Term Paper: Income Disparity and Development

Pages: 9 (2476 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Literature - Latin-American  ·  Buy for $19.77

SAMPLE EXCERPT:

[. . .] The idea of the positive correlation between greater democracy and lower levels of income inequality is also suggested by Li et al. (1998) However, the presumed connections between democracy and income disparities are not ubiquitous. From another perspective the contention is that democratic implementations have not been the panacea for the region in terms of its disparities. "Neither development nor democracy has served to reduce inequality much." (Inequality in Latin America. A stubborn curse).

This view takes the stance that the reduction of income disparities has been too slow and still tends to favor the wealthy and more fluent member of the society. The view that few inroads into income inequality has been made by democracy is evidenced in the following quotation.

In Brazil, for instance, only 70% of children aged 6-12 in the poorest fifth of the population went to school in 1990. By 2001, that figure had risen to 93% (the equivalent figures for children from the richest fifth of homes were 96% and 99%).

(Inequality in Latin America. A stubborn curse

The view is put forward that inequality in modern Latin America is due to the following factors: " ... access to education is unequal; the earnings of educated people are disproportionately high; the poor have more children with whom they must share their income; and targeting of public spending is ineffective."

(Inequality in Latin America. A stubborn curse)

Improving the inequalities and disparities has become a prime concern in this region. Reducing disparities requires attention to a number of factors. Commentators mention the importance of improving the quality and quantity of education. Another factor referred to is expanding social assistance schemes aimed at the poor. (Inequality in Latin America. A stubborn curse) However, commentators also point out that changes of this nature also necessitate a political will and reforms in order to have a realistic chance of success.

Other suggestions aimed at improving economics development and reducing disparities include the following.

(a) Facilitating access to assets (land, capital, knowledge and Technology);

(b) Achieving a geographically balanced form of productive development in which small and medium-size enterprises play an important role;

(c) Implementing social policies based on the principles of universality, solidarity and efficiency.

The necessary funding for such policies could be obtained by means of an appropriate fiscal covenant and a more efficient allocation of the available resources.

(INTERNATIONAL FORUM FOR SOCIAL DEVELOPMENT EQUITY, INEQUALITIES AND INTERDEPENDENCE)

There are also other external factors that are involved in the complex equation aimed at reducing income disparities. The effect of privatization is one of these factors. The privatization movement has become almost universal and privatization combined with a freer circulation of capital has also led to the redistribution of wealth and assets from national to foreign hands. (INTERNATIONAL FORUM FOR SOCIAL DEVELOPMENT EQUITY, INEQUALITIES AND INTERDEPENDENCE) This is an aspect which has also impacted in the development of Latin American countries.

In mid-1990s, transnational corporations controlled half of the first 100 and accounted for 43% of the sales of the 500 largest companies of Latin America. This transnational ownership is pronounced in both manufacturing and services, the latter having received the largest inflow of foreign direct investment during the second half of the 1990s in Latin America."

(INTERNATIONAL FORUM FOR SOCIAL DEVELOPMENT EQUITY, INEQUALITIES AND INTERDEPENDENCE)

Therefore, this aspect may also be exacerbating and complicating the goal of reducing income disparities,

A study entitled Liberalization, Globalization and Income distribution places the need for a reduction in income inequality in the region in a serious light in terms of long-term development and poverty issues.

Much of the recent rise in income inequality must thus be viewed with alarm. Many of the developing countries with rising inequality already had high levels of income and asset concentration which have traditionally inhibited growth, poverty alleviation and human development in these regions. A further increase in inequality or its persistence at high levels may well prove to be incompatible with the poverty reduction objectives reaffirmed recently by many national authorities and the international community, may destabilize international trade and finance

(Giovanni Andrea Cornia )

The above sounds a warning that the reduction these disparities have become both an economic and social imperative in Latin American Counties.

Bibliography

Barro, R. "Democracy and Growth," Journal of Economic Growth, 1, 1-27. 1996

CONSTANCE P. A yardstick for misfortune. November 6, 2005.

http://www.iadb.org/idbamerica/Archive/stories/1998/eng/e1198i.htm

Economics A-Z. November 6, 2005. November 6, 2005. http://www.economist.com/research/Economics/alphabetic.cfm?TERM=GNP

Giovanni Andrea Cornia. Liberalization, Globalization and Income distribution. 1999. November 7, 2005. Http://64.233.161.104/search?q=cache:yktOBv9VyGgJ:www.wider.unu.edu/publications/wp157.pdf+Development+in+Latin+america+within+income+disparity+using+the+Gini+Coefficient+& hl=en& lr=lang_en& client=flock

Alesina, A. And D. Rodrik, (1994), "Distributive Politics and Economic Growth,"

Quarterly Journal of Economics, 109, 465-90.

Inequality in Latin America. A stubborn curse. 2003. The Economist. Accessed November 8, 2005. "http://www.economist.com/world/la/displayStory.cfm?story_id=2193852

INTERNATIONAL FORUM FOR SOCIAL DEVELOPMENT

EQUITY, INEQUALITIES AND INTERDEPENDENCE

United Nations, New York, 5-6 October 2004. Accessed November 7, 2005. http://64.233.161.104/search?q=cache:oaroPStz8l0J:www.un.org/esa/socdev/IFSD/documents/Background%25202004.pdf+Development+in+Latin+america+within+income+disparity+using+the+Gini+Coefficient+& hl=en& lr=lang_en& client=flock

LATIN AMERICA AND THE CARIBBEAN: SITUATION AND TRENDS ON

THE ROAD TO THE MILLENNIUM DEVELOPMENT GOALS, WITH

EMPHASIS ON FIRST GOAL Contribution from Economic Commission for Latin America and the Caribbean. 2005. Accessed November 7, 2005. http://64.233.161.104/search?q=cache:xLQVGhWFVZ4J:www.un.org/esa/socdev/csd/contrib/ECLAC.pdf+Development+in+Latin+america+within+income+disparity+using+the+Gini+Coefficient+& hl=en& lr=lang_en& client=flock

Li, H., L. Squire, and H. Zou, (1998), "Explaining International and Intertemporal

Variations in Income Inequality," Economic Journal, 108, 26-43.

SANCHEZ M. LATIN AMERICA'S INCOME DISPARITY HUGE. Seattle Post-Intelligencer (Seattle, WA); 7/8/2005

WAGE DISPARITY IN LATIN AMERICA. Risk Management; 2/1/1999

The exact nature of these disparities is a complex issue which was felt to be outside the parameters of the present discussion. See http://www.un.org/esa/socdev/IFSD/documents/Background%202004.pdf for more extensive information on this aspect. [END OF PREVIEW]

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