Latin America and Caribbean region reduces inequality and boosts human development, but at slower pace

Jul 24, 2014

Photo: UNDP Paraguay

UNDP’s 2014 Human Development Report suggests the creation of a regional monetary fund to reduce financial vulnerability

Tokyo, 24 July 2014 — Compared to all other developing regions, Latin America and the Caribbean has the highest Human Development Index (HDI)—a composite measure of longevity, standard of living and education. However, progress has slowed in this and other regions over the past five years compared to 2000-2008, and persistent vulnerabilities threaten to reverse the achieved gains, according to the UN Development Programme (UNDP) 2014 Human Development Report, launched here today.

 The report, entitled “Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience,” stresses that despite recording the biggest drop in inequality, the region is still the most unequal in the world in terms of income, while citizen insecurity is alarmingly high. These key challenges must be tackled to improve people’s lives in the region, says UNDP’s flagship publication.              

The report shows that average annual growth rates in the region’s HDI dropped by about half over the past five years compared to growth between 1990 and 2000. This was a larger drop than in all other regions except the Arab states.

The report attributes part of the HDI slowdown to the global financial and economic crisis. To boost resilience and reduce the region’s exposure to future financial contagion and volatility, UNDP calls for the creation of a Latin American Monetary Fund to complement global funds. The report also recommends universal provision of basic social services, stronger social protection policies and full employment to advance and secure development progress while reducing vulnerabilities—particularly for the most disadvantaged groups and for those who are at sensitive periods of their life-cycle, like children, the elderly and youth entering the labour market.

The report reveals that more than 45 million vulnerable people in Latin America and the Caribbean are at risk of falling into multidimensional poverty—with multiple deprivations in their education, health and living standards—if financial, natural or other setbacks occur.

“Boosting resilience now is crucial to secure the region’s achieved gains,” said Jessica Faieta, UN Assistant Secretary-General and UNDP Director for Latin America and the Caribbean. “This is particularly important for the Caribbean Small Island Developing States (SIDS), which are even more vulnerable to challenges ranging from debt and unemployment to climate change and rising sea-levels, making their path towards sustainable development even more complex.”

While income inequality has risen in several regions, it declined in Latin America and the Caribbean, in part because of the expansion of education and public transfers to the poor, the report says. The region has also been closing the gap in health inequality.

“Inequality matters not only for those at the poorest end of the distribution, but for society as a whole—as it threatens social cohesion and hampers social mobility, fuelling social tensions that can lead to civil unrest and political instability,” the report says.

“Extremes of economic inequality inevitably lead to political inequality—resulting in governments that are less likely to provide the systems of social protection that can safeguard those at the bottom when large shocks occur,” said Khalid Malik, Director of UNDP’s Human Development Report Office.

The report stresses personal insecurity as a key challenge in the region, which records the highest homicide rates, higher than 70 per 100,000 inhabitants. And many, especially women, feel that their personal security is at risk, the report says.

Among the most vulnerable groups, the report stresses that indigenous peoples are particularly exposed, tending to have poor educational attainment, unequal access to land and other productive assets, and fewer opportunities.

Informal workers—mostly in urban settings and with precarious livelihoods— are also highly vulnerable, the report says, reiterating the call for universal social protection: “In the long run access to more decent jobs can boost human development, social trust and citizen security.”

This year, three countries in the region – Chile, Cuba and Argentina – feature in the very high human development group, with the majority of the region’s 33 countries grouped among those of high or medium human development. Only one, Haiti, remains in the low human development group. This year’s HDI reflects a major revision of UN population data and new purchasing power parity (PPP) conversion rates, which have impacted figures on countries’ life expectancy and purchasing power.

As a whole, Latin America and the Caribbean surpasses all developing regions in every HDI component except for mean years of schooling. The region’s average life expectancy at birth, 74.9 years (compared to 74.2 in 2010) is over four years above the world average, and its average gross national income per capita is slightly above the world average, at US$12,926 PPP in 2010, compared to $13,767 PPP in 2013. The region’s 7.9 mean years of schooling remained unaltered from 2010-2013.

The region also ranks highest among developing regions on the new Gender Development Index, with a female HDI value at 96.3 percent of that for males. Argentina, Barbados, and Uruguay are among the 16 countries in the world in which female HDI values are equal or higher than those of males.

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