaragua, as high as 50 percent.

However, one of the greatest success stories is Peru, where the poverty rate declined from 54.7 percent in 2001 to 22.7 percent in 2014.

According to World Bank research, there are two key reasons that Peru has seen its poverty rates decrease — economic growth and sound fiscal policies. Much of this growth comes from an increase in exports, particularly of metals like gold and copper.

However, while Peru has been successful at reducing poverty, there are lessons that can also be taken away from its shortcomings. “Leaders must improve their ability to deliver services to the poor. Without improved capacity for quality delivery, even the best policies will mean little to their intended beneficiaries,” said World Bank President Jim Yong Kim.

Peru needs improvements to its infrastructure and social services, as the gap between rural and urban areas remains significant. The World Bank has helped to address these issues by “supporting the government in improving equity through social services, infrastructure and competitiveness, while continuing to preserve macroeconomic stability”.

It is hoped that other Latin American countries will take a cue from Peru when it comes to reducing poverty and securing sustainable futures for families and communities.

– Emily Milakovic

5 Things You Should Know About The Africa Competitiveness Report 2013

5 Things You Should Know About The Africa Competitiveness Report 2013
The World Economic Forum released The Africa Competitiveness Report 2013 last week, a body of data analysis that examines where Africa’s nations stand in economic competitiveness. Results show that when ranked against the rest of the world, the majority of African nations are among the least competitive. Furthermore, even on the African continent vast differences emerge between countries, leaving African countries with great room for improvement. Here are a few key lessons to take from the ACR 2013.

1. Africa needs economic policies to take advantage of its “youth bulge.” Africa’s economies have enjoyed high rates of growth, but a key question the ACR 2013 poses is whether this growth has been accompanied by investments and policies that make it sustainable. The “youth bulge,” a common phenomenon in developing countries where a significant percentage of the population consists of youths, can either cripple or fuel an economy solely based on whether jobs exist to utilize a massive workforce of young people.

2. African countries need to diversify what they sell and buy — and avoid reliance on natural resource industries. Dependence on a single production industry hinges the entire country’s economy on a single commodity price; natural disasters, resource depletion, social-political instability, or unexpected competitors may cripple this economy. In fact, many suggest that dependence on natural resources for national economies alone can hurt, rather than help, the plight of those in developing countries.

3. Infrastructure, infrastructure, infrastructure. What those in the developed world take for granted — paved roads, electricity, local or regional government — many countries in Africa lack. Even while mobile telephone services are on the rise, progress has been slow — “even negative,” the ACR says — in development of infrastructure. Without well-maintained transportation routes, goods cannot even get to the border.

4. Once goods are at the border, import-export procedures need to be simplified. Regional fragmentation is a significant problem for Africa’s continental economy. When bordering countries have goods they could sell each other but don’t for whatever reason, their economies will suffer. Reducing both material and time costs for inter-state trade can yield greater regional integration in the long run, while providing rapid economic gains short-term.

5. Africa needs “growth poles.” John Speakman and Marjo Koivisto from the World Bank write in the ACR that growth poles are “simultaneous, coordinated investments in many sectors to support self-sustaining industrialization in a country.” These growth poles make use of public and private investments by industries that need a specific resource. A vast amount of planning and coordination must go into the development of these growth poles, but what can result is improvement in quality of life through steady employment, entrepreneurial opportunities, and economic diversity.

– Naomi Doraisamy
 Sources: Africa Competitiveness Report 2013, Irish Times
Photo: World Economic Forum Facebook