Latin America: Is there a solution for economic inequality?

11 of the 20 countries with the highest economic inequality in the world are in South America

Latin America: Is there a solution for economic inequality?

Latin America is the region with the greatest economic inequality in the world. Calculations of the humanitarian organization Ofxam, carried out in 2016, indicated that if this situation does not improve, by 2022 the richest 1% of the region would have more wealth than 99% of the remaining population.

Poverty is the main indicator of economic inequality for a country. In 2016, in Latin America it was estimated that 186 million people lived in poverty and another 61 million in extreme poverty. According to Ofxam statistics, 27% of world growth has been in the hands of the richest 1%, while half of the poorest population received only 12%.

Although inequality in the distribution of income in Latin America has been declining in recent years, the region continues to have the widest gap between rich and poor in the world. In accordance to measures of the Gini index in its 2016 report -an indicator that assesses the economic inequality in the countries-, the reduction of inequality was significant in all the countries of the region, except in Mexico.

Nations such as Argentina, Bolivia, Ecuador, Peru, and Nicaragua presented drops of the Gini close to 10%. While Costa Rica, Venezuela, Colombia, and the Dominican Republic had the lowest reductions.

Mexico, the clearest example

In Mexico, the 10 richest people in the country have the same as half of the citizens with scarce resources. In this nation, observing contrasts between opulence and extreme poverty is part of daily life. According to data from a recent report by Oxfam, called just Mexico: proposal of public policies to combat inequality, the country is part of the 25% of the most unequal nations in the world.

Analysis of Forbes show that the fortune of the richest Mexicans was 116 million dollars in 2017, a figure equivalent to the 50% total economic accumulated by the most vulnerable population. The Oxfam report noted that the Mexican economic model "only benefits the economic elites" and focuses on favoring and facilitating foreign investment over local growth.

In this context, Oxfam developed a series of measures that would allow reducing economic differences in Mexico based on the implementation of 10 tactics in public policies:

1. Consolidate an effective universal social security system.
2. Increase the resources of the five poorest states in the country to improve school infrastructure, increase scholarships and build new hospitals.
3. Encourage school enrollment at the upper secondary level.
4. A new industrial policy so that Mexican workers can enter the international market with dignified and quality jobs.
5. Raise the minimum wage to the welfare line followed by gradual increases according to the country's inflation.
6. Creation of innovative mechanisms for the demand for transparency and accountability.
7. Restoration of an inheritance tax.
8. Better collection of the property tax on the property.
9. Higher income taxes on fixed and variable income instruments in capital markets.
10. Evaluate and design a pilot for the implementation of the Universal Basic Income.

With this Decalogue, Oxfam aims to guide the new public representatives to implement these practices and take advantage of the political dialogue that is taking place in Mexico, in view of the July 1 elections. The model also hopes to become an example for Latin American countries such as Colombia and Costa Rica, where the same scourge is presented.

In the last decade, Latin America has almost doubled the number of citizens corresponding to the middle class, from 100 to 186 million people. Households classified as poor also fell by almost a third, falling from 224 to 117 million citizens. Although the figures show increasing economic mobility in the region, even 11 of the 20 least equitable countries on the planet are in Latin America.

The lack of educational access, poor food conditions, high infant mortality rates and a high rate of unemployment are factors that contribute to economic inequality in Latin America and keep the region ranked number one, as the most unequal in the world. .


Latin American Post | Krishna Jaramillo
Copy edited by Marcela Peñaloza

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