Poverty, Inequality, Policy and Politics in Latin America

For those who study Latin America, poverty and inequality are problematic and endemic features of the region's economies and societies. While the debt crisis of the 1980s produced not only an increase in poverty but also rising income inequality, the structural adjustment policies of the 1990s were supposed to deliver economic growth that would eventually reduce both poverty and inequality. As many studies, including several under review here, have demonstrated, even when economic growth did return, it did not necessarily reduce poverty and often increased income inequality. In response to persistent or increasing poverty in the 1990s, international financial institutions began promoting targeted social spending and investment in human capital (see, e.g., World Bank 1990, 1993; Inter-American Development Bank 1998). Targeted social spending was supposed to provide more efficient social safety nets to catch those affected by the economic crisis and subsequent structural adjustment reforms. Investment in health and education was endorsed as a means to promote growth and competitiveness in globalized markets. More than halfway through the first decade of the twenty-first century, now is an appropriate moment to take stock of the effectiveness of economic growth and anti-poverty programs in addressing poverty and inequality and to outline plans for future efforts to ameliorate these problems in Latin America.

Disciplines such as economics, sociology, public policy, and political science all contribute to our understanding of the sources of poverty and inequality, and this collection of books represents a wide range of the approaches and methodologies used by these disciplines to study poverty and inequality. Collectively, these books address poverty and inequality three ways. First, the three volumes published by international development banks and written mainly by economists explore the sources of poverty and inequality. Second, all five books recommend either implicitly or explicitly certain policies for addressing poverty or inequality. The policy recommendations, especially those of the development bank volumes are neither surprising nor particularly innovative; most continue to recommend targeted investment in human capital to reduce poverty and inequality. Third, the remaining contributions and volumes focus on the politics and implementation of social policy, including targeted policies, in Latin America. The results of several studies suggest that poverty alleviation or targeted policies are not universally effective. Furthermore, as many of the authors suggest, social and political contexts shape the likelihood that policies are politically sustainable or effectively implemented.

Explaining Inequality, Poverty, and Social Exclusion

The volumes published by The World Bank or Inter-American Development Bank are dominated by contributions from economists and focus on defining, measuring, and explaining income inequality, poverty, or social exclusion. The volume edited by Bourguignon, Ferreira, and Lustig (2004) provides a methodologically consistent examination of income inequality in Latin American and East Asia in the 1980s and 1990s through decomposition analysis of household survey data from Argentina (Buenos Aires only), Brazil (urban areas only), Colombia, Mexico, Indonesia, Malaysia, and Taiwan, China. The initial chapters explain the Oaxaca-Blinder decomposition methodology that estimates endowment, occupation and price effects on income inequality. As the editors argue, the methodology has several advantages over cross-national macro-level studies of income inequality because it can describe more completely the reasons for changes...