Location:
International Food Policy Research Institute
2033 K Street, NW, Washington, DC
Fourth Floor Conference Facility
Thursday, October 24, 2002
3:30 p.m. to 5:00 p.m.
R.S.V.P.

Abstract
Despite having adopted most of the reforms imposed by the Washington Consensus, Latin America’s economic growth has been disappointing, largely because of a severe slowdown after 1995 in the countries in South America. Per capita income grew at only .9% per year between 1995 and 1999 compared to 2.7% for 1950-80 and 1.5% for the 1990s as a whole. What went wrong? Falling investment, volatile capital inflows, and structural adjustment are not the problem. For most countries, growth performance correlates with the extent of reforms adopted. Rather, the problem seems related to a significant reduction in the growth rate of exports since 1997. Cross-sectional historical data from 1970 to the present, show that countries are “stuck” at very high levels of income inequality because of the extreme differences in asset ownership and human capital. This skewed concentration of income, assets, and skills in the hands of an economic elite meant slow progress on poverty reduction even when the region was growing prior to 1995. To reduce poverty, the region needs to find a sustainable, labor-intensive growth strategy, based as much as possible on targeted investments that raise the income of the poor in the short run and make them more productive in the long run. Even if such a growth strategy is adopted, a significant reduction in inequality in the short run is unlikely because of the increasing skill-intensity of production and the length of time it takes to change the skill composition of the labor force.

Please RSVP to 202-862-8107 or Email: S.Hill-Lee@cgiar.org.