The Impact of Inequality in Latin America

This paper examines the impact of inequality on poor people in Latin America. It is argued that development policies in Latin America and other developing regions should focus not only on eliminating poverty and deprivation but also on preventing and reducing inequality. By inequality we refer not only to differences in income or consumption between population groups but also to divergences in the access to social and political rights (education, health care, voting, and so on). Although conceptually related, poverty and inequality are two distinct phenomena and it is possible that falls in poverty may be accompanied by increases in inequality and vice-versa. In fact, many Latin America countries have experienced the former in recent years. In the long-term, however, persistent inequalities as those observed in the Latin America region will undermine efforts to reduce poverty and destitution due to the emergence of poverty traps caused by the impossibility of economic and social mobility of certain population groups. This will have important consequences for the challenge of achieving the Millennium Development Goal of halving poverty worldwide by 2015. In addition, persistently high inequalities will also impact negatively on crucial economic, social and political variables and will thus seriously undermine the success of any development strategies.