American and Caribbean perspective ALICIA BRCENA EXECUTIVE - - PowerPoint PPT Presentation

ALICIA BÁRCENA

EXECUTIVE SECRETARY

University of Oslo September 3, 2014

Equality and Sustainable Development: A Latin American and Caribbean perspective

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What ECLAC proposes: the trilogy of equality

Equality is the goal, structural change is the path, and the art of politics and policymaking is the instrument

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Equality with a rights-based approach

• Time for Equality (Brasilia, 2010 ): equality and economic

growth are not at odds with each other, the key is to pursue equality for growth and growth for equality

• Structural Change for Equality (San Salvador, 2012):

more productive employment with rights as the master key for equality

• Compacts for Equality (Lima, 2014): a new

State-market-society equation with medium-term political agreements

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Equality as an ethical principle and ultimate goal of development

• Broadening the concept of equality to encompass autonomy,

recognition, dignity.

• All individuals must be recognized as equal in rights –civil and

political- and dignity –equality with rights-based approach

• Concept goes beyond distributive fairness in terms of income,

assets and resources

• Considers other dimensions: capabilities, social protection and

access to public goods

• New development paradigm: growth for equality and equality

as a driver of growth

• Requires different public policies and new multi-dimensional

measures in order to address these challenges

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Latin America and the Caribbean in brief

• Three realities: South America,

Central America, and the Caribbean

• Lack of linkages in the production

structure

• Middle-income trap
• Slowdown of economic growth
• Lower, consumption-dependent

growth

• Insufficient investment
• Plateauing of poverty reduction
• Weak natural resource and

environmental governance

• Scarcity of quality public goods
• Weak institutions
• Loss of dynamism in

international trade

• End of the commodity price

supercycle

• Financial volatility
• High vulnerability to weather

events

• Defining a new development

agenda with equality as the pivotal element, structural change with more productivity and innovation, and with high quality employment creation

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Latina America and the Caribbean is at a crossroads

• After a period of prosperity, the region is facing a more

difficult external context and slower economic growth

• Efforts must be redoubled to achieve development with a

strategic focus through structural change and investment in human capacities

• The State must continue along the path towards more

progressive fiscal policy and public spending, with stronger institutions to promote equality in all its forms

• Environmental sustainability is an imperative, which

requires broad agreements and challenges existing patterns of consumption and production

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Inequality

For the first time in recent history there have been advances in combating inequality

Investment

Investment, at 22.9% of GDP, is insufficient for development

Productivity

Closing the external gap (with the technological frontier) and the internal gap (between sectors and actors)

Taxation Regressive tax systems; weak non- contributory pillar International linkages

Risk of “reprimarization”

• f the export

structure, with low value added and little investment in technology

Environmental sustainabiity Move towards sustainable production and consumption patterns

A structural change is necessary

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The policies pursued since the 1980s did not produce the rapid, sustained economic growth that was expected

LATIN AMERICA AND THE CARIBBEAN: GDP GROWTH COMPARED WITH TOTAL GDP OF DEVELOPING COUNTRIES AND THE WORLD (Annual rates of variation)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures and World Bank, World Development Indicators [online database].

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Consumption continues to be the component sustaining this low growth

LATIN AMERICA: GDP VARIATION AND CONTRIBUTION TO GROWTH OF AGGREGATE DEMAND COMPONENTS (Percentages, on the basis of dollars at constant 2005 prices)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of official figures.

a Estimates

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The investment rate is still too low for development

LATIN AMERICA: GROSS FIXED CAPITAL FORMATION, 1950-2010 (Percentages of GDP, in dollars at constant 2005 prices)

Source: ECLAC, on the basis of official figures from the countries.

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The production structure has not changed: it is heterogeneous and a source of inequalities

LATIN AMERICA (18 COUNTRIES): GDP PER WORKER, PPP AROUND 2009 (Thousands of dollars)

Source: ECLAC, on the basis of R. Infante, “América Latina en el ‘umbral del desarrollo’. Un ejercicio de convergencia productiva”, Working Paper, No. 14, Santiago, Chile, June 2011, unpublished.

LATIN AMERICA (18 COUNTRIES): STRUCTURAL HETEROGENEITY INDICATORS, AROUND 2009 (Percentages)

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Productivity levels are very low in the region

GDP PER PERSON EMPLOYED BY REGION, 1990-2012 (Dollars at constant 2005 prices)

12500 25000 37500 50000 62500 75000 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 5000 10000 15000 20000 25000 30000

Developed economies and European Union World Latin America and the Caribbean South-East Asia and Pacific East Asia

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from International Labour Organization (ILO).

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1985 2011 1985 2011

4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 0% 10% 20% 30% 40% 50%

Participation in world exports (%)

High tech exports in total exports (%)

Latin America Developing Asia

The biggest challenge for Latin America and the Caribbean is transforming and diversifying the exports pattern

LATIN AMERICA AND ASIA: CHANGES IN THE PATTERN OF SPECIALIZATION AND IN THE SHARE OF WORLD EXPORTS, 1985-2011a (En porcentajes)

Source: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de United Nations Commodity Trade Statistics Database (COMTRADE).

LATIN AMERICA AND THE CARIBBEAN: EXPORT STRUCTURE BY TECHNOLOGY INTENSITY, 1981-2010 a (Percentages of the total)

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Dimensions of inequality

• Inequality in educational attainment. Wide gaps are seen in the educational

attainment of the poorest income quintile compared with the richest,

• Inequality in access to information and communication technology: the rate of

use among the highest income quintile is five times higher than the lowest income quintile.

• Improvements as regards the prevalence of chronic undernutrition, with

smaller differences between quintiles, except in the Plurinational State of Bolivia and Peru.

• Reproductive inequalities: the percentage of 15-19 year-old women who are

mothers is three to four times higher the lowest income quintile than the highest income quintile,

• Improvements in achievements in terms of overcrowding and access to

durable goods, with greater levels of equality.

• Marked residential selectivity among high-income groups. Fall in residential

segregation in the 2000s, particularly in the cities in Brazil; the situation in

• ther countries is more varied (although declines also predominate).

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Substantial poverty reduction, although this has come to a standstill, and high levels of inequality

LATIN AMERICA AND OTHER WORLD REGIONS: GINI COEFFICIENT, AROUND 2010

Source: ECLAC, on the basis of special tabulations of data from household surveys in the respective countries.

LATIN AMERICA: a POVERTYb AND INDIGENCE, 1980-2013c (Percentages)

Source: ECLAC, on the basis of special tabulations of data from household surveys.

a Estimate for 18 countries of the region plus Haiti. b Total for indigent plus non-indigent poor. c The 2013 figures are projections.

0,50 0,45 0,41 0,37 0,34 0,33 0,34 0,00 0,10 0,20 0,30 0,40 0,50 0,60

Latin America and the Caribbean (18) Sub- saharan Africa (39) East Asia and the Pacific (10) North Africa and Middle East (9) South Asia (8) Western Europe and Central Asia (21) OECD (22)

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A significant proportion of the population remains in a vulnerable position

DISTRIBUTION OF THE POPULATION BY VULNERABILITY TO POVERTY, AROUND 2010 (Percentages)

Source: S. Cecchini and others, “Vulnerabilidad de la estructura social en América Latina: medición y políticas públicas”, Realidad, Datos y Espacio. Revista Internacional de Estadística y Geografía, vol. 3, No. 2, May-August 2012.

2.0 4.1 7.4 12.1 12.3 11.0 11.9 23.3 14.5 23.4 17.8 35.0 23.4 32.3 31.3 37.3 46.7 11.2 12.8 17.8 18.7 19.3 25.6 27.6 24.8 31.5 28.8 30.6 26.3 33.9 31.5 31.8 32.4 26.7 15.5 17.8 18.2 15.4 17.7 22.6 22.7 16.9 20.2 16.8 20.7 14.8 19.5 14.6 16.9 13.8 11.5 71.4 65.3 56.6 53.8 50.7 40.8 37.8 35.0 33.7 31.0 30.9 23.9 23.3 21.6 20.0 16.4 15.1

10 20 30 40 50 60 70 80 90 100

Not vulnerable (over 1.8 of poverty line) Vulnerable to poverty (1.2 to 1.8 of poverty line) Poor or highly vulnerable to poverty (0.61 to 1.2 of poverty line) Indigent or highly vulnerable to indigence (up to 0.6 of poverty line)

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LATIN AMERICA (13 COUNTRIES): WAGES AS A SHARE OF GDP AND GINI INDEX, 2002 AND 2009

Distributive improvements at the household level have not been reflected in a more egalitarian distribution in the share-out of capital and labour

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of information from CEPALSTAT, the National Institute of Statistics and Censuses (INDEC) of Argentina, and the central banks of Costa Rica, Guatemala and Uruguay.

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To date the reduction in inequality has not been associated with a virtuous dynamic for structural change

• The main factor is the lesser inequality in labour income arising

from a decline in the returns on education.

• The fall in inequality could be attributable to the higher relative

demand for low-skilled workers, which has narrowed the gap in returns on education.

• If this were the case, it would be a sign that the combination of

stagnating productivity and the pattern of specialization is sending signals that discourage educational progression and capacity-building.

• So, how sustainable is the reduction in inequality?

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LATIN AMERICA (14 COUNTRIES): POPULATION LIVING IN HOUSEHOLDS WITHOUT SOCIAL SECURITY MEMBERSHIP AND WHICH DO NOT RECEIVE ANY PENSION OR PUBLIC WELFARE TRANSFERS, BY INCOME QUINTILE, 2009 (Percentages)

Social protection gaps by quintile…

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys conducted in the respective countries.

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Autonomy: a third of all women are unable to generate income of their own and are economically dependent

LATIN AMERICA (16 COUNTRIES): WOMEN AGED 15 OR OVER NOT IN EDUCATION AND WITHOUT INCOMES OF THEIR OWN, BY AREA OF RESIDENCE, 2011 (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of special tabulations of household surveys.

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Deep-seated inequalities: indigenous peoples

LATIN AMERICA (7 COUNTRIES): POVERTY RATES IN THE INDIGENOUS AND NON-INDIGENOUS POPULATIONS (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of household surveys conducted in the respective countries.

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Capacities: the link education - employment reproduces and perpetuates social inequalities and poverty

LATIN AMERICA (18 COUNTRIES): MONTHLY LABOUR INCOME OF THE EMPLOYED POPULATION, BY AGE GROUP AND LEVEL OF SCHOOLING (Dollars at 2000 prices, PPP)

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Progress has been made over the past decade

• Poverty diminished and so did inequality, albeit to a lesser extent, but

without major changes in production structures.

• Participation improved, unemployment fell, informality declined

(moderately), wages went up, pension and health-care coverage increased for wage-earners and minimum wage policies were strengthened.

… but there is cause for concern in the social sphere

• The world of work continues to be the root cause of many inequalities

instead of constituting a sphere for mutual recognition through social relations and the realization of potential.

• Inequalities in income, participation, pension coverage, access to different
• ccupations and job positions (gender and ethnicity), and the burden of

unpaid work.

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Higher consumption of durable goods is associated with higher demand for energy

LATIN AMERICA (9 COUNTRIES): HOUSEHOLD SPENDING ON ENERGY (ELECTRICITY, GAS AND OTHER FUELS) AS A PROPORTION OF TOTAL HOUSEHOLD SPENDING BY INCOME QUINTILE (Percentages)

Source: ECLAC, on the basis of official information. .

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Negative externalities of the expanding vehicle fleet: pressure on air pollution with attendant health risks

LATIN AMERICA AND THE CARIBBEAN (SELECTED CITIES): ANNUAL AVERAGE PARTICULATE MATTER (PM10), AROUND 2004 AND 2008

Source: World Health Organization (WHO), Global Health Observatory Data Repository”, http://apps.who.int/gho/data/node.main.156?lang=en

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The region’s vulnerability to natural disasters and climate change

• Since 1972, disasters have caused approximately 310,000 deaths,

affected 30 million people and cost US$ 231 billion (dollars at constant 2000 prices) in damage in the region.

• The estimated costs of the main physical impacts associated with a

2.5°C temperature rise in Latin America and the Caribbean vary from just over 1% to over 4% of regional GDP, according to analysts.

• Achieving the climate target requires reducing deforestation,

changing patterns of production, consumption and urbanization, and making large investments in increasing energy efficiency and shifting the region’s energy matrix towards renewable sources.

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INTERNATIONAL COMPARISON OF THE LEVEL AND STRUCTURE OF THE TAX BURDEN (Percentages of GDP)

Closing social gaps requires a fiscal pact that raises the tax burden and makes the tax structure more progressive

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There is scope for increasing income tax in the region

LATIN AMERICA AND THE CARIBBEAN AND OECD: COMPARISON OF INCOME TAX YIELDS (Percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of national databases,, "Revenue Statistics of OECD Member Countries” (OECD) 2008, and WEO-Oct.2008 (IMF). Note: The OECD figures relate to general government operations. The same applies to figures for Argentina, Brazil, Chile, Costa Rica, Plurinational State of Bolivia and Uruguay.

OECD

Natural persons 70 Companies 30

3.7 %of GDP 8.9 %of GDP Latin America and the Caribbean

Natural persons 23

Companies 77 3.0 %of GDP 0.9 %of GDP

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Limited institutional capacity to correct the disequilibrating dynamics of the market ex-post

GINI INDEX BEFORE AND AFTER TAXES AND TRANSFERS

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Organization for Economic Cooperation and Development (OECD), Social Expenditure Database; and N. Lustig and others (2013).

• 60
• 40
• 20

20 40 60 80

Finlandia Eslovenia Bélgica Austria Irlanda

• Rep. Checa

Alemania Luxemburgo Dinamarca Noruega

• Rep. Eslovaca

Francia Suecia Islandia Italia Grecia Polonia Reino Unido Estonia Portugal España Holanda Japón

• N. Zelanda

Australia Canadá Israel Estados Unidos Suiza Corea

• Prom. OCDE

Argentina* Bolivia Perú Mexico Uruguay Brasil

• Prom. AL

Gini antes de impuestos y transferencias Gini después de impuestos y transferencias Variación porcentual

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Close coordination between institutions and structures will help to combine higher social spending, increased productivity and greater equality

LABOUR PRODUCTIVITY AND SOCIAL SPENDING AS A PERCENTAGE OF GDP, AROUND 1990 AND 2010, AND INEQUALITY AROUND 2010 (Dollars at constant 2005 prices and percentages)

Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of Standardized World Income Inequality Database, version 4.0, September 2013; Organization for Economic Cooperation and Development (OECD), STAN Structural Analysis Database [online]; and World Bank, World Development Indicators.

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ECLAC proposal: structural change for equality and sustainability

• Defining a new development agenda with equality as pivotal element

– Macroeconomic stability, economic growth and direct transfers are not enough to restart the uptrend in social indicators. – Employment with rights is the master key to equality and the link with the economic domain. – Structural heterogeneity needs to be overcome by building up competitive, high-productivity sectors, with more technological innovation and productive linkages to avert a situation of jobless growth.

• Convergence of production structure, with better distribution of

production factors, universal social protection and capacity-building

• Environmental sustainability, with a shift in consumption and

production patterns.

• Building a regional vision for the Post 2015 Agenda

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• 1. Structural change for equality and environmental

sustainability

• 2. Well being of society
• 3. Education, health, nutrition and capabilities to absorb

technical progress

• 4. Policy and institutions matter: regulation, taxation, financing

and governance of natural resources

• 5. Global governance for fair trade, technology transfer and

financial reform including new financing mechanisms

• 6. Build regional density and promote South-South cooperation

and social participation

• 7. Better measuring is required: GDP+

Road ahead

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Inclusion for closing structural gaps

• Inclusion is the process for achieving equality.
• Inclusion as a process for closing gaps on productivity,

capabilities (education) and employment /job segmentation/informality which constitute the main causes

• f inequality
• Requires new equilibrium between State-Market-Society to

ensure redistributive policies

• Ensure public access to financing, technology and innovation
• Universal access to a basic floor of social protection: health,

social protection, pensions,

• Respect and dignity: Identity and discrimination: gender and

generation, ethnic and generation

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Structural change requires compacts for equality

• New equation: State – markets – society
• New compacts are urgently needed: social and fiscal pacts for

investment and productivity

• Agreements for better governance of natural resources
• Coordination of macro, industrial, social and environmental

policies

• Social consensus-building and consultation, with

accountability

• Culture of regional integration with solidarity, to tap the

benefits of value chains in the region.

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Politics and policymaking: the importance

• f compacts
• The development crossroads the region has reached calls for

revisiting the way in which its institutions and structures are linked to one another, involving a wide range of agents in the process

• A compact is a political instrument for putting into place, within a

democratic framework, medium-term institutional policies and reforms with a strategic vision, with less risk that they will be reversed later

• A social compact is necessary at a time of changes in the

interaction between the State, the market and society, with social effervescence and the emergence of new forms of participation

• The citizenry is a party to the compact, as a full bearer of rights,

with the State acting as guarantor of those rights

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Compacts relating to the seven pillars for transforming the region’s development process

• A fiscal compact to endow the State with the resources it needs to

promote policies in the strategic direction of equality, sustainability and structural change

• A compact for investment and industrial policy to enable the State

to guide structural change and coordinate public and private agents to raise investment and shift sector composition to boost productivity

• A social and labour compact to build the State’s redistributive

capacity in different areas of inequality and ensure that labour institutions keep pace with structural change in order to close gaps in relation to gender, output, quality employment and the division

• f benefits between capital and labour

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Compacts relating to the seven pillars for transforming the region’s development process

• A compact for social welfare and public services to provide public policy

with the tools it needs to achieve a better balance between private consumption and broader access to better-quality public services such as transport, education, health care and environmental services, and which will result in a greater sense of belonging and smaller gaps in well-being.

• A compact for environmental sustainability is essential for

intergenerational solidarity and for recognition of the wide range of groups adversely affected by environmental degradation and the exhaustion of non-renewable resources. The compact must boost coordination between actors in the transition to a green economy, reshape consumption patterns in ways that will result in less pollution and less waste, and reflect the importance of policies to prevent natural disasters, avoid the degradation of water and woodland, and mitigate the level and impact of climate change.

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Compacts relating to the seven pillars for transforming the region’s development process

• A compact for natural resource governance to build a new institutional

framework for the regulation, ownership and appropriation of rents that can harness revenue generated during upswings in the natural resources markets to promote greater production diversification, additional investment in physical and social infrastructure and in innovation and development, more inclusion through employment and funds to build capacity and improve access to services.

• A compact among the international community for development and

cooperation beyond 2015 that targets a global economic structure capable

• f attaining threshold levels of environmental sustainability and social well-

being for the majority of the population. Its scope should go beyond the satisfaction of basic needs to encompass reduction of the deep-seated inequalities and asymmetries that divide one society from the next, and it should respect the principle of shared but differentiated responsibilities.

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Principles of an inclusive Post 2015 agenda

• The multilateral space as a community of interests and not as

North-South cooperation: all at the table

• Political agreements for a universal covenant for sustainable

development with equality at the center

• Enhancing a culture of collective action for development
• Strategic vision with an intergenerational approach promoting

new equation and agreements between State-Market & Society

• Build institutional capabilities to manage big data, to ensure

continuity of policies and programmes

• More and better democracy and rule of law: access to

information, participation and justice by all actors.

• Independent measuring and monitoring: autonomy of

statistics ad participation of civil society to asses progress

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PERCENTAGE OF COUNTRIES FROM EACH REGION CLASSIFIED AS MIDDLE-INCOME

Fuente: Comisión Económica para América Latina y el Caribe (CEPAL), sobre la base de la última clasificación disponible del Banco Mundial

Latin America and the Caribbean is middle-income region: 85% of countries belong to this category-80% of the poor

Only five of all 33 countries in the region are not classified as middle-income: 1 is low-income and 4 are high-income.

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

América Latina y el Caribe Asia del Sur Oriente Medio y Norte de Africa Asia del Este y Pacífico Africa Sub- Sahariana Europa y Asia Central

Porcentajes del total

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Synergies between equality and inclusion

Economic inclusion: structural change + industrialization

• Productivity gaps: full employment oppportunities
• Decent jobs: income/functional distribution, fair wages
• Investment gaps: infrastructure, roads, energy,
• Access to assets, goods + services, full employment opportunities and

universal social protection, technology inclusion

• Capabilities gaps: education, science and technology inclusion

Social inclusion: universal access to social protection

• Progressive compliance and fulfillment of rights,
• Attain critical aspirations of society: safety, health and a prosperous society

within the planetary boundaries

• Poverty erradication, food security/nutrition,health + well-being

Environmental inclusion: access to public goods

• Re-distribution of rents and productive gains from extraction of natural

resources, quality of life for all, global public goods