Chronic poverty remains despite decade of economic boom in Latin America
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Chronic poverty remains despite decade of economic boom in Latin America

Latin America and the Caribbean experienced historic economic growth over the past 10 years, creating a middle-class that is for the first time larger than the region’s poor, but entrenched poverty remains.

A World Bank report published on March 4 noted that 70 million people in Latin America and the Caribbean moved out of poverty between 2003 and 2012. This caused poverty to decline from 41.6 percent of the population to 25.3 percent. The middle class rose from 23 percent of the population to 34 percent.

Despite these advances, the report said that those born into poverty were still unlikely to escape it and said addressing infrastructure, education, government institutions, the psychological effects of poverty, and gender equality were the key solutions for change.

Infrastructure services such as potable water, electricity, internet and mobile phone access were the most important means of pulling Latin Americans out of poverty.

“The primary difference between the chronic poor and those who escaped poverty is with regards to access to services,” the report said. “In 2004, only 79 percent of the chronic poor had access to water, compared to 89 and 95 percent for those that escaped poverty and the non-poor, respectively.”

On government institutions, the World Bank report stressed three criteria. The first is that the bureaucracy effectively deliver services. The second is a credible legal and justice system, and the third is government transparency and accountability.

Lastly the report stressed equal opportunity for future generations to pull themselves out of poverty. Income from labor was an obvious driver of poverty reduction, especially when women worked. The report said there was a gap of 16 percent for women’s labor participation between poor and non-poor households in the region. In addition, to break the cycle of chronic poverty, educational opportunities needed to address reduced aspirations by chronically poor students.

A analysis of a World Bank set of a data from approximately 1990 to 2013 showed divergent paths on poverty reduction in the region. Mexico, Brazil, Chile and Panama reduced poverty by the largest amount during this stretch, while in Venezuela, Costa Rica and Argentina it actually increased. In this analysis the poverty data used was for those living on $2 a day or less.

Despite some large reductions in poverty during this period, three Central American countries – Nicaragua, Honduras and Guatemala – still held the highest levels of poverty in the region.

Venezuela stands out among the rest of the countries in the region. Though Costa Rica and Argentina saw their poverty rates climb, they still remained among the lowest in Latin America in recent years, at 4.2 percent and 2.9 percent, respectively. Venezuela saw its climb from 9.7 percent to 12.9 percent. This is despite having one of the largest total growths of per capita GDP in the region.

Venezuela is perhaps the most well-known for a strident socialist government during part of this period, but other countries dominated by the more left-leaning governments of this era did see dramatic reductions in their poverty, such as Nicaragua, Ecuador and Bolivia.