Time for Systemic Solutions in Latin America and the Caribbean – Global Issues


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Luis Felipe Lopez Calva
  • Opinion By Luis Felipe Lopez Calva (New York)
  • Interpress service

Despite being home to only 8% of the world’s population, the region has experienced 20% of all confirmed COVID-19 cases and 32% of all confirmed COVID-19 deaths. The continued spread of the virus has not only caused the tragic loss of a large number of lives, but also brought devastating economic and social damage.

Poverty and hunger are on the rise again in the region and prospects for growth are bleak. With access to vaccines limited in many countries, hopes of a return to “normal” remain distant.

Unfortunately, it wasn’t just the pandemic response in Latin America and the Caribbean that mattered – but mainly, the “pre-existing conditions” that characterized the region before the pandemic arrived.

These pre-existing conditions, or structural weaknesses, have made countries in the region more vulnerable to the multiple and interconnected crises associated with COVID-19.

The UNDP’s recently launched regional human development report, Trapped: High Inequality and Low Growth in Latin America and the Caribbean, looks at two of these conditions: high inequality and low productivity.

It explores how the underlying factors related to ineffective governance act to drive these outcomes into a vicious, mutually reinforcing (“trap”) cycle. In particular, it highlights how the concentration of power in the hands of “the few” distorts public policies in ways that simultaneously perpetuate existing patterns of inequality and impede productivity growth in the region.

Exiting this trap will only happen if countries take bold action to adopt systemic solutions that take into account the complexity of the dynamics between governance, inequality, and productivity. Over the years, countries in the region have invested in various solutions to meet these challenges.

However, many of these responses were short-lived, designed to separately address the various symptoms of a much deeper problem. This has left countries with a raft of fragmented and costly policies that divide the labor market, provide erratic risk protection for families, do not adequately redistribute income toward lower income groups, and bias resource allocation in ways that penalize productivity and stability. growth.

The region cannot remain stuck in this way.

While the pandemic has accelerated the urgency of this challenge, citizens were already calling for change before we knew what COVID-19 was. As citizens flock to the streets of Latin America and the Caribbean in late 2019, it has become increasingly clear that “business as usual” is not working for “many.”

The countries of Latin America and the Caribbean have made important development progress over the past 30 years, but events in recent years have revealed how fragile this progress is. We celebrated a temporary reduction in inequality in the 1990s and early 2000s, but it was not enough and unsustainable—driven in large part by a commodity boom, targeted cash transfers, and a compressing wage gap between skilled and unskilled workers.

While many countries have achieved middle-income status, they have not been able to unite themselves as middle-class societies. Millions have been left behind because opportunities have fallen short of people’s aspirations for their lives and expectations of their governments.

What we have learned is that there is not a single “silver bullet” policy that can change this. The region already has many “good” policies in place. The challenge we face now is a structural one.

It requires rethinking the foundations of our systems from a long-term perspective and looking at the interrelated ways these issues work to reinforce each other in positive or negative directions.

While there are many potential entry points, the potential of comprehensive social protection systems that ensure that everyone is protected, that income is redistributed to those in need, that the policies deployed to achieve these goals provide incentives for companies and workers to increase productivity, and that income sources are sustainable, are critical Special.

This requires the principle of universality understood in three complementary dimensions: (i) all populations at particular risk must be covered by the same programme; (ii) The source of funding should be one for each programme, based on the type of risk being covered; and (3) when programs offer benefits in kind, the quality must be the same for all.

A social protection system built around these global principles provides the region with a path to increase social protection spending while strengthening the foundations for long-term growth, and a path to promoting social inclusion.

A move in this direction may represent a “third moment” in the history of social protection in the region. The first moment occurred more than 75 years ago, when countries began to build their own social protection systems; The second moment occurred in the early 1990s, as countries emerged from the “lost decade” of the 1980s.

The current COVID-19-related crisis moment is likely to open the political space required for this third moment, as countries contemplate major changes to their social protection and tax systems in their efforts to contain social damage, and restore fiscal position. Balances, resume growth.

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© Inter Press Service (2021) – All rights reservedOriginal source: Inter Press Service

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