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Poverty in Latin America

NAFTA Inter-American Trade Monitor, Vol. 1 no. 13, 26 June 1998

A recent World Bank analysis of Latin America and the Caribbean reported that 40 percent of the population lives in poverty and about 25 percent live on less than one dollar a day. On May 27, the U.N. Economic Commission on Latin America and the Caribbean (ECLAC) issued a report on poverty and income distribution between 1995 and 1997. ECLAC noted that in some countries poverty has increased and that concentration of wealth has worsened the plight of the poor. The richest 10 percent of the region's population holds 40 percent of the wealth, and the poorest 10 percent controls only 2-3 percent. ECLAC found unemployment increasing everywhere except Chile, Peru and Nicaragua. An International Labor Organization report found that 56 percent of all jobs were in the informal sector, where low incomes and insecurity are the norms. Malnourishment remains a significant problem in much of the region.

The U.N. Food and Agriculture Organization warned in a study released in June that falling rural living standards may force 5-7 percent of the rural population to urban areas within the next few years. The increasing dominance of agriculture for export has resulted in an increase in seasonal labor and a feminization of agricultural production of basic foods, with women accounting for 40 percent of domestic agricultural production. The FAO report outlined a strategy for sustainable agricultural and rural development, coupled with programs to strengthen medium-sized cities and towns so that they can absorb immigrants from rural areas.

In Mexico, agriculture lags behind other sectors. Despite an average economic growth of 6.6 percent from January to March 1998, the agricultural sector fell six percent. In 1997, overall national economic growth was 7 percent, but agricultural sector earnings grew by only one percent. More than 80 percent of the malnourished people in Mexico live in rural areas, and 80 percent of people living in rural areas are malnourished.

"Regional Economic Reports Cite Rising Poverty, Unemployment in Latin America," NOTISUR, May 29, 1998; Gustavo Gonzalez, "Rural Development as Crux of Fight Against Extreme Poverty," INTERPRESS SERVICE, June 15, 1998; Diego Cevallos, "Mexico: Countryside Still in Crisis Despite Economic Growth," INTERPRESS SERVICE, May 20, 1998.