Luis Bértola · Jeffrey Williamson Editors Has Latin American Inequality Changed Direction? looking over the long run Has Latin American Inequality Changed Direction? Luis Bértola • Jeffrey Williamson Editors Has Latin American Inequality Changed Direction? Looking Over the Long Run Editors Luis Bértola Universidad de la República Montevideo, Uruguay Jeffrey Williamson University of Wisconsin MADISON, Wisconsin, USA ISBN 978-3-319-44620-2 ISBN 978-3-319-44621-9 (eBook) DOI 10.1007/978-3-319-44621-9 Library of Congress Control Number: 2016952534 © The Editor(s) (if applicable) and The Author(s) 2017 This book is published open access Open Access This book is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits use, duplication, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made The images or other third party material in this book are included in the work’s Creative Commons license, unless indicated otherwise in the credit line; if such material is not included in the 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registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Prologue A Contribution to Settle the Large Pending Issue of Latin America On the initiative of Professors Luis Bértola and Jeffrey Williamson, the Institute for the Integration of Latin America and the Caribbean (INTAL), together with the IDB’s Social Management, the ECLAC, and the World Bank, organized a regional conference in December 2014 with the motto “Latin American Inequality in the Long Run.” Buenos Aires hosted worldwide experts to identify the historical roots of the problem and to contribute proposals to prevent inequality from remaining the region’s distinguishing feature This book that we are now publishing constitutes a continuity and, at the same time, reinforces our commitment to the task As the challenge is huge, there cannot be another way In Latin America and the Caribbean, there are 175 million people who live in poverty conditions, 122 million informal workers without access to social security, and abysmal differences that persist in terms of opportunities of access to health, housing, and education services After a decade in which the middle class has multiplied, and welfare programs have proliferated, reaching to a fourth part of Latin Americans, social demands are increasingly higher and demand more of public policies But the deceleration of several economies of the region and the stagnation of commerce of the last years created additional difficulties to the inclusion process In this scenario, regional and global integration is key to revert this trend, as most integrated societies—in the region and the world—are the ones that manage to grow more harmoniously, reducing the inequality gap between people Integration and inclusion are the two sides of the same coin The first part of the book analyses the long-term tendencies in diverse subjects that range from income disparity to gender equality The second part of this book examines more recent phenomena, with emphasis on fiscal policy, social policy, and agricultural development v vi Prologue After experiencing gradual improvements during recent times, the countries in the region have a shared interest in implementing second generation reforms that, disregarding false shortcuts, build the foundations of nations which are more egalitarians and integrated to the world We must spare no effort Inequality generates antinomies and fragmentation among citizens, scarce social cohesion, and a major tendency to political destabilization, while social inclusion is the most finished example of a democracy that, instead of weakening, gains strength With a long-term vision that clears up permanent phenomena of transitory situations, this publication addresses this issue in an original way, with an interdisciplinary approach and scientific accuracy This is why we swell with pride of this contribution where different experiences and knowledge converge in the same objective: strengthen regional integration that implies a higher degree of social inclusion Washington, USA Washington, USA Héctor Salazar Sánchez Gustavo Beliz Contents Introduction 1 Luis Bértola and Jeffrey G Williamson Part I Long-Run Trends unctional Inequality in Latin America: F News from the Twentieth Century .17 Pablo Astorga Junquera he Political Economy of Income Inequality in Chile Since 1850 .43 T Javier E Rodríguez Weber sing Heights to Trace Living Standards and Inequality U in Mexico Since 1850 65 Moramay López-Alonso and Roberto Vélez-Grajales ong-Run Human Development in Mexico: 1895–2010 .89 L Raymundo M Campos-Vazquez, Cristóbal Domínguez Flores, and Graciela Márquez I nequality, Institutions, and Long-Term Development: A Perspective from Brazilian Regions 113 Pedro Paulo Pereira Funari istorical Perspectives on Regional Income Inequality H in Brazil, 1872–2000 .143 Eustáquio Reis acial Inequality in Brazil from Independence to the Present 171 R Justin R Bucciferro he Expansion of Public Spending and Mass Education in Bolivia: T Did the 1952 Revolution Represent a Permanent Shock? 195 José Alejandro Peres-Cajías vii viii Contents he Lingering Face of Gender Inequality in Latin America .219 T María Magdalena Camou and Silvana Maubrigades iscal Redistribution in Latin America Since the Nineteenth Century 243 F Leticia Arroyo Abad and Peter H Lindert Part II The Recent Inequality Downturn I nequality in Latin America: ECLAC’s Perspective 285 Verónica Amarante and Antonio Prado he Inequality Story in Latin America and the Caribbean: T Searching for an Explanation .317 Augusto de la Torre, Julian Messina, and Joana Silva he Political Economy of Inequality at the Top T in Contemporary Chile 339 Diego Sánchez-Ancochea tructural Change and the Fall of Income Inequality S in Latin America: Agricultural Development, Inter-sectoral Duality, and the Kuznets Curve 365 Martin Andersson and Andrés Palacio iscal Policy and Inequality in Latin America, 1960–2012 387 F Judith Clifton, Daniel Díaz-Fuentes, and Julio Revuelta hallenges for Social Policy in a Less Favorable C Macroeconomic Context 407 Suzanne Duryea, Andrew Morrison, Carmen Pagés, Ferdinando Regalia, Norbert Schady, Emiliana Vegas, and Héctor Salazar Introduction Luis Bértola and Jeffrey G. Williamson After the so-called structural reforms of the 1970s and 1980s, most Latin American countries had shown that they could achieve fast growth and deal with structural change However, income per capita failed to converge on the world leaders, and growth was followed by increasing inequality and, in some parts of Latin America, even increasing poverty Noting this experience, observers began to wonder whether inequality had become a permanent feature of Latin American development and whether it had contributed to the region’s disappointing long-run development performance (Bértola et al 2010a) A few years later, we were discussing something quite different By 2014, Latin America had recorded fast growth for more than a decade and, contrary to what was going on in other parts of the world, inequality was falling Had Latin America permanently changed its long-term direction? To what extent was decreasing inequality dependent on those high growth rates, and thus was it only temporary? What roles did market forces, institutions, and political ideology play during the inequality downturn? To start a search for answers, we sent out a call for papers for a conference in Buenos Aires, which was organized with support from the Economic Commission of Latin America and the Caribbean (ECLAC), the Inter-American Development Bank (IADB), and the International Bank for Reconstruction and Development (IBRD) The conference gathered together economic historians that had long been working on the history of Latin American inequality and poverty, with economists engaged in the study of inequality in the recent period By the time of the conference in December 2014, and even more clearly at the time of publication years later, the atmosphere in Latin America had changed yet again L Bértola (*) Universidad de la República, Montevideo, Uruguay J.G Williamson University of Wisconsin, Madison, WI, USA © The Author(s) 2017 L Bértola, J Williamson (eds.), Has Latin American Inequality Changed Direction?, DOI 10.1007/978-3-319-44621-9_1 L Bértola and J.G Williamson Even if it is too early to guess what will happen to inequality in the near future, we know for sure that the commodity-driven boom during the first years of the twentyfirst century has come to an end In 2014, Latin America was already growing more slowly than the OECD, and prospects for 2015 were even worse The expected GDP growth rate for the years ahead is sufficiently low to allow us to say that Latin American catch up on the world leaders has come to a halt Thus, the original question posed at our conference is even more dramatically posed by more recent events Has Latin America changed direction and was the recent inequality downturn just the result of a globally induced economic boom, similar to so many other previous booms in Latin America since the nineteenth century? Were the recent inequality events transitory with no permanent change in political, institutional, and other fundamentals, ones that have been a feature of the region for the past two centuries or even longer? 1 The Origins of Latin American Inequality Most studies of Latin American development written between the 1950s and 1970s stressed colonial heritage as the main explanation of its underachievement Competing schools of thought at least agreed on this point: dependency theories, modernization theories, Marxist writings, and development economics all agreed that Latin America’s colonial heritage contributed two key features: dependency on foreign powers, and inequality in civil rights, property rights, and political power Things were made even worse due to the fact that the imperialists, Portugal and Spain, were relatively backward themselves compared with Western Europe Each of these thought that independence was jeopardized by the lack of a real social revolution, by the weakness of the local elites, by the failure to create a Latin American federation, and the development of new forms of unequal international relations, led by British “informal” imperialism, later followed by US hegemony National states were consolidated during the last quarter of the nineteenth century They implemented liberal reforms, by which the lands of the church, the peasant communities, and the state were privatized thus passing it on to an increasingly powerful landowning elite Wage labor became dominant, but a varied array of coercive labor market mechanisms persisted The landowning elite, together with merchants, foreign powers, state bureaucracies, and the military, formed an alliance which left the majority—mainly those of Afro-American and Indian ethnic origin— without property, civil rights, and education This process took varied forms in different Latin American countries and regions Three main groups were identified in the literature The Indo-American group—the Andean, Central American, and Mexican regions—was the center in the colonial period, densely populated and rich in gold and silver There, the interplay between the haciendas and the peasant communities, together with centralized forced labor for the mines, was at the heart of social relations as the region drifted towards capitalism (Salvucci 2014) The Afro-American regions (northern Brazil, coastal .. .Has Latin American Inequality Changed Direction? Luis Bértola • Jeffrey Williamson Editors Has Latin American Inequality Changed Direction? Looking Over the Long... J. G (2010) Five centuries of Latin American inequality Journal of Iberian and Latin American Economic History, 28(2), 227–252 Williamson, J. G (2015) Latin American inequality: Colonial origins,... Williamson (eds.), Has Latin American Inequality Changed Direction? , DOI 10.1007/978-3-319-44621-9_1 L Bértola and J.G Williamson Even if it is too early to guess what will happen to inequality in