Transcript Poverty, Inequalities and the future of Democracy in Latin

The Freeman Spogli Institute for International Studies
Stanford University
Frank E. and Arthur W. Payne Distinguished Lecture Series
2008
“Economic Growth, Poverty, Populism, and Democracy”
“Can the Poor Afford Democracy?
A Presidential Perspective”
STUDY/BOOK PROJECT
Alejandro Toledo
Payne Distinguished Visiting Lecturer
CDDRL Visiting Scholar
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Poverty and Democracy
Democratic
Governability
Economic Growth
Democratic Institutions
Poverty and Exclusion Reduction
Premises:
1.
2.
3.
4.
5.
We cannot redistribute poverty and the final objective is not that everyone is equally poor.
Economic growth is an indispensable (but insufficient) component for poverty and exclusion
reduction.
Economic, social, political and legal stability are indispensable to attract national and foreign capital
investment.
Within a market economy, there is a need for deliberate social policies targeted and specific projects
directed to the extremely poor.
There is high need for accountability.
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Conceptual Framework
• Conventional wisdom
Economic Growth
Poverty & Inequality
Reduction
Income Levels
The conventional wisdom among most development economists and policy makers is that economic growth and increases in
income levels are the key, and at times the only crucial, components for any poverty reduction strategy. The literature on this is
abundant in Latin America as well as in USA, And Europe.
Less examined is the reverse proposition: That high levels of poverty and social exclusion may in fact constitute real
impediments to achieve the needed social, economic, political, and legal stability for sustained economic growth and democratic
governability in the region.
This development process perspective recognizes the existence of “vicious circles” in which low economic growth accentuates
poverty and high poverty, in turn, results in a low economic growth and fragile governability.
This study/book seeks to examine the ways and means to convert this “vicious circle” into “virtuous circle” in which poverty,
exclusion/inequality reduction, and sustained economic growth could support each other and strengthen democracy, thus
preventing the surge of irresponsible populism and destabilizing forces which undermine sustainable development.
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Weakening Democracy Video
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Region-Unique Opportunities
Few times in its history has Latin America had the opportunity to make a qualitative
jump into a predominant role in the World Economy in the next 10 to 15 years.
Some reasons for cautious optimism:
1.
The region’s economy is registering a sustained rate of growth of an average of 6% in the last 6
years. Of course, there are some variations from country to country.
2.
The region’s internal composition of growth is in the direction of increasing diversification. Latin
America is now exporting more grapes, olives, asparagus, mangos, lemons, artichokes and textiles
than ever before, and these are products which are more labor intensive and less vulnerable to the
changes of commodities in the international market.
3.
We have opened up new markets in the United States, in the European Union, and in Asia. We are
widening and diversifying our trade and investment relationship in the world.
4.
China and India’s economic growth, at least in the medium run, will continue to demand raw materials
(minerals, grains, and energy). For China and India to maintain their present levels of economic
growth they will need continuing supply of such raw materials.…which they have found in Latin
America. This factor will help the region in decreasing the risk of the prices of our raw export
materials from dropping significantly in the short and medium term, and this is paradoxically a great
opportunity of which we should take advantage.
5.
In the last sixty years, with significant participation from institutions such as the Ford Foundation, and
AID, and other international corporations, the region has constructed a respectable stock of human
capital who today are in a Diaspora around the world. If the region is intelligent enough to produce
deliberate public policies to recuperate this human capital, it could constitute a crucial component for
the region’s objective to build a knowledge-based economy, which in turn will liberate Latin America,
to a large extent, from external forces.
Continued
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Region-Unique Opportunities (continued)
However, This cautious optimism is not free of some significant challenges:
1.
The persistently high levels of poverty and exclusion in the region may, by themselves, constitute a serious
impediment for the needed political, economic, social and legal stability to attract capital investment for the
achievement of sustained rates of economic growth indispensable for any poverty reduction strategy.
2.
The emergence of indigenous people in the political life is the new challenge for the 21st century democracy in
Latin America. Issues of indigenous people, have profoundly changed the social and political challenges of Latin
America in the last two decades. Constitution of indigenous movements as political actors have become the
most significant phenomena to have occurred in the region and will have lasting impact in its democracies
through the organization and actions of indigenous people who on their own rights are demanding to be included
in the economic, social and political life. These demands include claims for new conveniences and broader
concepts of citizenship.
3.
The fragility of democratic institutions including the political parties in the countries of the region contributes to
weaken the stability and the accountability of the respective governments at different levels.
4.
These conditions may constitute a fertile land for the expansion of opportunistic and irresponsible populism that, in
the short term, may have high political returns but constitute impediments for sustainable development of the region.
This populism attempts to resolve the crucial poverty challenge by giving fish away to the poor instead of providing
them their right to learn
how to fish.
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Poverty in the world
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Data on Poverty
Poverty
• World
Population
6.6 Billion World
• Latin America
2.6 Billion < $2/day
• Peru
1.1 Billion < $1/day
18 Million in the world die of poverty
per year
0.5 Billion Latin America
Peru 28Mil (.5% of LA )
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Latin America
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The Faces of Poverty
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Woman and child
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Search for
hope
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Children At Work
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Poverty trends graph
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Latin America
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Other manifestations of Poverty
•
•
•
•
Unemployment
Infant mortality
Malnutrition
Lack of access to quality health and
education
• Vulnerable to economic crisis
• Ethnically social-exclusion (Ethnicity)
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Indigenous People: New
Challenges for the 21st Century
Democracies
1)
2)
3)
4)
5)
6)
7)
8)
Increase in access to quality health and education
Assure effective social inclusion (particularly the indigenous
population)
Indigenous people of Latin America emerge with old inequalities
diverse realities and new obligations for 21st century democracies.
Regions impatient with the democracy
High inequalities
Lack of availability of jobs,
rural, urban contrasts.
Inclusion with mutual respect for cultural diversities.
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In Summary
18
Percent
EcoGrowthEconomic
Acc Change
Comparative
Growth
GDP 2002-2006 Accumulated
Change (per cent)
35
30
25
20
15
10
5
0
30.1
24.2
17.4
Peru
World
Latin America
&Caribbean
Source IMF,BCRP,MEF
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Consumer Price Index
CPI Acc
Change
2002-2006
Accumulated
Change (per cent)
44.1
Percent
50
40
30
20
12.2
10.7
Peru
World
10
0
Latin America
&Caribbean
Source IMF,BCRP,MEF
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Accumulated GDP
21
Accumltd Inflation
22
23
Acc Fisc deficit
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Peru Poverty reduction 2001-2006
2001
Perecent
2006
60
50
40
30
20
10
0
54.2
44.5
24
Poverty (3.6 mil)
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Extreme Poverty (1.7 mil)
Types
Source: World Bank, Washington DC, National Institute for Statistics, Peru 2007
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Poverty and Democracy
Democratic
Governability
Economic
Growth
Strong Democratic
Institution
Poverty, Inequality/Exclusion
Reduction
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Final Comments
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?
Can Democracy Afford To
Neglect The Poor?
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