Politics, Policies, and Poverty in Latin America

Abstract

Poverty has long been recognized as one of the most serious and lasting problems facing Latin America. Recent data from the United Nations' Economic Commission on Latin America and the Caribbean (ECLAC) show that 41 .7 percent of Latin Americans lived in poverty in 2004, while 17.4 percent lived in extreme poverty.1 Despite this generally high level of poverty, there is significant variation among Latin American states. Indeed, in 2002 the share of individuals living in poverty varied from a low of 15.4 percent in Uruguay to a high of 77.3 percent in Honduras (see Table I).2 These differences are not exclusive to income-based poverty but also exist for indicators of basic-needs poverty. In this vein, ECLAC estimates that about 29 percent of the Nicaraguan population was undernourished in the late 1990s, while only two percent of Argentines suffered from the same nutrition problem.3 In short, variation in the prevalence and intensity of poverty in Latin America is striking and points to an important puzzle: why do countries exhibit such stark differences in their ability to protect citizens from falling into poverty? Put differently, why, despite the similar constraints imposed by globalization, unstable political regimes, and late industrialization, do countries in the region vary in their ability to reduce poverty? This article seeks to find an answer to this question, paying special attention to the issue of how politics shapes a state's ability to reduce poverty. This focus on the role of politics- political regime type, parties, and stateprovided social policy - builds on a growing body of research about the political economy of Latin American poverty. This new line of investigation has begun to move away from the Washington Consensus' nearly exclusive focus on the impact of economic growth on poverty reduction and toward a more nuanced view of the achievement of social welfare. At the height of the neoliberal Washington Consensus, economists and policymakers stressed that Latin America's high poverty levels were largely the result of slow growth.4 This explanation gained support in the wake of the 1982 debt crisis and was maintained throughout the 1 990s by national and international technocrats, who argued that Latin America's poor economic performance was the result of decades of inefficient economic policy in the form of trade barriers, exchange rate controls, and a large public sector. Proponents of the Washington Consensus encouraged governments to liberalize their markets with the aim of boosting economic growth. This growth in GDP was expected to have automatic spill-over effects, such as increased employment and poverty reduction. In essence, technocrats suggested that, with the proper reforms,