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Bértola Luis - Has Latin American Inequality Changed Direction?: Looking Over the Long Run

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Bértola Luis Has Latin American Inequality Changed Direction?: Looking Over the Long Run
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This book is open access under a CC BY 4.0 license. This book brings together a range of ideas and theories to arrive at a deeper understanding of inequality in Latin America and its complex realities. To so, it addresses questions such as: What are the origins of inequality in Latin America? How can we create societies that are more equal in terms of income distribution, gender equality and opportunities? How can we remedy the social divide that is making Latin America one of the most unequal regions on earth? What are the roles played by market forces, institutions and ideology in terms of inequality? In this book, a group of global experts gathered by the Institute for the Integration of Latin America and the Caribbean (INTAL), part of the Inter-American Development Bank (IDB), show readers how various types of inequality, such as economical, educational, racial and gender inequality have been practiced in countries like Brazil, Bolivia, Chile, Mexico and many others through the centuries. Presenting new ideas, new evidence, and new methods, the book subsequently analyzes how to move forward with second-generation reforms that lay the foundations for more egalitarian societies. As such, it offers a valuable and insightful guide for development economists, historians and Latin American specialists alike, as well as students, educators, policymakers and all citizens with an interest in development, inequality and the Latin American region.;INTRODUCTION -- Chapter1. Long-run inequality trends and cycles and the recent inequality downturn in Latin America -- PART I. LONG-RUN TRENDS -- Chapter 2. Functional Inequality in Latin America: News from the Twentieth Century -- Chapter 3. The Political Economy of Income Inequality in Chile since 1850 -- Chapter 4. What Human Heights Can Explain about the Evolution of Living Standards and Inequality in Latin America: the Case of Mexican Females and Males, 1850-1992 -- Chapter 5. Long-run Human Development in Mexico: 1895-2010 -- Chapter 6. Inequality, Institutions, and Long-Term Development: A Perspective from Brazilian Regions -- Chapter 7. Historical perspectives on regional income inequality in Brazil, 1872-2000 -- Chapter 9. Racial Inequality in Brazil from Independence to Present -- Chapter 10. The lingering face of gender inequality in Latin America -- Chapter 11. Fiscal Redistribution in Latin America since the Nineteenth Century -- PART II. THE RECENT INEQUALITY DOWNTURN -- Chapter 12. Inequality in Latin America -- Chapter 13. The Inequality Story in Latin America and the Caribbean: Searching for an Explanation -- Chapter 14. The Political Economy of Inequality at the Top in Contemporary Chile -- Chapter 15. Structural change and the fall of income inequality in Latin America -- Agricultural development, inter-sectoral duality and the Kuznets curve -- Chapter 16. Fiscal policy and inequality in Latin America 1960-2012 -- Chapter 17. Challenges for Social Policy in a Less Favorable Macroeconomic Context.

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The Author(s) 2017
Luis Brtola and Jeffrey Williamson (eds.) Has Latin American Inequality Changed Direction? 10.1007/978-3-319-44621-9_1
Introduction
Luis Brtola 1 and Jeffrey G. Williamson 2
(1)
Universidad de la Repblica, Montevideo, Uruguay
(2)
University of Wisconsin, Madison, WI, USA
Luis Brtola
holds a Ph.D. in Economic History and an M.Sc. in Economic History from the University of Gothenburg, Sweden. He was research vice-rector at the Universidad de la Repblica, Uruguay, and the Dean of Social Science and professor of economic and social history at the same university. He has worked as advisor for the Economic Commission for Latin America and the Caribbean, the Inter-American Development Bank, and the Uruguayan Budget and Planning Department.
Jeffrey Gale Williamson
is Laird Bell Professor of Economics, emeritus, Harvard University. His most recent books are The Spread of Modern Manufacturing to the Periphery since 1870 (forthcoming Oxford: ed. with Kevin ORourke); Unequal Gains: American Growth and Inequality since 1700 (Princeton 2016: with Peter Lindert); The Cambridge History of Capitalism (Cambridge 2014: ed. with Larry Neal); and Trade and Poverty: When the Third World Fell Behind (MIT 2011).
After the so-called structural reforms of the 1970s and 1980s, most Latin American countries had shown that they could achieve fast growth and deal with structural change. However, income per capita failed to converge on the world leaders, and growth was followed by increasing inequality and, in some parts of Latin America, even increasing poverty. Noting this experience, observers began to wonder whether inequality had become a permanent feature of Latin American development and whether it had contributed to the regions disappointing long-run development performance ().
A few years later, we were discussing something quite different. By 2014, Latin America had recorded fast growth for more than a decade and, contrary to what was going on in other parts of the world, inequality was falling. Had Latin America permanently changed its long-term direction? To what extent was decreasing inequality dependent on those high growth rates, and thus was it only temporary? What roles did market forces, institutions, and political ideology play during the inequality downturn? To start a search for answers, we sent out a call for papers for a conference in Buenos Aires, which was organized with support from the Economic Commission of Latin America and the Caribbean (ECLAC), the Inter-American Development Bank (IADB), and the International Bank for Reconstruction and Development (IBRD). The conference gathered together economic historians that had long been working on the history of Latin American inequality and poverty, with economists engaged in the study of inequality in the recent period.
By the time of the conference in December 2014, and even more clearly at the time of publication 2 years later, the atmosphere in Latin America had changed yet again. Even if it is too early to guess what will happen to inequality in the near future, we know for sure that the commodity-driven boom during the first years of the twenty-first century has come to an end. In 2014, Latin America was already growing more slowly than the OECD, and prospects for 2015 were even worse. The expected GDP growth rate for the years ahead is sufficiently low to allow us to say that Latin American catch up on the world leaders has come to a halt.
Thus, the original question posed at our conference is even more dramatically posed by more recent events. Has Latin America changed direction and was the recent inequality downturn just the result of a globally induced economic boom, similar to so many other previous booms in Latin America since the nineteenth century? Were the recent inequality events transitory with no permanent change in political, institutional, and other fundamentals, ones that have been a feature of the region for the past two centuries or even longer?
The Origins of Latin American Inequality
Most studies of Latin American development written between the 1950s and 1970s stressed colonial heritage as the main explanation of its underachievement. Competing schools of thought at least agreed on this point: dependency theories, modernization theories, Marxist writings, and development economics all agreed that Latin Americas colonial heritage contributed two key features: dependency on foreign powers, and inequality in civil rights, property rights, and political power. Things were made even worse due to the fact that the imperialists, Portugal and Spain, were relatively backward themselves compared with Western Europe.
Each of these thought that independence was jeopardized by the lack of a real social revolution, by the weakness of the local elites, by the failure to create a Latin American federation, and the development of new forms of unequal international relations, led by British informal imperialism, later followed by US hegemony. National states were consolidated during the last quarter of the nineteenth century. They implemented liberal reforms, by which the lands of the church, the peasant communities, and the state were privatized thus passing it on to an increasingly powerful landowning elite. Wage labor became dominant, but a varied array of coercive labor market mechanisms persisted. The landowning elite, together with merchants, foreign powers, state bureaucracies, and the military, formed an alliance which left the majoritymainly those of Afro-American and Indian ethnic originwithout property, civil rights, and education.
This process took varied forms in different Latin American countries and regions. Three main groups were identified in the literature. The Indo-American groupthe Andean, Central American, and Mexican regionswas the center in the colonial period, densely populated and rich in gold and silver. There, the interplay between the haciendas and the peasant communities, together with centralized forced labor for the mines, was at the heart of social relations as the region drifted towards capitalism (Salvucci ).
After the 1980s, however, the academic and political climate in Latin America changed significantly. The region was confronted with the crisis of state-led industrialization, by the debt crisis, and by a lost decade of very poor economic performance. Pro-market reforms were introduced, often combined with authoritarian regimes. The story told by a new political voice said that the problems faced by Latin America were not market failures that the state had tried to overcome, but rather state involvement itself. Efforts were made to liberalize trade and capital flows, as well as to implement macro stabilization policies, and these were consistent with pro-global policies flourishing all over the world.
The pattern of development adopted by most Latin American countries since the 1980s was fueled by export growth, but the domestic sector did not keep pace. Inequality increased and the region continued to experience significant macro volatility. After every crisis, divergence with world leaders was deepened.
While increasing dissatisfaction spread and developed a more powerful voice in the context of the continents democratization, the dominant liberal discourse was challenged by neo-institutional approaches. While the neo-institutionalists agreed with conventional theory that free trade and unfettered capital movements were good for growth, they emphasized that domestic institutions were the ultimate factor explaining economic performance. Furthermore, institutions could not be expected to quickly change their character, since they tended simply to reproduce themselves in a path-dependent way. Thus, it was nave to expect that the imposition of rules from outside sources would produce the expected results. Quite the contrary, foreign attempts to foster liberal reforms instead reinforced the power of rent-seeking elites and their extractive institutions.
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