Escaping the Poverty Trap

Even if Latin America's policy makers were successful in creating an environment that better promotes rapid economic growth, widespread poverty would persist. Given the high level of income inequality requires, the region requires redistribution, particularly through programs aimed at improving education and health care.

The elimination of poverty must remain at the top of the policy agenda in Latin America and the Caribbean, where inequality is higher than in any other region and one in five people survive on little more than two dollars per day (as measured by the 1993 purchasing power parity (PPP) exchange rate).

Poverty is an intrinsically dynamic phenomenon. Poor people are locked into a low-level asset (or capability) trap. Hence, poverty reduction efforts must seek to provide incentives that will encourage the poor to acquire assets and capabilities that will enable them to escape poverty in the future.

Of course, it is impossible to make serious inroads against poverty without generating persistent economic growth. But, based on the continent’s economic performance over the past last 15 years, growth alone is unlikely to reduce poverty by more than 25% in the next ten years. Even if policymakers were successful in creating an environment that better rewards investment and thus promotes faster growth, Latin America’s ills would not be solved. The high level of income inequality requires specific poverty reduction efforts.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.


By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.