Beginning in 1998, Latin America began taking a sharp turn to the political left with the election of Venezuela’s Hugo Chavez, Bolivia’s Evo Morales, Nicaragua’s Daniel Ortega, Brazil’s Luiz Inácio Lula da Silva, Argentina’s Néstor Carlos Kirchner, Ecuador’s Rafael Correa and Chile’s Ricardo Lagos, among others. Following Chavez’s death, a reassessment of the region’s recent social and economic past — and future prospects — has commenced among scholars and media members.
When first elected, these “New Left” leaders found their support among the poor and politically disenfranchised. With promises of equality and fairness, they institutionalized private industries, rejected free trade and flooded money into signature government-sponsored social programs. Some gave mothers checks to return to school, built community clinics and undertook massive housing projects, for example; all have drawn on private resources to bolster government.
Following more than a decade of left-leaning leaders, the question of whether their policies have worked remains highly politicized. But scholars have drawn some tentative conclusions.
In the background is the question of what drove this political pattern in the first place. In a 2011 paper titled “The Rise of Leftist-Popularist Governance in Latin America: The Roots of Electoral Change,” Karen L. Remmer of Duke suggests that it was not necessarily a shift in ideology that led to the surge of leftist leaders, but a rise in anti-Americanism coupled with an expanding economy that fueled opportunities for programs in poverty reduction and increased government spending.
At any rate, few would dispute the data that show declining inequality in almost all countries in Latin America and the Caribbean; and the drop was more pronounced in left-of-center governments such as Argentina, Brazil and Venezuela. Poverty also declined in Latin America: Nearly a decade ago, 43.9% of Latin America lived below the poverty line, but that number has since dropped to 28.8%, according to the Economic Commission for Latin America and the Caribbean (ECLAC).
Whether this decrease has to do with left-of-center polities is still being evaluated. In their 2011 paper “Inequality and Poverty under Latin America’s New Left Regimes,” Nora Lustig of Tulane and Darryl McLeod of Fordham find that if you control for existing economic conditions (such as the commodity price boom) the inequality-reducing impact of public spending in Argentina, Bolivia, and Venezuela becomes insignificant. They also found that poverty falls more sharply under social democratic regimes (such as Brazil and Chile) than so-called left-populist regimes.
Another study by the World Bank found the countries with the highest Human Opportunity Index (a measure of how personal circumstances impact a child’s probability of accessing services) were countries with very different development models — Chile, Uruguay, Mexico, Costa Rica and Venezuela.
The following is a variety of further research that can help inform the debate over the direction of Latin America:
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“The Resurgence of the Latin American Left”
Levitsky, Steven, and Roberts, Kenneth M, eds. The Resurgence of the Latin American Left. 1st ed. The Johns Hopkins University Press, 2011.
Summary: “The Resurgence of the Latin American Left asks three central questions: Why have left-wing parties and candidates flourished in Latin America? How have these leftist parties governed, particularly in terms of social and economic policy? What effects has the rise of the Left had on democracy and development in the region? The book addresses these questions through two sections. The first looks at several major themes regarding the contemporary Latin American Left, including whether Latin American public opinion actually shifted leftward in the 2000s, why the Left won in some countries but not in others, and how the left turn has affected market economies, social welfare, popular participation in politics, and citizenship rights. The second section examines social and economic policy and regime trajectories in eight cases: those of leftist governments in Argentina, Bolivia, Brazil, Chile, Ecuador, Uruguay, and Venezuela, as well as that of a historically populist party that governed on the right in Peru.”
“The 2010 Human Opportunity Report for Latin America and the Caribbean”
Molinas, José R.; Paes de Barros, Ricardo; Saavedra, Jaime; Giugale, Marcelo. The International Bank for Reconstruction and Development/The World Bank, 2010.
Abstract: “The Human Opportunity Index measures how personal circumstances (birthplace, wealth, race or gender) impact a child’s probability of accessing the services that are necessary to succeed in life (timely education, running water or connection to electricity). The HOI was first published in 2008, and applied to Latin America and the Caribbean (LAC). This book reports on the status and evolution of human opportunity in the region. The data is representative of some 200 million children living in 19 countries over the last 15 years. The good news is that all countries have raised their HOI in the last decade and a half, some quite rapidly (the fastest improvement occurred in Mexico). Variations remain wide though, from top-performer Chile (HOI of 95) to Honduras (51). Interestingly, the five countries with the highest HOI—Chile, Uruguay, Mexico, Costa Rica, and Venezuela —have very different development models.”
“The Preliminary Overview of the Economies of Latin America and the Caribbean”
Economic Development Division of the Economic Commission for Latin America and the Caribbean (ECLAC), 2012.
Summary: This annual report by ECLAC provides a comprehensive and comparative analysis of the economies of Latin American countries. The report finds that public spending rose sharply in a number of Latin American countries (namely, in the Dominican Republic, Ecuador, Panama, Paraguay and Bolivia), but dropped in other countries (including in Venezuela, El Salvador, Guatemala and Honduras.) Growth slowed in 2012, but several countries maintained momentum such as Bolivia (5%), Venezuela (5.3%) and Panama (10.5%). Paraguay’s economy contracted 1.8%. In terms of employment rates, Peru (64.5%), Cuba (73.6%) and Uruguay (60%) report the highest whereas Ecuador (51.9%), Honduras (49.7%) and Dominican Republic (48%) report the region’s lowest rates. Across Latin America and in the Caribbean, employment quality improved slightly, rising real wages helped push up consumption and the commerce, construction and financial service sectors were buoyant.
“Inequality and Poverty under Latin America’s New Left Regimes”
McLeod, Darryl; Lustig, Nora. Working Paper 1117, March 2011.
Abstract: “Inequality and poverty fell sharply in many Latin American countries during a decade in which voters in ten countries chose left-leaning leaders. Are these developments related? Using data for 18 Latin American countries, this paper presents econometric evidence that social democratic regimes in Brazil and Chile were more successful at reducing inequality and poverty than the so-called populist regimes of Argentina, Bolivia, and Venezuela. Both groups implemented policies to redistribute income, but the social democratic regimes’ efforts were more effective. Argentina and Venezuela started the 1990-2008 sample window with lower levels of inequality, so to some extent recent reductions in inequality are a return to “normal” levels (as estimated by fixed effects). Conversely, inequality and poverty in Brazil and Chile fell to historic lows. Second, overall terms of trade shocks were more favorable to Argentina and Venezuela, so part of the drop in inequality can be attributed to commodity price booms.”
“Leftist Governments in Latin America: Successes and Shortcomings”
Weyland, Kurt; Madrid, Raul L.; Hunter, Wendy. Cambridge University Press, June 12, 2010.
Summary: “Can Latin America’s new left stimulate economic development, enhance social equity, and deepen democracy in spite of the economic and political constraints it faces? This is the first book to systematically examine the policies and performance of the left-wing governments that have risen to power in Latin America during the last decade. Featuring thorough studies of Bolivia, Brazil, Chile, and Venezuela by renowned experts, the volume argues that moderate leftist governments have attained greater, more sustainable success than their more radical, contestatory counterparts. Moderate governments in Brazil and Chile have generated solid economic growth, reduced poverty and inequality, and created innovative and fiscally sound social programs, while respecting the fundamental principles of market economics and liberal democracy. By contrast, more radical governments, exemplified by Hugo Chávez in Venezuela, have expanded state intervention and popular participation and attained some short-term economic and social successes, but they have provoked severe conflict, undermined democracy, and failed to ensure the economic and institutional sustainability of their policy projects.”
“Social Protection in Latin America: Achievements and Limitations”
Ferreira, Francisco H. G.; Robalino, David A. World Bank Policy Research Working Paper No. 5305, May 1, 2010.
Abstract: “Social protection systems in Latin America have been transformed in the past two decades. Until the 1980s, those who were not covered by the social security arrangements available primarily in the urban formal sector received little public assistance beyond universal subsidies for some food or fuel purchases. Since the 1990s, the introduction of non-contributory social insurance programs (including social pensions) and conditional cash transfers has substantially extended the coverage and improved the incidence of social assistance. However, the organic growth of subsidized social assistance in parallel to the older social insurance system, financed largely out of taxes on formal sector employment, has led to a dual system that is neither properly equitable nor efficient. The twin challenges that now face social protection in Latin America are to better integrate those two halves of the system, and to develop programs that promote sustainable self-reliance, by moving from safety nets to opportunity ropes.”
“Social Policy Reforms in Latin America: Urgent but Frustrating”
Nelson, Joan M. Latin American Research Review, Volume 46, Number 1, 2011.
Abstract: “Attempts to reform social policies in Latin America have surged since the early 1990s, intensifying earlier efforts to broaden coverage of basic health and education services. More controversially, many countries have restructured aspects of their pension, health, and education policies and programs in an effort to improve quality, reach the poor more effectively, increase efficiency, and contain costs … Efforts to expand social programs rapidly at earlier stages of development were often viewed as competitive with growth. By the 1990s, however, research had provided persuasive evidence that the health status of a nation’s people is a powerful determinant of its economic growth. Recent research also suggests that deep inequalities may impede rapid growth. Social policies, in short, are increasingly regarded as complementary to, rather than competitive with, goals of rapid and sustainable economic growth.”
“Declining Inequality in Latin America in the 2000s: The Cases of Argentina, Brazil, and Mexico”
Lustig, Nora; Lopez-Calva, Luis F.; Juarez, Eduardo Ortiz. World Bank Policy Research Working Paper, No. WPS 6248, July 16, 2012.
Abstract: “Between 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures and data sources. In depth country studies for Argentina, Brazil and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.”
“An Updated Assessment of the Trade and Poverty Nexus in Latin America”
Giordano, Paolo; Li, Kun. 2012. Inter-American Development Bank Integration and Trade Sector. IDB Working Paper Series No. IDB-WP-383.
Abstract:”Despite the growing political priority given to making trade work for the majority in Latin America, a notable gap exists in the knowledge about the distributive impacts of trade integration. This study … concludes that despite the impossibility to rigorously and unambiguously assert that trade openness is conducive to growth and poverty reduction, the preponderance of evidence supports this conclusion. However, the majority of empirical studies also show that the impact of trade on growth and poverty is generally small and that the causes of indigence are to be found elsewhere. Likewise, it is extremely arduous to find evidence that supports the notion that trade protection is good for the poor.”
“Income Distribution under Latin America’s New Left Regimes”
Cornia, Giovanni Andrea. Journal of Human Development and Capabilities: A Multi-Disciplinary Journal for People-Centered Development, Volume 11, Issue 1, 2010.
Abstract: “This paper reviews the decline in income inequality that has taken place over 2002–2007 in most Latin American countries against the background of its steady increase over 1980–2002. The paper then analyzes the factors that could explain this trend reversal. It focuses in particular on favorable external conditions, cyclical factors, improvements in the distribution of educational achievements and the subsequent drop in skill‐premium, and changes in macro‐economic and social policies introduced in several countries, particularly by a growing number of left‐of‐center governments that have come to power during the past decade. An econometric test for the years 1990–2007 using a sample of countries covering the majority of the population in the region indicates that, in addition to a favorable business cycle and external conditions, a decline in skill premium and the new policy model of fiscally prudent social‐democracy that is emerging this decade in much of Latin America impacted favorably the distribution of income. If this approach will survive the current crisis, much of the recent inequality decline is likely to become permanent.”
“Ageing, Solidarity and Social Protection in Latin America and the Caribbean Time for Progress Towards Equality”
Huenchuan, Sandra. February 2013. Economic Commission for Latin America and the Caribbean (ECLAC).
Abstract: “This publication builds on the knowledge of the situation of older persons in our region at a time unlike any other in the subject’s history in the framework of the United Nations. One of the book’s main contributions is the link between ageing and gender equality, using an innovative conceptual approach and different indicators to facilitate its measurement in terms of social security, health and social services. The book also identifies and proposes tools for analysis and action with regard to public institutions, and for detailed examination of the guarantees needed to ensure equality in old age.”
“The Economics of Crime: Lessons for and from Latin America”
Di Tella, Rafael; Edwards, Sebastian; Schargrodsky, Ernesto. National Bureau of Economic Research, July 2010
Abstract: “Latin America has been traditionally seen as a particularly violent region of the world. This perception is not new, even though it may have been enhanced over the last decades with the escalation of violence in countries such as Brazil, Colombia, and Venezuela (see Aguirre [2000]). This chapter argues that the high crime rates observed in Latin America seem to be consistent with the socioeconomic characteristics of its countries and with the policies implemented by governments in the region. There seems to be no basis for the claim that the patterns observed are due to unusual and exceptional characteristics faced by its countries. On the contrary, three factors widely recognized as being major determinants of the incidence of crime—inequality, police presence, and incarceration rates—account for most of the seemingly exceptionally high crime rates.”
“After Neoliberalism: The Left and Economic Reforms in Latin America”
Flores-Macias, Gustavo A. Oxford Scholarship Online: May 2012.
Summary: “Between 1998 and 2010, an unprecedented wave of left-of-center candidates reached power in Latin America. In spite of a shared concern for social inequality and opposition to the Washington Consensus, their governments pursued dramatically different economic policies. Why did some governments reverse neoliberal economic policies amid the supremacy of market orthodoxy? Why did others embrace market orthodoxy after denouncing it for decades from the opposition? Why were nationalizations, price controls, and trade barriers implemented in Argentina, Bolivia, Ecuador, and Venezuela, but not in Brazil, Chile, Nicaragua, and Uruguay? More generally, what are the conditions that make the initiation and maintenance of economic reforms likely? In answering these questions, this book conducts a theoretical and empirical study of economic reforms in Latin America. It takes stock of the left’s economic transformations in the region and challenges widely held views that resource dependence, economic crises, or strong executives are responsible for them. Instead, it argues that party systems are crucial in explaining reform: when institutionalized, party systems are likely to preserve the prevailing market orthodoxy; when in disarray, they are conducive to drastic economic changes. Marshalling evidence drawn from ten countries and case studies of the governments of Ricardo Lagos in Chile, Lula in Brazil, and Hugo Chávez in Venezuela, this study not only sheds light on one of the most puzzling aspects of contemporary Latin America, but also advances our general understanding of the left as a political ideology, economic reforms, and party systems beyond the region.”