By Narayan Ammachchi
Over the past decade, Latin America has reached considerable economic and social progress, yet the region may take three more decades to catch up with developed countries, says a report from the World Bank.
The report titled ‘Shifting Gears to Accelerate Shared Prosperity in Latin America and the Caribbean’ indicates that the region can quicken its growth by stabilizing institutions, opening up markets, and enforcing transparency in governance. Also, the report suggests that LAC countries should enable its citizens to unleash their inherent economic potential and increase productivity.
In order to accelerate productivity, the report noted, countries should give access to healthcare and quality education. “This, in turn, leads to higher growth, which makes more fiscal resources available to improve the quality of life for all,” the report points out.
Imbalance in the living standards is the biggest challenge facing the region, they point out.
In Latin America, poverty levels have dropped by around 50% over the past decade. In 2011, the middle class actually outnumbered the total population below the poverty line.
Faster and more equitable income growth helped expand the middle class to 32% of the region’s total population in 2011. Labor income was the main driver of the reduction in extreme poverty after 2003, while transfers and pensions also played an important role, accounting for more than one-third of the decline.
However, more than 80 million people still live in extreme poverty in LAC, half of them in Brazil and Mexico.“This reality keeps extreme poverty as an important issue even in the region’s middle-income countries and has inspired governmental anti-poverty strategies such as Brazil’s “Sem Miseria” and Mexico’s Cruzada Nacional contra el Hambre,” the report noted.
Despite impressive economic gains, the World Bank says that about 40% of Latin Americans could fall back into poverty. “Indeed, most LAC citizens who escaped poverty did not enter the middle class, but made it only into the vulnerable group, living on $4 to $10 a day.”