Overcoming Inequality in Latin America: Issues and Challenges for the Twenty‐first Century

Citation

Dagdeviren, H. (2007), "Overcoming Inequality in Latin America: Issues and Challenges for the Twenty‐first Century", Equal Opportunities International, Vol. 26 No. 1, pp. 80-82. https://doi.org/10.1108/02610150710726561

Overcoming Inequality in Latin America is a book with a collection of articles written mostly by economists with a specialist interest in political economy and development. The book has been compiled with the aspiration of discussing the broad social and political aspects of inequality in Latin America. In many chapters there is a genuine attempt to avoid pure economic analysis. Still, the central concern of all chapters is income inequality, which is explained with some reference to social and political matters. This is appropriate, since income inequality is often caused by factors other than those that are economic in nature, although some of the core socio‐economic and political issues such as class and exploitation do not feature in the discussion of inequality.

The book is based on the theme that inequality stifles growth, the accumulation of human capital and leads to social discontent. Throughout the book there is an emphasis on the need for redistributive policies and equal opportunities as mechanisms for reducing inequality and poverty. This is one of the most exciting aspects of this book. It does not only argue for the redistribution of income and productive assets but also for the redistribution of social and political rights. Notwithstanding the limitations imposed by the scope of the book, a more systematic and detailed discussion of the forms of redistribution, its political feasibility and outcomes would have been useful. However, the limitations on the content of any book imply a sacrifice in either the depth or the coverage.

The introduction starts with a useful distinction between what can be termed as “good” and “bad” inequality. The former is necessary for compensating people against “risk taking, enterprise, skill acquisition and savings”, which lead to technological change, higher productivity and faster economic development. The latter constitutes a structural barrier inhibiting people from realising their full potential as a result of lack of opportunities, social and political exclusion and other types of discrimination.

Patricia Justino, Julie Litchfield and Lawrence Whitehead provide a very good review of the literature on economic, social and political inequalities in Latin America in Chapter 2. The argument of this section is that inequalities may persist as a result of intergenerational transfers. Disadvantaged families face a vicious circle that is reinforced and re‐generated through some “social and market processes” (e.g. race, ethnicity, non‐progressive distributional system, lack of wealth, education). The coverage in this section is quite standard in that income inequality arises from unequal access to:

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  productive assets (land and credit/capital) in the economic domain;

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  education, health and social security on the social side; and

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  political power and legal institutions in the political sphere.

The next four chapters in the book are devoted to some highly relevant economic policy issues on inequality: macroeconomic policy, financial crisis, international trade policies and privatisation. Although in some parts the discussion does not go beyond what is already known and recommendations are rather general, all four chapters are quite useful in providing an overview of economic developments in Latin America in the last two to three decades. In Chapter 4, Stephany Griffith‐Jones and Jenny Kimmis emphasise the social and economic costs of the financial crisis (e.g. economic recession, job losses, increased poverty) in Mexico, Argentina and Brazil and highlight the need for a more coherent framework of action not only at the national but also at the international level to prevent such crises or mitigate their effects. In Chapter 5, David Evans presents an analysis of the links between income inequality and international trade policy with reference to both the mainstream and more contemporary approaches, especially the framework developed by Adrian Wood on the role of skills vs natural resource endowments for determining the comparative advantages of nations. Lack of application of the latter to Latin American countries appears to be a shortcoming in this chapter. However, he presents a convincing argument and some evidence for the association between trade liberalisation and rising household income inequality in Latin America since the 1980s.

Arnab Acharya, Aaron Schneider and Cecilia Ugaz provide an interesting evaluation of inequality from a political economy perspective in Chapter 6. Departing from the premises that access to key services such as water, electricity and telecommunications plays a key role in raising the welfare of disadvantaged groups, the authors then set off to assess the distributional impact of utility privatisation in Latin America as their case study. The discussion in this chapter is quite balanced, informative and valuable in spite of a few shortcomings. For example, one acquires a sense that there is lack of linkage between the theory and the case study. While the concepts of progressive and regressive privatisations are extremely interesting, they are not fully explained either in abstract or in the context of Latin American experience.

Overall, this book provides the reader with a good general insight into the issues related to income inequality in Latin America. Its coverage is wide‐ranging and the discussion is interesting, informative and relevant for policy making purposes. It is written with an accessible style even for non‐economists. All chapters include a review of the relevant literature. In spite of the absence of in‐depth country studies in the book, most parts include plenty of useful, comparative and up‐to‐date data, information and discussion on various aspects of inequality in Latin American countries as well as other regions of the world.