CHANGING POVERTY AND INEQUALITY IN LATIN-AMERICA

In the early 1980's most Latin American countries experienced economic recessions of such severity that they came to be referred to, both in Spanish and in English, as ''the crisis ''. These crises forced severe austerity measures and imposed great social and economic strain throughout the region. It is widely believed that poverty in Latin America worsened during that time and that inequality, already high, increased even more. Accordingly, the 1980's have been characterized as a ''lost decade''for Latin America. This paper compiles new data on Latin American poverty and inequality. Yes, in terms of poverty, the 1980's were a lost decade. Poverty did not decrease. Poverty rates were as high at the end of the decade as they were at the beginning. But contrary to the expectations of many, inequality did not increase in the crisis years nor did it decrease in the subsequent recovery. The data show a remarkable constancy of inequality. Poverty has been reduced in Latin America when economic growth has taken place and not otherwise. A resumption of economic growth would therefore be expected to lower poverty. Inequality, however, has not changed much with economic growth in the past, and hence will probably not change with economic growth in the future. More fundamental changes are needed if inequality in Latin America is to be seriously affected.