UNDP First Human Development Report for Latin America & the Caribbean

Nov 3, 2010

Inequality stands in the way of human development in Latin America and the Caribbean, but it can be reduced

Latin America and the Caribbean is the most unequal region in the world. Ten of the 15 countries with the highest levels of inequality are in the region. This inequality is persistent, self-perpetuating in areas where social mobility is low and it poses an obstacle to progress in human development. According to the first ever Human Development Report for Latin America and the Caribbean “Acting On The Future: Breaking The Intergenerational Cycle Of Inequality” (2010), published by the United Nations Development Programme (UNDP), the most common public policies in the region have focused on specific aspects of combating poverty without considering the deep-seated nature of deprivation and its systemic relationship to inequality. It also shows that income and education levels are some of the factors responsible for continuing inequality in human development. There are also structural causes of political and social origin that reflect historical factors of social inequality, including lack of equal opportunity and lack of empowerment that result in marginalization, oppression, and domination.

The report finds that it is possible to reduce inequality in Latin America and the Caribbean. It proposes the design and implementation of public policies on three fronts to lift the region out of the inequality trap. These policies must have an impact on people (“reach”), address the set of constraints that perpetuate poverty and inequality (“breadth”) and empower people to feel they are in charge of their development destinies (“ownership”). According to the report, factors at household level and within the political system serve to perpetuate inequality. Achieving a clearer understanding of these factors will make it possible to design policies that successfully combat poverty and achieve meaningful reductions in inequality in the region.

“This report reaffirms the critical importance of the fight against poverty, while indicating that it is necessary to go further,” said UNDP Regional Director Heraldo Muñoz. “Inequality is inherently an impediment to progress in the area of human development, and efforts to reduce inequality must be explicitly mainstreamed in the public agenda.” For UNDP “equality is instrumental in ensuring meaningful liberties; that is to say, in terms of helping all people to share in meaningful life options so that they can make autonomous choices,” he added.

The President of Costa Rica, Laura Chinchilla, emphasized the value of the report: “The success of government action depends on the deployment of information like that offered in the report. Continuity of inequality across generations presents us with a critical factor in human development, one that demands our special attention.” And added: “This report highlights that inequality in itself is a concern. We must therefore make it an issue and a policy matter in the development agenda of the region and its countries. It is our obligation that the fruits of development contribute to the general well-being and not only to that of a few.”

Women, indigenous populations and those of African descent are the groups hardest hit by inequality. Women in the region are paid less than men for the same work, they have a greater presence in the informal economy and they face a double workload. Furthermore, when compared to those of European descent, twice as many members of indigenous and African descended populations, on average, live on US$1 per day.

The report also introduces a new type of indicator which shows how inequality impacts human development. According to this estimate, the Human Development Index of countries in the region would diminish, on average, by between 6 and 19 percent if the index were corrected to reflect inequality. Rebeca Grynspan, UNDP Associate Administrator, pointed out that: “Inequality is a source of social vulnerability. For that reason, as the report shows, it’s critical to advance knowledge of the factors explaining inequality in human development in Latin America and the Caribbean and its persistence from one generation to the next. That would allow the proposal of a strong framework for development of targeted policies that drive a more equality-based development.” The proposed comprehensive and carefully designed policy would reduce inequality in the region and have an impact on the conditions and constraints facing households, as well as on factors that influence autonomy and aspirations to achieve mobility. The quality and effectiveness of political representation and the State’s capacity to redistribute income are other key factors to take into account, according to the report.

“In order to break the ongoing cycle of inequality it’s necessary to implement comprehensive social policies financed with more progressive fiscal arrangements,” said Luis Felipe López Calva, UNDP Chief Economist for Latin America and the Caribbean. Lowering inequality helps to create connected societies in which economic growth and social cohesion are strengthened. Conversely, inequality perpetuates itself, as much for economic reasons as for reasons of political economy, the report concludes.

The report and related press materials are available online: www.idhalc-actuarsobreelfuturo.org

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