Old and new challenges for the fight against poverty, inequality and exclusion in Latin America

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Old and new challenges for the fight against
poverty, inequality and exclusion in Latin America

• André Urani
• Presentation prepared for the Seminar
• Perspectives for the LAC-EU Lima Summit
• Lima, February 28, 2007

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Latin America and globalization

• Region in the world where the idea - so typical
  of the XX century - that it was possible to
  create well-being investing more in things than
  in people was taken further.
• Unbalance between economic and social indicators
• Excessive inequality
• Globalization arrived with democratization and
  with the collapse of a model of development where
  social development was a residue of economic
  development
• Unless regional integration reaches beyond what
  we have seen so far, there is no space for big
  countries in the region economies intrinsically
  subject to idiosyncratic clashes

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A Latin American characteristic inequality in
the distribution of income
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Inequality in different continents
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Density function in a typical distribution of
income in Latin America
Mexico, 2000 histogram of the distribution of
household per capita income excluding the
riches 1
Source Ferreira (2005).
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Brazil the excess of inequality
Relation between the proportion of the poor and
per capita income in developing countries
100
90
80
70
60
Inequality(60)
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Scarce resources
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Brazil (4.27128,7)
(40)
30
Poverty ()
20
10
0
0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
5500
6000
6500
7000
Per capita income (PPC US)
Developing countries
International average
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Poverty not one, but several Latin Americas
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A complex and heterogeneous phenomenon

• There are countries in the region that are poor
  and that need to grow to be able to fight
  poverty.
• There are others that are not poor, but that have
  a lot of poor people because of the excessive
  inequality
• There are some (few) others that have few poor
  people, because they have a relatively high
  income, or because they have a relatively low
  inequality
• Fragility
• Macroeconomic fluctuations (Argentina)
• Inability of institutions to overcome the
  challenges of democratization and globalization
  (Brazil)
• Discontinuity of public policies (democratic
  insipience)
• The usual poor, the new poor and the dilemmas of
  social policy

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Different degrees of economic development
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Different dimensions
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Efforts required to eradicate poverty are also
very different
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Efforts required to eradicate poverty are also
very different(2)
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Evolution of povertymyth and truth

• The Brazilian Case

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Poverty in Brazil fell dramatically after the
Real plan, and remained stable, with a little
downward trend since then, becoming more
pronounced from 2003 on.
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In Metropolitan Brazil, the trend after the Real
Plan was not downwards but upwards
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Specially in Sao Paulo
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The same is happening with extreme poverty, in
Brazil as a whole
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In Metropolitan Brazil...
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or in Sao Paulo
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The reduction of poverty in Brazil
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New poor and impoverishedmetropolitan sinking
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And, above all, Sao Paulo
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Different Latin Americas also from a fiscal
perspective

• There are countries with a small State, because
  they are unable to establish political-fiscal
  pacts (Mexico, Chile), or because they have a
  very poor tax base (Bolivia, Nicaragua, Honduras)
  
• There are countries with a big State (Brazil),
  which is not very effective in terms of the
  reduction of poverty
• State-building x reforms

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State-building or reformswhat for?

• To rescue social debts / forever excluded
• To honour commitments / including the old ones
  
• To minimize social costs of reforms (second
  chance for the new excluded)
• To increase the expenses in education and improve
  its quality
• To aim at the future
• Extend the supply of goods and public services
• Extend public spaces beyond state borders

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The usual excluded in Brazil
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New roads

• Conditioned Income Transfers
• Mexico (Oportunidades)
• Chile (Puente)
• Brazil (Bolsa-Familia)
• Honduras
• Quick expansion (among countries, among different
  levels of the government, number of
  beneficiaries, value of benefits, extension of
  balancing items, etc.)
• Continuous monitoring, evaluation, and re-design
  (data bases)
• Limits

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Distributive impacts of the Social Public
Expenditure
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The weight of old commitmentsBrazil composition
of Social Public Expenditure
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The incidence of the Social Public Expenditure is
regressive
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And increasingly regressive
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Enquanto no Brasil como um todo as elites olham
mais pra frente, nas metrópoles elas tendem a
olhar para trás
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The capture of Rio de Janeiro by the elite of
pensioners
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Rio de JaneiroEight decades of difference in
human development under scrutiny
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• IDH em el Município de São Paulo

Fonte Censo 2000 e Fundação SEADE.
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In short

• Emergency of new problems
• Unbalance between the nature and depth of these
  problems and the resources available to public
  powers to face them
• Need to find a new institutionality

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Reinventing the space

• Not only national, but local policies
• Put an end to bureaucratic and administrative
  cuts
• Incentives for the self-constitution of
  territories
• Intra-municipal topics (re conversion of centres
  or industrial suburbs)
• Inter-municipal topics (water, solid waste,
  infrastructure, etc.)
• Convergence Combination of efforts among
  different government levels, the private sector,
  and the civil society in the joint provision of
  goods and public services
• Mix of stakeholders and their roles depend on the
  territory and established agreement
• Complementary competences
• No stakeholder (public or private) is able to
  make the necessary investment in isolation
• Positive externalities investment of an
  individual in a certain territory increases
  profitability of the investment of other
  stakeholders in the same territory
• Transparency and social control

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Reinventing timeBeyond the short-termness

• Required terms are longer than mandates of
  authorities
• Projects ? processes
• How to feed?
• How to expand the sights?
• Strategic planning
• Local Chambers of Development
• Who is in charge?
• Resources
• From whom?
• For whom?
• Financial armour against political cycles

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Redefinition of public space

• Inability of current institutions to face the new
  kind of problems
• New institutionality do not substitute the
  existing one, but complement it
• New design is not universal, and cannot come
  ready from national governments or multilateral
  agencies it must be the result of participative
  constitutive processes bottom up whose
  initiative is this?
• New forms of participation
• New legitimacies

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• For everything in life, science, conscience, and
  patience are necessary.
• Popular saying in Mauriti (Ceará, Brasil)

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Thank you

• aurani_at_iets.org.br