Inclusive social development: The next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean

Inclusive social development: the next generation of policies for overcoming poverty...
a significant drop of 8 percentage points (from 19.3% to 11.3%); however, the rate of that reduction has fallen in
recent years, chiefly because of food costs rising more rapidly than inflation in general. 2
These positive results are associated with a range of factors, including a favourable economic context, notable
improvements in the labour market and a string of social policy initiatives, most notably the expansion and redefinition
of policies and programmes for overcoming poverty and extreme poverty and promoting social inclusion, against
a political backdrop where those topics were once again at the forefront of several countries’ public agendas and
general development strategies.
Thus, between 2002 and the onset of the international financial crisis (2008), the region was able to return to rates
of growth similar to those of the 1970s. A boom period occurred between 2003 and 2007, with high annual rates of
GDP growth (around 5%) and of per capita GDP (3% for almost five years running), in a context of positive current
account balances, fiscal surpluses and unprecedented international reserve levels. This favourable combination of
rapid growth, in conjunction with expansionary external conditions, was without precedent in the region’s recent
history, and it was largely driven by the boom in commodity prices. At the same time, unemployment fell notably
(from 11% to 7.4%) and the percentage of people living beneath the poverty line dropped by 10 percentage points
(from 44% to 34%) (ECLAC, 2009).
Figure I.2
Latin America and the Caribbean: per capita GDP and rates of poverty and indigence, 1990-2014
(Index: 1990=100 and percentages of the population)
Per capita GDP (index: 1990=100)
150
140
130
120
110
Asian and Russian
crises
International financial
crisis and slowing
of the Chinese
economy
55
50
45
40
35
30
25
20
15
Percentage of the population
100
1990
1991
1992
1993
10
Chapter I
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Per capita GDP (index: 1990=100) Indigence Poverty
Source: Economic Commission for Latin America and the Caribbean (ECLAC), CEPALSTAT database; and C. Aravena, L.E. Escobar and A. Hofman, “Fuentes del
crecimiento económico y la productividad en América Latina y el Caribe, 1990-2013”, Macroeconomía del Desarrollo series, No. 164 (LC/L.4024), Santiago,
ECLAC, 2015.
This process was affected by the global financial crisis of 2008 and 2009; however, compared to previous crises,
this one had a lower impact on levels of poverty and extreme poverty. This was partly due to the countercyclical nature
of the public social spending used to tackle the crisis and, within that, the priority placed on the social dimension.
That trend was seen both in the increased public social spending over time (up to 2010, the resources available
for funding social services and household transfers rose in real terms) and in the composition of public spending
(greater fiscal priority placed on social spending). In contrast, up to the midpoint of the first decade of the century,
the evolution of public social spending had been highly procyclical. Thus, in the second half of the decade, several
countries began a process of increasing social spending to expand the coverage of different social programmes,
particularly those geared towards fighting poverty, on which such countries as Brazil and Mexico had embarked in
the mid-1990s (ECLAC, 2013d).
However, in 2012 and 2013, the poverty reduction process stagnated (see ECLAC, 2014a). This occurred in
a context of low global economic growth, the end of the commodity boom, heightened inflationary pressure and
curtailed capacity to create and formalize employment. Thus, 2012 saw a decline in the world economy, combining
the European recession, particularly in the euro zone, the deceleration of China’s economy and moderate growth
2
According to the Social Panorama of Latin America, the lowest levels of poverty and extreme poverty over the past three decades were
recorded in 2012 (ECLAC, 2013b).
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