Latin America

Social discontent in Latin America through the lens of development traps

Development Matters Development in Transition, Latin America/Caribbean ,

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By Sebastián Nieto-Parra, Mario Pezzini and Juan Vázquez, OECD Development Centre

This blog is part of an ongoing series evaluating various facets
of Development in Transition

LATAM-Social-discontent.jpgUntil recently, rising levels of citizen dissatisfaction with public services and institutions in Latin America might have merely been pictured as an upward line in a graph. However, it seems to have reached a breaking point. Growing social discontent has boiled over into protests across several Latin American countries over the past weeks. While these protests are complex and multifaceted, understanding the underlying causes is essential to defining policy priorities that may help address the structural sources of discontent.

GDP growth is not alone in driving social unrest, as protests have not necessarily taken place in countries with the lowest growth rates or at times of lower economic dynamism, like the 2008 crisis.  Furthermore, income gradually ‘delinks’ from well-being outcomes, as countries move up the income ladder. This has clearly been the case for most Latin American countries since the 2000s (OECD et al., 2019a). Continue reading →

Security, violence and fiscal policies in Latin America

Development Matters Latin America/Caribbean, policy, Social Protection , , , , ,

By Eduardo Salido Cornejo, Public Affairs and Policy Manager Latam, Telefonica    

Police-Latin-America-ViolenceViolence is a central theme in Latin American popular music. Films and paintings portray well-known tragedies affecting Latin American societies. Art imitates life according to the 2017 Latinobarómetro since Argentinians, Mexicans and Panamanians declare public safety their number one problem. It is second on the list of citizen concerns in Colombia and Venezuela, just behind supply issues in Venezuela and the peace process in Colombia. Violence, crime and insecurity are the region’s main issues ahead of unemployment, economic problems or inequality.

According to data from the Brazilian think tank Igarapé Institute, 33% of all homicides in the world take place in the region, which is home to just 8% of the world’s population. Of the 20 countries with the highest homicide rates, 17 are in Latin America, where 43 out of the world’s 50 most violent cities are located. For every 100 000 inhabitants in Latin America, 21 are murdered, while the world average is seven. In the last decade, the homicide rate in Latin America increased 3.7%, while the population grew 1.1%.1

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Upgrading International Development Cooperation

Development Matters Latin America/Caribbean, policy , , ,

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By Alicia Barcena, Stefano Manservisi and Mario Pezzini

Dev-in-Trans-Barcena-Manservisi-PezziniIn an era when the benefits of multilateralism are being questioned, income inequality is growing, and innovation and technology are transforming how people learn and work, the world needs a more equitable approach to globalization. Can Latin America and the Caribbean offer a way forward?

PARIS – These are hard times for international cooperation. With rising protectionism, burgeoning trade disputes, and a troubling lack of concern for shared interests like climate change, the world seems to be turning its back on multilateralism.

And yet cooperation remains one of our best hopes for addressing humanity’s most complex development-related challenges. Just as the Marshall Plan rebuilt a war-ravaged Europe and the Millennium Development Goals lifted some 471 million people out of extreme poverty, the international development agenda can still deliver results thanks to the combined potential of the 2030 Agenda for Sustainable Development, the Addis Ababa Action Agenda, and the Paris climate agreement.
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Lessons learned from structural transformation in least developed countries

Development Matters policy , , , ,

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By Daniel Gay[1], Inter-Regional Adviser on LDCs, UN Department of Economic and Social Affairs

To learn more about countries’ strategies for economic transformation, including a session on Least Developed Countries (LDCs), follow the 10th Plenary and High-Level Meeting of the OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development in Paris, France on 27-28 June 2018 
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Bangladeshi garments workers in Dhaka, Bangladesh. Photo: Shutterstock.com

At Leather Wings, a small shoe-making outfit based in central Kathmandu, four women sit in a small room cutting up bright red cowhide imported from India. Next door, a dozen of their colleagues stitch the shapes together on sewing machines. The owner Samrat Dahal says the boots, designed by a German expat, sell via the Internet in India, China and Italy.

The company, founded in 1985, sums up some of the issues facing the Nepalese economy: entrepreneurial leaders at the helm of a committed workforce making a competitive and quality product for which overseas demand is ample. The problem isn’t finding buyers; it’s scaling up production to meet that demand. Exports by the handful of players in Nepal’s shoe industry totalled only USD 23 million in 2015. The task of boosting production in Nepal is doubly pressing given that the country already meets the criteria to graduate from the least developed country (LDC) category, something that the government wants to happen as soon as 2022. Nepal’s productive capacity predicament is typical of many LDCs. Moving onto a path of long-term prosperity requires structural transformation that expands production via manufacturing, services and higher-productivity agriculture.

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Stabilising Argentina’s Public Expenditure

Development Matters Latin America/Caribbean, policy , , ,

By Dr. Sebastian Galiani, Professor of Economics, University of Maryland 1

development-financeThe present government in Argentina inherited a particularly high level of public spending compared to the country’s own history. Consolidated public expenditure for the three levels of government − nation, province and municipalities − reached 42.2% of Gross Domestic Product (GDP) in 2015. This is an almost 17 point hike from before the 2001-2002 crisis when this expenditure was 25.6% of GDP.

Three areas drove such growth in public spending. First, the public wage bill grew 4.8 points of GDP since 1998 − mainly driven by the provinces and municipalities. Second, pension benefits grew 4.7 points of GDP since 1998. And third, private transfers increased 5.0 points of GDP, of which subsidies to public services represented 3.6% of GDP. In contrast, public investment almost did not grow during 1998 to 2015, at 1.4 points of GDP. The end result was a level of primary spending that is higher than that of all Argentina’s Latin American neighbors, and up to 8 percentage points above what is expected for a country at its level of GDP per capita.

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Reducing violence in El Salvador: What it will take

Development Matters Gender, Latin America/Caribbean, Security, Youth , ,

By Ian Brand-Weiner, Policy Analyst, OECD Development Centre; Katharina Ross, Project Officer Latin America & Asia, Plan International Deutschland e.V; Francesca Cárdenas, Head of Public Relations, Plan International El Salvador; César Pineda, Grants specialist, Plan International El Salvador

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A young woman is being trained through the Youth Employability and Opportunities initiative.

Violence holds El Salvador’s economic and social development potential hostage. Violence and inequalities often reinforce each other in Latin America: countries with higher levels of inequality tend to have higher rates of intentional homicides (Figure 1). El Salvador, however, stands out. Its homicide rate is disproportionately high compared to its level of inequality. The small Central American country surpassed Honduras and Venezuela in 2015 to become the most violent country in the Americas, with 108 homicides per 100 000 inhabitants.

The violence and its consequences are costing the government, households and enterprises 16% of GDP annually. These costs include expenses for public and private security, extortion, medical treatments, preventing and combating violence, the penitentiary system, and the opportunity costs for those in prison or forced to emigrate. These costs exclude the intangible ones, such as the suffering of victims and their families, the long-term fear and psychological effects impacting their employability and that of future generations, and decreased trust in the community and state.
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Bridging the green investment gap in Latin America: what role for national development finance institutions?

Development Matters Climate change, Development finance, Latin America/Caribbean, SDGs , , , , ,

By Maria Netto, Lead Capital Markets and Financial Institutions Specialist, Inter-American Development Bank, and Naeeda Crishna Morgado, Policy Analyst – Green Growth and Investment, OECD              

Green-investmentThe developing world urgently needs more and better infrastructure. Affordable and accessible water supply systems, electricity grids, power plants and transport networks are critical to reducing poverty and ensuring economic growth. The way new infrastructure is built over the next 10 years will determine if we meet the Sustainable Development Goal (SDGs) and the Paris Agreement objectives. Considering the long lifespan of most infrastructure projects, the decisions developing countries make about how they build infrastructure are critical: we can either lock-in carbon intensive and polluting forms of infrastructure, or ‘leap frog’ towards more sustainable pathways.

Many countries in Latin America are making this shift: thirty-two of them have committed to cut their emissions and improve the climate resilience of their economies, in infrastructure and other sectors, through Nationally Determined Contributions (NDCs). The cost is estimated at a staggering USD 80 billion per year over the next decade, roughly three times what these countries currently spend on climate-related activities. What is more, this is in addition to a wide investment gap for delivering development projects and infrastructure overall – the World Bank estimates that  countries in Latin America spend the least on infrastructure among developing regions in the world.
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