Key Economic Challenges For Latin America

Key Economic and Social Challenges for Latin America

During the past fifty years the Latin American area has grown as much as other areas in the world. Nevertheless there are huge problems that need to be solved in order to achieve a higher economic and social development.

Most changes have been implemented in the region so that many countries have included substantial measures of (largely unilateral) liberalization of foreign trade and of inward foreign direct investment (FDI), and the privatization of many state-owned industries, utilities and banks.

It is though these changes have brought a kind of stability and economic grown to the area, at the same time the development indicators go up. The Gross Domestic Product has grown as well as the Per Capita GDP. However we must point out the next issues:

• Inequality,

• Education and technology

• The investment climate (including the provision of infrastructure), and

• Latin American countries’ international competitiveness and comparative advantage.

These points seem to be the greatest Latin America’s challenge and it results really important to analyze them.

Inequality

The international community recognizes the inequality as a huge problem that poor and less industrialized countries face. As the richness focus only in a little part of the population the poverty levels cover almost the whole Latin American area. On average, the richest 10 percent of individuals received about 48 percent of total income in Latin America in the early 1990s; while the poorest 10 percent received just 1.6 percent of the total (comparable ratios for Asia would be 37.4 percent and 2.6 percent respectively, and for OECD nations, 29.1 percent and 2.5 percent).

The high levels of inequality are not only a government’s charge but the private sector too.

Education

One of the keys for reaching development and progresses is education. As the international community recognizes this fact the Latin American countries start to work that hard to increase education levels. There has been some progress at the quantitative level. Over the past two decades, for example, the average years of schooling of Latin America’s adult population (25 and older), i.e., the stock of educational skills in the population at large, increased by 1.7 years (from 4.1 to 5.8 years).

Despite these facts there are too many things the administrations of Latin America need to do in order to increase the education boundaries at a North America’s level for example. In this context Latin American countries are experimenting with a wide range of reform designs in the educational system. Reforms that seem to have helped increase the number of children attending school include the “conditional cash transfers” (discussed earlier) to poor families that keep their children in school (e.g., Brazil, Mexico), as well as “capitation” programs under which public spending “follows the student,” thus providing incentives

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