Thursday, September 04, 2014

Poverty reduction and politics in Latin America

The credit for significant poverty reduction achieved in the last decade in Latin America goes to the pro-poor policies of the leftist governments who have been elected and reelected in recent years. In keeping with this trend, the Left is expected to be voted back to power in the October elections to be held in Brazil, Uruguay and Bolivia.The emancipation of millions of people from poverty is good news for the Indian companies exporting goods affordable to the new middle class in the region.

Poverty reduction and politics in Latin America 

More than 56 million people have been lifted out of poverty in Latin America in the period 2000-2012, according to a 26 August report* of the United Nations Development Programme (UNDP) based on data for 18 countries (Cuba and Haiti have not been covered) of the region accounting for 90% of the total population. The poverty level (under 4 $ a day) fell from 42 % to 25 % and the number of poor reduced to 134 million in 2012. The middle class ( 10-50 $ per day) which rose from 21 % to 34% reached 181 million. Between the middle class and the poor there were 200 million who earned  4 to 10 $ a day. 
Boliviahas achieved the greatest poverty reduction by 32.2%, followed by Peru with 26.3%, Venezuela -22.7%, Ecuador 21.9%, Brazil 18.6%, Panama-18.2%, Argentina-14.2%, Chile -13.1%, Costa Rica- 11.8% and Colombia- 10.6%.  In three countries, poverty levels have gone up. These are Guatemala 6.8%, Dominican Republic-0.7% and Honduras-0.5%. 
The credit for poverty reduction should be given primarily to the pro-poor policies of the left-of-centre governments in the region. This is evident from the fact that the top five countries with the highest poverty reduction have leftist governments. It is highlighted strikingly even more clearly in the contrast between Bolivia and Guatemala; the former has achieved the highest poverty reduction with a leftist government while Guatemala has seen increase in poverty with its rightist governments.The Bolivian success should be attributed entirely to Evo Morales, the first native Indian elected as President of the country in the 200 -year history of the country. The Indians, who form sixty percent of the Bolivian population and the bulk of the poor, never got the attention of the conservative European descendant rulers. It was Evo Morales who focussed on the poor Indians as a priority for his government. But the Guatemalan Indians who also form 60% of the population continue to be marginalized by the conservative governments of European descent. When a leftist President Arbanz tried to protect the poor with some progressive policies in 1954, the United Fruit company and CIA engineered a coup and installed right wing dictatorship. The current democratically elected President is Otto Perez Molina, a retired army General. It is no surprise that Guatemala has the highest proportion (63.1%) of poor in the whole region.

Uruguay has the highest proportion ( 60.2%) of middle class but its population is just 3.4 million. In the top four biggest markets, the middle class constitute 34.8% in Brazil, 26.4% in Mexico, 54.4% in Argentina and 26.8% in Colombia.

The success of poverty alleviation is the reason why Leftists have been elected and reelected in many countries of the region. At present, ten countries of Latin America have Leftist governments. These are: Chile, Brazil, Bolivia, Uruguay, Peru, Ecuador, Venezuela, Nicaragua, El Salvador and Cuba ( unelected).
The Conservatives were defeated in the last elections in Chile and Mexico. In Chile, the conservatives who came to power in 2010 after two decades of centre-left governments lost to the Left in the December 2013 elections. In Mexico, the left-of-centre Instituitional Revolutionary Party (PRI) defeated the conservative PAN party which was in power for two terms till 2012.
At present only four countries have conservative governments: Colombia, Honduras, Paraguay and Guatemala. In Colombia, the Left has been given a bad name by the FARC guerrillas who have misused their original Marxist-Leninist ideology and got into drug trafficking, kidnappings and terrorism. In Honduras and Paraguay the conservatives came to power through questionable routes. In Honduras, the Leftist President Manuel Zelaya was overthrown in a coup in 2009 with indirect US support. The coupsters ensured the conservative victory in the elections in 2010 and 2013. In Paraguay, there was a Congressional coup by the conservatives in 2012 who forced the Leftist President Fernando Lugo out of office. The oligarchs of the country conspired together and have reestablished centre-right governments since then.

Given the link between poverty alleviation and politics, it is no surprise that the Left is expected to retain power in the elections to be held in Brazil, Bolivia and Uruguay in October this year .

The emancipation of people from poverty and the enlargement of middle class in Latin America is an encouraging news for Indian companies which export medicines, two and three wheelers, cell phones, clothes, and other goods affordable for the low income groups. 

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