SANTO DOMINGO, Dominican Republic, CMC- The Inter-American Development Bank (IDB) says Latin America and the Caribbean (LAC) is the world’s most unequal region, with the 10 percent highest earners making 12 times more than the poorest 10 percent.
It said that this compares to a ratio of four for developed countries in the Organization for Economic Co-operation and Development (OECD).
In addition, the Washington-based financial institution said that one in five citizens of Latin America and the Caribbean is poor.
“The complexities of inequality in Latin America and the Caribbean,” a fact sheet by the IDB, coincides with the IDB and IDB Invest annual meetings, which run from Wednesday until Sunday.
The bank noted that between 1990 and 2014, the region saw its inequality reduced, but it said progress since has stalled.
“Governments need better evidence on how to tackle this problem, which has different causes and drivers in each of the region’s countries,” it said, noting that it had teamed up with the London School of Economics, Yale University, the Institute for Fiscal Studies, and academics from more a dozen leading universities to launch a comprehensive rethink of the inequality problem through critical reviews of the literature, new data, and new analyses.
“These new studies also indicate that wealth inequality seems deeper than income inequality in the region. Many low-income households have negative equity because their outstanding debts are greater than the value of their home, vehicles, and other assets.”
The IDB said that inequality in Latin America and the Caribbean is not only unacceptably high but also responsive to factors that can make it more or less “inherited.”
It is said that to get to the roots of this problem, governments must abandon old assumptions and apply the latest insights.
“For instance, countries with many workers with informal contract arrangements would need different policies for their tax and pension systems.
“Traditional strategies such as expanding and improving the quality of education and offering cash assistance to low-income households can be effective but insufficient. Governments must promote economic growth to generate more productive (and formal) jobs and adopt smarter, more adaptive fiscal policies.”
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