Ruminations of an Expatriate

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Tuesday, December 12th, 2006...9:14 am

Latin American Poverty and The Death of Neo-liberalism

A week go the Economic Commission for Latin America and the Caribbean released a report entitled “Social Panorama of Latin America 2006″ which, as the organization put it in a press release, indicates that:

“Latin America has turned in its best performance in 25 years in economic and social terms. Progress in poverty reduction, together with improvements in unemployment and, in some countries, income distribution, as well as increases in the number of jobs, are the main factors underlying the positive trend in a number of the region’s countries.

“These encouraging trends are reflected in the most recent estimates of poverty and indigence, which decreased, for the third consecutive year, in 2005. According to the latest available figures, in that year 39.8% of the population of Latin America and the Caribbean (some 209 million people) lived in poverty and 15.4% (81 million people) lived in extreme poverty or indigence. This represents a decrease of more than 4% in relation to figures for 2002, which registered levels of poverty and indigence of 44% and 19.4%, respectively.”

The organization’s press release goes on to note that “The most significant improvements occurred in Argentina (26% poverty rate in 2003-05, compared to 45.4% in 2000-02) and Venezuela (37.1% in 2003-05, compared to 48.6% in 2000-02).”

Is it merely a coincidence that the governments of the countries exhibiting the largest reductions in poverty are those which have most radically departed from the “neo-liberal” policies advocated by the USA government, the World Bank, and International Monetary Fund?

It appears not, or at least an examination of the Argentinian experience would indicate not.

A 2004 report by the Condor Advisers, which its web page indicates, “has been providing independent, emerging markets investment risk analysis to a select number of institutional investors since 1996″, documents the Argentinian experience.

The Condor Advisers report indicates that Argentina suffered “unprecedented political and social instability between 1999 and 2002, when the cumulative contraction of gross domestic product approached 20 percent. More compelling than the economic collapse that occurred during this period was the surge of individual poverty, which increased from 27 percent of the population in 1998 to 54 percent of the population in 2002. The political, social and economic disasters that befell Argentina were largely the product of IMF-induced economic policies. By discarding these policies, the Kirchner government has enabled Argentina’s stabilization and recovery.”

On the other hand, the Condor Advisoers report that “Like pre-default Argentina, Brazil has studiously applied the IMF’s economic policies. The result has been weak economic growth, deteriorating social conditions and rapidly increasing public sector debt. Annual average gross domestic product growth in Brazil was 1.6 percent between 1999 and 2003. Over the same period, unemployment more than doubled to 13 percent and cumulative real average earnings contracted by over 13 percent. The outlook for economic growth is discouraging. Gross domestic product growth is not expected to exceed 1.5 percent this year. This weak economic performance and tragic deterioration in social conditions are a direct result of the IMF’s demand that Brazil keep fiscal and monetary policies tight in return for continued access to multilateral credit.”

The Kirchner government, like the Chavez government in Venezuela, has emphasized investment in its human resources rather than to continue pursuing the neo-liberal model, which emphasizes policies such as public debt and the private ownership of resources and utilities that enrich a few at the expense of the many. The result has been robust economic growth and a decrease in poverty.

One-by-one the other nations of Latin America are electing governments that, to one degree or another, are following the Argentinian and Venezuelan lead.

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