In the article "Not Everyone Celebrates Improved Poverty Statistics" (August 23, 2005, http://www.globalpolicy.org/socecon/develop/quality/2005/0823mexico.htm), Diego Cevallos states that Latin America's poverty numbers can be deceptive. He uses the example of an impoverished woman in Mexico City who makes a living picking through garbage and has seen her monthly income increase from $70 to $85 because she has begun collecting discarded tin cans besides paper. While she theoretically has increased her income enough to lift her out of extreme poverty, in reality she is no better off. This, Cevallos argues, is the case with many Latin Americans who are considered above the official poverty line but in reality are still impoverished. Cevallos explains that any poverty line is necessarily subjective, quoting Joseé del Val, the coordinator of the Mexico Multicultural Nation program at the National Autonomous University of Mexico: "Poverty is a condition, a global social state that is not modified just because someone earns a few more dollars."
Colonization and Inequality in Latin America
Latin American social, political, and economic inequality dates back to the late fifteenth century, when the region was first colonized by explorers from Spain and Portugal (including Christopher Columbus). Besides the region's climate and soil fertility, South America in particular is rich in mineral, precious metal, and oil reserves. European explorers recognized this and began moving to expand their territories by taking control. The indigenous peoples of what are now the Caribbean, Mexico, Central, and South America had lived there in complex civilizations for thousands of years. When the
FIGURE 5.1 Poverty rates in Latin America, 1950–2000
A History of Unequal Land Distribution
As in all countries and regions with a history of colonization and slavery, the distribution of property and income in Latin America is inequitable: overall, descendants of native, African, and mixed-race conquered people and slaves earn less money and have less access to workable land than the descendants of Europeans. Samuel Morley writes in The Income Distribution Problem in Latin America and the Caribbean (UN Economic Commission for Latin America and the Caribbean, 2001) that the Latin American region has averaged the most unequal distribution of income in the world since at least the middle of the twentieth century. According to Morley, in the 1990s the top 5% of Latin Americans earned 25% of total income, while the bottom 30% earned 7.5%. Morley contrasts this with the countries of Southeast Asia, where the wealthiest 5% earned 16% of total income and the poorest 30% earned 12.2%. The main difference, Morley says, between Latin America and other developing and even underdeveloped areas such as Africa (the second most unequal region after Latin America) is that inequality did not decrease even after the economic recovery began in the 1990s following the severe recession of the 1980s (sometimes called the "lost decade" for the entire region).
A major cause of the dramatic inequities in income in Latin America is the region's history of land distribution. The World Bank's Office of Land Policy and Administration reports that Latin America's forty million indigenous peoples have not historically been given land rights because government priority has always leaned toward allowing for the greatest—usually corporate or business-oriented—use of natural resources. In Models for Recognizing Indigenous Land Rights in Latin America (World Bank, October 2004), Roque Roldán Ortiga reports that historically, Latin America's indigenous land rights system was essential for the livelihoods, culture, inheritance patterns, and basic survival of the native people.
In his foreword to Ortiga's report, the World Bank's Alfredo Sfeir-Younis writes that once the conquering Europeans realized that the region was not as rich in gold as they had initially thought, they began dividing up huge pieces of land, sometimes much of entire countries, and distributing it to individuals without regard to traditional land tenure customs. Over the centuries, the two land distribution techniques overlapped, producing a confusing system. As Sfeir-Younis explains, "The lack of coherence in the land tenure and land titling policies in the mid-eighties constituted one of the main sources of poverty—particularly for women—and of unsustainable agricultural practices." The reason is that in much of Latin America a title to a piece of land, even for a small plot in the city, can be used as collateral to gain access to credit. Without land, people have no way to acquire credit, which leaves them with very few financial options. Additionally, land has a symbolic, religious, and social significance for traditional cultures that often is not understood by nontraditional societies. "Thus," writes Sfeir-Younis, "whenever governments or the private sector move people away, or alienate them, from those sacred sites, this process is almost always accompanied by social disruption, instability and conflict."
Ortiga explains that the conquering Europeans used force, in the form of imposing Christianity and European languages and social norms, on the native people of the region to assimilate them into the dominant culture. "State authorities were particularly keen to abolish the institutions of collective territorial property and communal government of the native peoples of the Americas." Until the twentieth century, the goal was to create a single, overarching culture, eliminating any ethnic or social distinctions. Around the 1930s and 1940s, however, indigenous people began to agitate for recognition of their distinct backgrounds. Native land claims were first officially addressed when the countries of Latin America and the Caribbean all adopted the International Labor Organization's (ILO) Convention 107 in 1957, which recommends methods for protecting and assimilating native peoples while recognizing their individual rights and cultures. Since the 1970s native land rights have become a central issue in Latin American legal and social reform. In 1989 the ILO updated and expanded Convention 107 with Convention 196—the Indigenous and Tribal Peoples Convention—which was adopted by twelve out of twenty Latin American and Caribbean (LAC) countries.
Income Poverty Statistics
As with other countries, researchers use the $2—a—day standard to measure poverty in LAC countries. However, the countries within the region each have their own standard for measuring poverty, most of which differ significantly from each other. The World Bank explains that LAC countries tend to define poverty using a line higher than $2 a day, but in several countries the line is lower than $2 a day. According to the World Bank, in some LAC countries people are officially classified as poor who would not be considered poor in other countries. Likewise, in LAC countries with lower poverty lines fewer people are considered poor than would be in nations with a higher official poverty line. Furthermore, there is no consistency throughout the region on measuring poverty using income and measuring it using expenditures. This lack of consistency makes it difficult to compare rates of poverty in different LAC countries.
The LAC poverty rate (measured according to the standard of under $2 a day) averaged about 25% in 2005, with individual country rates ranging from 4% in Uruguay to 47% in Nicaragua. (See Figure 5.2.) Falling in the middle is the "Southern Cone" region of Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay, which averaged 18.8%; Central America and Mexico averaged 29.2%; and the region of the Andean Mountains averaged 31.4%. (See Table 5.1.) The rates measuring against the poverty lines of individual countries yield a somewhat different picture. In Honduras, for example, 72% of the population in 2005 lived below the country's poverty line, while 36% lived on less than $2 a day. In Chile 5% of the population lived on less than $2 a day, but 19% lived
FIGURE 5.2 Poverty in selected Latin American countries, 2005
In 2005 and 2006 several Latin American countries began ushering in what was viewed as an era of change.
TABLE 5.1 Poverty in Latin America, by region, early 1990s to early 2000s
| TABLE 5.1 | ||||
|---|---|---|---|---|
| Poverty in Latin America, by region, early 1990s to early 2000s | ||||
| [US$2 a day headcount poverty] | ||||
| Region | Early 1990s | Early 2000s | Last survey (iii) | Change (iii)-(i) |
| Note: Weighted refers to population-weighted averages. | ||||
| SOURCE: Guillermo E. Perry, Omar S. Arias, J. Humberto Lopez, William F. Maloney, and Luis Serven,"Table 2.1. Poverty in Latin America (US$2 a Day Headcount Poverty)," in Poverty Reduction and Growth: Virtuous and Vicious Cycles, World Bank, 2006, http://siteresources.worldbank.org/EXTLACOFFICEOFCE/Resources/870892-1139877599088/virtuous_circles1_complete.pdf (accessed April 10, 2006). Data from Gasparini, Gutierrez, and Tornarolli (2005). | ||||
| A. Southern Cone | ||||
| Poverty (weighted) (%) | 23.6 | 19.0 | 18.8 | −4.9 |
| Poverty (unweighted) (%) | 18.1 | 16.2 | 17.1 | −1.1 |
| Population (million) | 204.4 | 244.4 | 246.4 | 42.1 |
| Number of poor (million) | 48.3 | 46.5 | 46.2 | −2.1 |
| B. Andean community | ||||
| Poverty (weighted) (%) | 24.8 | 34.9 | 31.4 | 6.6 |
| Poverty (unweighted) (%) | 30.6 | 37.2 | 34.0 | 3.4 |
| Population (million) | 94.4 | 118.3 | 118.0 | 23.6 |
| Number of poor (million) | 23.4 | 41.3 | 37.1 | 13.7 |
| C. Central America and Mexico | ||||
| Poverty (weighted) (%) | 30.5 | 29.2 | 29.2 | −1.3 |
| Poverty (unweighted) (%) | 36.5 | 30.0 | 30.1 | −6.4 |
| Population (million) | 112.7 | 140.4 | 139.6 | 26.8 |
| Number of poor (million) | 34.4 | 41.0 | 40.8 | 6.4 |
| Latin America (A+B+C) | ||||
| Poverty (weighted) (%) | 25.8 | 25.6 | 24.6 | −1.2 |
| Poverty (unweighted) (%) | 29.3 | 28.1 | 27.4 | −1.9 |
| Population (million) | 411.5 | 503.1 | 504.0 | 92.6 |
| Number of poor (million) | 106.1 | 128.8 | 124.1 | 18.0 |
ARGENTINA'S ECONOMIC CRISIS
As the most "European" country in South America, Argentina has fewer people living in extreme poverty than other Latin American countries because it has an unusually large middle class. In fact, Argentina does as well as most developed countries in terms of human development indexes. According to "Country Sheet: Argentina" (2006, http://hdr.undp.org/statistics/data/countries.cfm?cARG), the United Nations Human Development Program reports that Argentines had a life expectancy of 74.5 years and a total school enrollment of 95% in 2003, with a 97.2% literacy rate. The infant mortality rate in 2003 was seventeen per 1,000 live births; the under-five mortality rate was twenty per 1,000. The average per capita GDP in 2003 was $12,106.
FIGURE 5.3 Rural and urban headcount poverty rates, 2005
Historically, Argentina has been through phases of wealth and stability punctuated by periods of political and economic chaos. The events in the early years of the twenty-first century, however, were extreme in the number and kinds of people who were thrown into poverty, known in the country as the "new poor." Incidences of social problems such as suicide, substance abuse, and domestic violence increased as a result.
In 2001 the economy of Argentina fell into a recession. By November of that year the government, unable to repay its international debts, moved toward freezing citizens' bank accounts throughout the country so that it would have access to enough money to keep it stable through the crisis. The threat of having the accounts frozen threw Argentines into a panic, and they began withdrawing as much of their funds as possible. Because of these fears, bank deposits declined by 35% throughout 2001, according to Jennifer L. Rich in "Argentines, Fearing a Freeze, Withdraw Savings from Banks" (New York Times, December 1, 2001). Two days later, on December 3, the government froze most assets and limited withdrawals to $250 per week. This temporarily prevented a run on the banks, but not for long.
On December 19 four days of sporadic unrest in a few cities—with Argentines surrounding and in some cases storming grocery stores demanding food—erupted into nationwide rioting. Argentina's economy had been in decline for four years, resulting in an unemployment rate of 20% and a 14% drop in per capita income. The threat of a total economic collapse quickly caused widespread anxiety and chaos. In response, the government declared a "state of siege," a thirty-day period during which most of Argentina's constitutional guarantees were suspended. After President Fernando de la Rúa announced the state of siege, poor Argentines marched through the streets to the presidential palace, banging pots and pans in protest.
Within days de la Rúa was forced out of office. Poor, middle- and working-class Argentines who were unemployed resorted to looting and picking through garbage heaps for food. By January 2, 2002, the country was on its fifth president in two weeks, three more having resigned after de la Rúa. The new government immediately devalued the peso by 30% and froze all bank accounts over $3,000 for a full year. With banks still closed, Argentines were not only unable to access their accounts but were also prevented from cashing checks or using debit services and credit cards. They were effectively rendered penniless indefinitely. By the time the crisis began to ease in April 2002, at least twenty-seven people had been killed in food riots and millions of Argentines had been reduced, at least temporarily, to poverty.
According to the World Bank report Argentina—Crisis and Poverty 2003: A Poverty Assessment (Report No. 26127AR, July 24, 2003), poverty rose from 37% in 2001 to 58% at the end of 2002 because of the economic events of that year. Extreme poverty rose from 6% to 28%—a remarkable increase in a country with such a large and highly educated middle class. In fact, of the 825,000 jobs lost between May 2001 and May 2002, 90% were in the private sector, and two-thirds were salaried employees, meaning that most job losses affected the nonpoor. By contrast, the informal sector—which typically employs more poor people—actually grew by 170,000 jobs between 1998 to 2002, which implies that more people were forced into less secure, lower-wage jobs. Besides rising prices and unemployment rates, Argentines experienced an overall decrease in income between the late 1990s and the early 2000s, mostly during the crisis period. For the bottom 10% of Argentines, income fell 49%; for the top 10%, income declined 37%. Because of the large size of already-poor families in Argentina before the economic crisis, the poverty rate for children up to age fourteen rose from 45% in 1998 to 70% in 2002.
BOLIVIA'S POLITICAL UPHEAVAL
Bolivia, in central South America, is a country that has experienced nearly 200 political coups since it won independence from Spain in 1825. Although the country is rich in natural resources—including silver, tin, rubber, and natural gas—a history of human rights abuses (especially against indigenous Indians), involvement in the drug trade with its coca crops (used to produce cocaine), and a series of military dictatorships that mismanaged the economy left Bolivia the poorest country in the Latin American region, with two-thirds of its estimated nine million citizens living in poverty in 2005. According to the U.S. State Department in Background Note: Bolivia (April 14, 2005, http://www.state.gov/r/pa/ei/bgn/35751.htm), hyperinflation (inflation that increases quickly at extreme rates) in Bolivia had reached an annual rate of 24,000% by 1985.
The economy was temporarily stabilized during the mid-1980s under the presidency of Paz Estenssoro. Estenssoro implemented an intensive restructuring program that turned the economy around between 1985 and 1989, but not without serious social unrest because the "shock therapy" left tens of thousands of government workers unemployed. Two more presidents were democratically elected. In 1993 Gonzalo Sánchez de Lozada became president and began a program of "capitalization"—privatizing government services such as communications, utilities, and railroads, which proved very unpopular with the public. Violent protests were common under the Lozada administration. The next president, Hugo Banzer, continued with privatization, but less successfully. Economic growth and job creation slowed. Banzer also began a campaign to destroy Bolivia's illegal coca crops, on which most rural indigenous farmers depended for their livelihoods. In 2002 Sánchez de Lozada returned to office, but his administration was unpopular. In February 2003 a protest turned violent and thirty people were killed. More deadly violence erupted in September during protests against privatization of the natural gas industry. Sánchez de Lozada resigned in October, partly because of pressure from an Indian union leader named Evo Morales, who had led the movement to nationalize the gas industry and return most of the profits to the Bolivian people.
Two more presidents entered and exited office before the election of December 2005, when Morales became Bolivia's first indigenous Indian president, elected with 54% of the vote—an unusually high percentage in a country that rarely sees a majority vote. A former coca leaf farmer, Morales ran on a platform of antiprivatization as well as social and government reform. Morales's pro-socialist leanings are perceived as a threat by many, including the United States, which has aggressively campaigned against Bolivia's coca growing by physically eradicating crops and objects to Morales's close ties with the socialist regimes of Cuba and Venezuela.
The unsettled political situation has been detrimental to human development in the country. As of 2003 the UNDP Human Poverty Index ranked Bolivia 113th out of 177 countries. Annual gross domestic product per capita was $892 in 2003, an amount with purchasing power equal to $2,587 in the United States. The World Health Organization (2006, http://www.who.int/countries/bol/en/) reports that life expectancy in 2004 was sixty-five years, and healthy life expectancy (the years a newborn could expect to live in full health) was 54.4 years in 2002. UNICEF estimated that 18,000 deaths occurred among children under five years old in 2004, which equaled a rate of sixty-nine per 1,000 (http://www.unicef. org/infobycountry/bolivia.html). According to the nonprofit organization Food for the Hungry, Bolivia, chronic malnutrition is a contributing factor in 28% of child deaths; overall, 40% of children aged three to thirty-five months suffered from chronic malnutrition in 2004. UNICEF also noted that approximately 2,500 unaccompanied children were living on the streets of Bolivian cities in 2004.
FIGURE 5.4 Central Asia: the core of Eurasia
Poverty in Bolivia is more prevalent among indigenous people than among the population overall. According to the World Bank's Indigenous Peoples, Poverty, and Human Development in Latin America, 1994–2004 (March 2006), in 2002 (the most recent data available) the poverty rate for indigenous people in Bolivia was 74%; for nonindigenous people it was 53%. The rates of extreme poverty were 52% for indigenous people and 27% for nonindigenous. For the indigenous rural population the extreme poverty rate was 72%; for nonindigenous rural dwellers it was 52%. Indigenous Indians in Bolivia averaged between 5.9 years of formal schooling (3.5 for those living in rural areas); nonindigenous Bolivians averaged 9.6.
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