Edit]Poverty and inequality

Slums on the outskirts of a wealthy urban area in São Paulo, Brazil: an example ofpoverty common in Latin America.

Poverty continues to be one of the region's main challenges; according to the ECLAC, Latin America is the most unequal region in the world.^[104] Inequality is undermining the region's economic potential and the well-being of its population, since it increases poverty and reduces the impact of economic development on poverty reduction.^[105] Inequality in Latin America has deep historical roots that have been difficult to eradicate since the differences between initial endowments and opportunitites among social groups have constrained the poorest's social mobility, thus making poverty to be transmitted from generation to generation, becoming a vicious cycle. High inequality is rooted in exclusionary institutions that have been perpetuated ever since colonial times and that have survived different political and economic regimes. Inequality has been reproduced and transmitted through generations because Latin American political systems allow a differentiated access on the influence that social groups have in the decision making process, and it responds in different ways to the least favored groups that have less political representation and capacity of pressure.^[106] Recent economic liberalisation also plays a role as not everyone is equally capable of taking advantage of its benefits.^[107] Differences in opportunities and endowments tend to be based on race, ethnicity, rurality and gender. Those differences have a strong impact on the distribution of income, capital and political standing.

According to a study by the World Bank,the richest decile of the population of Latin America earn^[108] 48% of the total income, while the poorest 10% of the population earn only 1.6% of the income. In contrast, in developed countries, the top decile receives 29% of the total income, while the bottom decile earns 2.5%. The countries with the highest inequality in the region (as measured with the Gini index in the UN Development Report^[97]) in 2007 were Haiti (59.5),Colombia (58.5), Bolivia (58.2), Honduras (55.3), Brazil (55.0), and Panama (54.9), while the countries with the lowest inequality in the region were Venezuela (43.4), Uruguay (46.4) and Costa Rica(47.2).

According to the World Bank the poorest countries in the region were (as of 2008):^[109] Haiti, Nicaragua, Bolivia and Honduras. Undernourishment affects to 47% of Haitians, 27% of Dominicans andNicaraguans, 23% of Bolivians and 22% of Hondurans.

Many countries in Latin America have responded to high levels of poverty by implementing new, or altering old, social assistance programs such as conditional cash transfers. These include Mexico'sProgresa Oportunidades, Brazil's Bolsa Escola and Bolsa Familia, and Chile's Chile Solidario.^[110] In general, these programs provide money to poor families under the condition that those transfers are used as an investment on their children's human capital, such as regular school attendance and basic preventive health care. The purpose of these programs is to address the inter-generational transmission of poverty and to foster social inclusion by explicitly targeting the poor, focusing on children, delivering transfers to women, and changing social accountability relationships between beneficiaries, service providers and governments.^[111] These programs have helped to increase school enrollment and attendance and they also have shown improvements in children's health conditions.^[112] Most of these transfer schemes are now benefiting around 110 million people in the region and are considered relatively cheap, costing around 0.5% of their GDP.^[113]

Edit]Trade blocs

Rafael Correa, Evo Morales, Néstor Kirchner, Cristina Fernández, Luiz Inacio Lula Da Silva, Nicanor Duarte, and Hugo Chávez at the signing of the founding charter of the Bank of the South.

The major trade blocs (or agreements) in the region are the Union of South American Nations, composed of the integrated Mercosur and Andean Community of Nations (CAN). Minor blocs or trade agreements are the G3 Free Trade Agreement, the Dominican Republic – Central America Free Trade Agreement (DR-CAFTA) and the Caribbean Community (CARICOM). However, major reconfigurations are taking place along opposing approaches to integration and trade; Venezuela has officially withdrawn from both the CAN and G3 and it has been formally admitted into the Mercosur (pending ratification from the Paraguayan legislature). The president-elect of Ecuador has manifested his intentions of following the same path. This bloc nominally opposes any Free Trade Agreement (FTA) with the United States, although Uruguay has manifested its intention otherwise. Chile has already signed an FTA with Canada, and along with Peru,Colombia and Mexico are the only four Latin American nations that have an FTA with the United States, the latter being a member of the North American Free Trade Agreement (NAFTA).

Date: 2016-03-03; view: 760