The region is in a trap of high inequality and low growth. Concentration of power, violence, and inefficient social protection policies fuel this vicious circle and limit human development.
New York, June 22, 2021 – The gap between extreme wealth and extreme poverty and vulnerability that characterizes the region was in evidence like never before and deepened even further in the wake of the COVID-19 pandemic. The 2021 Regional Human Development Report “Trapped: High Inequality and Low Growth in Latin America and the Caribbean”, launched virtually today by the United Nations Development Program (UNDP), analyzes the trap in which it is immersed the region, which prevents progress towards achieving the 2030 Agenda and its Sustainable Development Goals.
Despite the progress of recent decades, LAC countries are more unequal than those of other regions with similar levels of development, and their social indicators are still below those expected for their average income level.
The report explores three factors that repeat themselves and feed back into the vicious cycle of high inequality and low growth: concentration of power, violence in all its forms, and poorly functioning social protection policies.
“The report calls on Latin Americans to understand the connection between all these factors and highlights an entry point that can serve to break free from low growth and high inequality: the implementation of universal social protection systems that are redistributive, fiscally sustainable. and more favorable to growth, ”explains Luis Felipe López Calva, UN Under-Secretary-General and UNDP Regional Director for Latin America and the Caribbean.
The document points out that the concentration of power in the hands of a few who defend their private interests is one of the factors that connect high inequality with low growth. Through its political influence, power misused distorts public policies and weakens institutions. One example explored in the report is the role of economic elites in blocking fiscal reforms that would support a more progressive form of redistribution. To balance the distribution of power, the agency suggests exploring lines of action such as lobbying regulation and financing of political campaigns.
It also stands out that the region is the most violent on the planet, and warns that although inequality causes greater violence, violence also increases inequality because it disproportionately affects the most vulnerable populations, contributing to perpetuate their state of deprivation. Violence also limits growth through its impact on human capital (and productivity) and on public and private investment that is distorted, as well as spending on security and uncertainty about property rights.
Among the lines of action proposed in the document to address this issue are the strengthening of local justice systems and the expansion of mental health care for victims of violence.
The report also looks at the fragility of the region’s social protection systems, evidenced by their limited response capacity during the pandemic. Linking risk insurance systems with formal employment has motivated governments to create parallel systems, of lower quality, to cover the people who are excluded, who are the majority in the region. LAC countries have segmented labor markets and social protection systems that reproduce inequalities and encourage the organization of production in very small and unproductive businesses. For this, the document suggests rethinking social protection to ensure universality.
Finally, the report states that the solutions should lead to greater growth with environmental sustainability, and to greater inclusion and social mobility. These are solutions that require balancing power in the area of defining rules and policies, eradicating violence in all its forms and redefining the institutional environment that constitutes the essence of the social contract: opportunities in the labor market, taxation and social protection.
Click here for more information about the 2021 Regional Human Development Report
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The United Nations Development Program is the leading United Nations agency dedicated to ending the injustice of poverty, inequality and climate change. Through our work with an extensive network of experts and partners in 170 countries, we help nations build integrated and durable solutions for people and the planet. More information at undp.org. You can also follow us @UNDP.
About the regional HDI: This fourth Human Development Report for Latin America and the Caribbean is an independent editorial publication commissioned by UNDP. This report was prepared with the financial support of the Spanish Agency for International Development Cooperation (AECID) and the Andalusian Agency for International Development Cooperation.
Media contact:
Ana Maria Currea, Head of Communications, UNDP in Latin America and the Caribbean, [email protected]
Vanessa Hidalgo, Communications Advisor, UNDP in Latin America and the Caribbean, [email protected]
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