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Extreme poverty remains high in Latin America and the Caribbean
by Odeen Ishmael PhD

The December 2005 report of the Economic Commission for Latin American and the Caribbean (ECLAC) has revealed that the number of poor people in the Latin American region declined by 13 million since 2003. But even though the numbers have dropped, more than 213 million people, or 41 percent of the region’s population, continue to live in poverty, with 88 million (or nearly 17 percent) existing in conditions of extreme poverty.

These figures are grave reminders that while percentage points on poverty have fallen, the real numbers of poor people continue to be very high. ECLAC stated that the region met 51 percent of the first Millennium Goal of halving the 1990 extreme poverty levels by the year 2015. However, since 15 of the 25 years have already elapsed, the region, according to the UN agency, is slipping away from the target.

Significantly, the study also found that remittances from abroad have positively affected the living conditions of many families in the region. In 2004 remittances into Latin America and the Caribbean amounted to about US$45 billion which was roughly the same amount as direct foreign investment and official development aid. But while the average remittances accounted for 10 percent of GDP in the region, the proportion was higher in Haiti (29 percent), Nicaragua (18 percent), Guyana and Jamaica (17 percent) and El Salvador (16 percent).

In addition, the report also analyzed the developments in the region’s economy in 2005 and made projections for 2006. It found that in 2005, the economy of Latin America and the Caribbean grew overall by 4.3 percent, marking the third successive year of growth.

But while ECLAC noted that unemployment rates fell from 10.3 percent in 2004 to 9.3 percent in 2005, trade unionists in various countries continue to insist that these rates in many of the countries are higher than these statistics illustrate.

Higher economic growth rate patterns in the larger and more economically developed Mercosur and Andean communities contrast sharply with those of some countries in the Caribbean sub-region. The Caribbean countries have been hit hard by the rising oil prices during 2005, forcing many of them to utilize a greater part of their budgetary resources to meet payments for oil imports. Further, they have been battered over the past few years by natural disasters, including hurricanes and floods, which have severely slowed down economic development. Guyana, for example, in 2004, showed only 1.6 percent real growth in the economy in 2004 although the target aimed for was 2.5 percent.

Positive growth in the Caribbean sub-region has suffered as a result of a number of factors. These include the expanding crime rate, and security is an obvious concern of both the local and foreign investors. And even though political stability has improved greatly over the past decade, there is some fear that crime is becoming more and more politicized in the region, thus causing some obvious concerns among foreign investors and the local business communities.

On the other hand, the forward move of representative democracy throughout the region and the promotion of social development programs by many governments have helped to promote the region as an attractive area for foreign investment. Nevertheless, some foreign investors also point to some archaic investments laws in the region and the indecisiveness of the local authorities in agreeing to certain types of investments financed by foreign business interests. And throughout many of these countries, the globalization concept has mixed support, with many local entrepreneurs expressing fear over competition from new business enterprises.

In the Caribbean sub-region, the populations of some of the countries remain either very small or without any steady growth. This factor has proven to be detrimental in supporting the sustainability of new industries since the local market for the products remain small and weak. The steady migration of skills from these countries also continues to retard the economic development process.

With the region falling short of the Millennium Goal target of combating extreme poverty, all the countries of Latin America and the Caribbean may have to re-prioritize their economic targets in the coming years. While applying capitalist modes of production and investment and targeting the large markets in the North may boost economic growth rates, one is left to wonder if this process will help to distribute the generated wealth in order to reduce the rate of extreme poverty in these countries. High economic growth rates do not always necessarily translate into low poverty rates. Perhaps such re-prioritizing can mean an expansion in social programs to improve the standards of living and reducing the poverty level of almost 41 percent of the people of the region.

(Dr. Odeen Ishmael is Guyana’s Ambassador to Venezuela.)
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