The first South American country to join the OECD, Chile is one to the fastest growing Latin American economies. But despite making considerable progress in reducing poverty, inequality is still a massive challenge needing to be faced.
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Over the past quarter century, the countries of Latin America and the Caribbean (LAC) have experienced rising incomes, with corresponding reductions in levels of poverty. At the same time, countries h... Show More +ave achieved improvements in health and well-being for all segments of the population: average life expectancy has risen significantly, more children live to see their first and fifth birthdays, and fewer mothers are dying from complications of childbirth. Nonetheless, health inequities persist between and within countries, and some health outcomes are still unacceptable, challenging health systems to develop innovative approaches that will improve responsiveness and address people’s changing needs. Universal health coverage (UHC) has been at the center of the global public health agenda in recent years. As one of the overarching goals of health systems, UHC provides countries a way forward to address unmet needs and health inequities. The World Bank has embraced UHC as part of its mission to eliminate absolute poverty by 2030 and to boost shared prosperity. The Pan American Health Organization (PAHO) in October 2014 adopted a regional Strategy for Universal Access to Health and Universal Health Coverage, which expresses the commitment of PAHO Member States to strengthen health systems, expand access to comprehensive quality health services, provide financial protection, and adopt integrated, comprehensive policies to address the social determinants of health and health inequities. For the past two years, the World Bank and PAHO have engaged in a collaborative effort to examine policies and initiatives in LAC aimed at achieving UHC. This report is one product of that collaboration. It includes contributions from professionals from both institutions and it has received the support of researchers from several countries in the region. The report provides insight on different approaches and progress being made by selected countries over the past quarter century to increase population coverage, services covered, and financial protection, with a special focus on reductions in health inequities. The report shows that countries have made meaningful progress toward UHC, with increases in population coverage and access to health services, a rise in public spending on health, and a decline in out-of-pocket payments, which can result in catastrophic spending and impoverishment for many households. Expanded health services, including preventive, curative, and specialized services, have also been observed in most countries, and service utilization has become less inequitable over the years. The gap between rich and poor has also narrowed on a number of key health outcomes. Despite the advances, much remains to be done to close the equity gap and address new health challenges in the region. As many countries in LAC adopt policies, plans, and strategies to move rapidly toward universal access to health and universal health coverage, continuous assessment of progress will be required to build the evidence base to inform policies and decision-making processes at the national level. Priority should be placed on the analysis of critical factors such as governance and stewardship in health, social participation and accountability, equity in access to quality services, health financing, and the intersectoral approach to address the social determinants of health, among others. National policies and strategies promoting universal access to health and universal health coverage should be firmly anchored in the premise that the enjoyment of the highest attainable standard of health is one of the fundamental rights of every human being. This report reaffirms that policies oriented toward the achievement of UHC can improve equity, promote development, and increase social cohesion, ultimately leading to improved health and well-being for all. Show Less -
China’s rise as a world power just over a decade ago caused “a tectonic shift” in the global economy that led to long-lasting change. The shift has even changed the language, says World Bank Chief Eco... Show More +nomist for Latin America and the Caribbean, Augusto de la Torre (Ecuador, 1953). New commonly-accepted terms have appeared, such as “emerging countries,” or BRIC (Brazil, Russia, India and China). Meanwhile, perceptions have also changed: the “North-South” divide or defining “Center” as the United States, Europe and Japan and “Periphery” as the remaining countries is no longer valid.During this global sea change, which the World Bank analyzes in its latest report, Latin America and the Rising South: Changing World, Changing Priorities, coauthored by de la Torre, Latin America has also shifted its position. Like China, the region has become a key player on the new chessboard of powers. Nevertheless, some structural transformations have not yet been consolidated —infrastructure, human capital and trade expansion are the keys to the future— which are essential to avoid backsliding on the economic and social advances made over the past decade. There is still time to do so, according to de la Torre. But not much.Question. According to the World Bank, China is at the epicenter of this global economic earthquake. Now its growth has slowed. Did Latin America trust too much in China as a driver of its economy?Response. Whether we like it or not, when you experience a decade of this major change whose epicenter is China, people begin to think it is permanent. There was the illusion that those 10 years were going to last forever, but they did not. This is forcing the Latin American region to rethink its priorities and growth agenda.Q. What are these priorities?R. Improving infrastructure and also realizing that it is not only a question of being integrated, but how we are doing it. We have specialized heavily in raw materials; we have not implemented almost any process to diversify our exports. As a result of this specialization, Latin America has been less dynamic than other emerging nations in integrating global value chains. We now realize that these are an important driver of the economic growth of nations. Labor markets are also an issue: this is a new world where Latin America is too expensive to compete based on low wages. Additionally, skill levels and the number of engineers and experts are still insufficient for competing based on knowledge.Q. How can exports be diversified?R. In order for Latin America to take advantage of the new circumstances, it will need to find routes to guide its economic machinery toward the world of exports. The correlate of this is that it needs to be a region of greater savings. This is not currently the case. So Latin America is in a limbo of sorts; it has major challenges to be able to take advantage of the opportunities this new world offers. It needs to make these leaps in the quality of human and physical capital. Some progress has been made -- the region facing these challenges is not the one of crises of previous decades, but these are high-voltage challenges.Q. Should Latin America have taken better advantage of the decade of bonanza?R. After the soccer game, we are all experts on how it could have been played better. Now we are all aware that Latin America could have taken better advantage of those golden years: it could have saved more, could have invested more in human capital, could have better developed its infrastructure to support the diversification of exports, could have made more significant investments in reducing costs for developing productive projects…There is no doubt that all of this could have been improved. I do not believe that the region did as badly as some people think, but the pressure to resume these issues is intensifying to the extent that Latin America is feeling what it means to have less economic impetus from China.Q. Is there still time to act?R. In some ways, we have a little more time than before because during these boom years, Latin America has improved its macroeconomic policy, particularly its monetary policy. That will not necessarily lead to much more growth now, but it will certainly make the region less vulnerable. On the other hand, the region changed its social structure and experienced enormous progress. Now it has a larger middle class and fewer poor people. Consequently, it has generated high social expectations: Latin Americans became accustomed to the idea that their children had opportunities that their parents did not. From that perspective, there is not much time because the region and the political class are under pressure to improve the public services that a new social structure demands. Unfortunately, what needs to be done cannot be resolved in the short term. They are reforms that take time. We need to start immediately. We have a bit of relief because we are no longer threatened by the shadow of major macroeconomic crises; however, social expectations are much more acute than previously.Q. In the report presented last week in Lima, the World Bank urged policymakers to rethink priorities “with a cold head.” What is the concern here?R. Given the tension between societal expectations and resources and the current situation, there is a risk that Latin America will return to its populist tendencies of the past, to making short-term promises without broader horizons. It is an enormous challenge for politicians. But facing this challenge can give the region something that it sorely needs: leadership associated with a horizon and a vision of the future that is promising and that gets people excited, so that Latin Americans will be willing to make the effort now with a view to having a better future. Show Less -
A desolate, poorly-lit street and an overturned dumpster. Open bags of trash and garbage scattered on the sidewalk. Would you walk alone there? Your sixth sense may advise against it.However, it is no... Show More +t only instinct that keeps us from walking down that road. Several years ago, a whole theory was developed which reinforced the idea that having clean, ordered streets and well-lit, maintained public spaces can discourage criminals and gangs.Urban neighborhoods of Latin America and the Caribbean are home to 70% of the region’s poor. There, where the poorest people live, public spaces often lack basic infrastructure, a water supply and garbage collection services.The region also has some of the highest rates of crime and violence in the world, with an average of 29 homicides for every 100,000 people (as compared with a global average of seven for every 100,000). Additionally, the lack of formal environments tends to generate conditions conducive to crime and violence.“A disorderly space with garbage gives the impression that people are not taking care of that place,” explains John Morton, World Bank environmental expert. Therefore, if a neighborhood tolerates disorder, whether that means throwing trash on the ground or dirty streets, it could – hypothetically – produce an environment more conducive to crime. For criminals, this type of disorder suggests that crimes will not be reported or controlled, in other words, that no one is in charge. “It is a symptom and also part of the cause; the neighborhood seems more defenseless,” says Morton.A recent experience in Kingston, Jamaica is proof of that.In Central Village, a neighborhood with high crime and unemployment rates, streets were cleaned to recover public spaces. “Garbage was constantly present in the community. This sent a signal that no one cared about the place; it was an invitation for vandalism,” says Mona Sue-Ho, a social development expert at the Jamaica Social Investment Fund (JSIF), which implemented the project with World Bank support.Streets were paved and repaired, public spaces were cleaned and dumpsters were installed. Additionally, a garbage collection service was established.The project also helped mobilize the community, which led residents to propose new initiatives. One of them was the environmental guards, who are responsible for keeping the area clean and encouraging neighbors to recycle and to properly dispose waste. “It makes me feel good to have clean streets,” says Tamara Reed, a neighborhood resident.Additionally, several national initiatives to prevent violence were launched. Neighborhoods such as Central Village also implemented specific activities such as skills-development and family support programs, among others, which address a variety of risk factors that contribute to crime and violence.Safer neighborsRemoving garbage from the streets is part of a broader strategy known as “crime prevention through environmental design,” a Canadian methodology that seeks to reduce opportunities to commit crimes, as well as to minimize the fear of the community through the design of safer cities. The strategy has to do with the neighbors’ desire to recover and claim ownership of public spaces. It focuses on improving urban spaces rather than employing hard-handed tactics.“To feel safer in our cities, we need to recover something we’ve lost -- human contact,” says Chilean architect Macarena Rau Vargas, president and founder of the Corporation for the Prevention of Crime through Environmental Design during her latest TEDX talk in Argentina. “We need to connect with the neighbors to feel safe,” she said.Waste management plays a key role in maintaining public spaces through improvements in garbage collection, street cleaning, optimization of dumpsters and programs that encourage garbage reduction.Part of the solution“Cleaning is not going to fix everything, but it definitely helps,” says Morton. Joan Serra Hoffman, a social development and citizen security expert at the World Bank, agrees: “Maintaining public spaces can increase informal controls, but it is just one aspect of all that municipalities can do to reduce crime and violence.”“Physical disorder is just one symptom of many other deficiencies. Those same neighborhoods often have no secondary school nearby where young people can study, nor is there access to basic services,” she says. “There is no magic bullet, but there is empirical evidence in the region that community driven strategies targeting youth and at-risk families can address factors contributing to crime,” she says.Accordingly, programs with a comprehensive focus are crucial for reducing crime. Some initiatives involve young people, not only in solid waste management in their community but also as in activities that serve as alternatives to crime and violence.One of these is Paraguay’s Cateurá Orchestra. “This cello is made from an oil can, boards and a spoon for making gnocchi,” says Bebi, a member of this Paraguayan group, which makes musical instruments for vulnerable children and young people from objects found in the Cateurá Dump, on the outskirts of Asunción.Despite their limited resources, the orchestra has now travelled to more than 25 countries and was the opening act of the Metallica rock group. In the words of orchestra conductor Favio Chávez: “The world gives us garbage; we give music in return.” Show Less -
Bank ContributionThe Bank loan of US$24.8 million loan built upon previous support to public financial management in Chile. It continued work undertaken by the first Public Expenditure Management Proj... Show More +ect and built upon experience at the municipal level through the First and Second Municipal Development Projects.PartnersThe Project was implemented by the Budget Directorate in the Ministry of Finance (Dirección de Presupuesto – DIPRES), the Sub-secretariat for Regional Development within the Ministry of the Interior (Subsecretaría de Desarrollo Regional y Administración - SUBDERE), and the Office of the Comptroller General (Contraloría General de la República – CGR). These entities provided strong support to project implementation, proactively adjusting to circumstances encountered. Work benefited from strong financial support from the Government; having disbursed more than 99 percent of Project funds by December 2011, the Government continued activities to advance on Project objectives through local financing. Over the course of implementation local support totaling U.S. $56.76 million was provided, demonstrating a clear commitment to objectives well-beyond the scope of the loan.Moving ForwardThe Bank does not currently have immediate plans for a follow-up project; however, the topics addressed are highly relevant and are expected to continue to remain such, with more government entities being expected to join SIGFE II and additional municipalities expected to be incorporated within SIFIM in the near future. SIFIM also expects to incorporate additional municipalities. The government has defined short term timelines to complete pending work on an updated budget administration system (SIAP 2.0) and the municipal information aggregator.BeneficiariesBy reducing the lags in the generation of information, the project benefitted policy-makers at the central and sub-national levels. By strengthening financial management and expenditure effectiveness, the project also benefits taxpayers and users of public services. However, the project’s immediate beneficiaries were the municipalities using SIFIM and the Ministry of Finance, the Office of the Comptroller General, and the other government agencies, in which SIGFE II was implemented. Show Less -
Wages in Countries without Commodity Booms Stagnated or FellWASHINGTON, June 3rd, 2015 – The commodity boom of the last decade helped raise wages for the less well off in Latin America and the Caribbe... Show More +an, but did not necessarily generate better job opportunities. What’s more, wages in those countries in the region that are not commodity exporters grew far less or actually decreased.Those are among key findings of a new World Bank report, Working to End Poverty in Latin America and the Caribbean: Workers, Jobs, and Wages, released today at the Council of the Americas. The report, part of the Poverty and Labor Brief series, also provides the latest poverty and income inequality numbers for the region using comparable household and labor force surveys.The report finds that, after more than a decade of steady decline, 2013 was the third year in a row with inequality stagnating. As GDP per capita slows, so has the pace of poverty reduction, compared to the first decade of the 21st century.“In recent years, the momentum has waned for social gains in Latin America and the Caribbean,” said Louise Cord, Manager for Latin America and the Caribbean in the World Bank’s Poverty Global Practice. “With the commodity boom fading, redoubling regional efforts to promote more inclusive growth and to reduce poverty is critical. This report highlights the need to ease the constraints that the poor face in labor market participation and to continue improving their access to high-quality education and to higher-productivity sectors.”The report finds that poverty in Latin America and the Caribbean, defined as living on less than US$4 a day, decreased from 25.3 percent in 2012 to 24.3 percent in 2013, and extreme poverty ($2.50 a day) fell from 12.2 to 11.5 percent. Progress in poverty reduction, even if at a slower pace, was not uniform, with Central America and Mexico performing below other sub regions. In fact, poverty reduction in Mexico and Central America has been less than half the average reduction seen in the entire region for the past decade.Labor market earnings have been the most important drivers of poverty reduction in Latin America. Since the early 2000s, the wages of the unskilled -- those most likely to be poor and whose households account for half of the region’s poor -- grew significantly across most of the region and faster than for other groups, playing a big role in the region’s poverty reduction. On average, unskilled workers experienced annual increases in their labor income of over four percent, while low-skilled (workers who completed primary school but not secondary), and skilled workers registered an increase of two percent.On the other hand, labor market participation for the unskilled and the least well off – the bottom 40 percent -- was not a driving force behind poverty reduction. In fact, despite increases in education, labor force participation —being employed or actively looking for work—did not increase, except for working-age women, while it fell for unskilled men in the region. Overall, labor force participation for working aged men and women in the bottom 40 percent fell by 1.6 percent between 2003 and 2013, while rising by 4.4 percent for workers in the top 60 percent.“The reasons behind this disparities in entering the job market can be many, anything from an increase in female headed-households to an increase in transfers that make workers more willing to wait for better paid jobs,” said Cord. “But this could also mean that finding a job is becoming harder for unskilled men.”The report finds that improvements in job quality of unskilled workers were relatively small. Shifts of unskilled workers to more productive sectors or better quality jobs were relatively minor across the region. Rather it has been external factors, namely the global commodity boom, which were associated with wage increases in the region. Commodity exporting countries of South America saw real wage gains in all skill levels and sectors —not just trade—; while countries without commodity booms saw wages actually stagnate or fall for all sectors and skills.Throughout the region, governments have helped raise labor income and improve labor market outcomes by enacting different programs and policies, including the provision of day care and early education to increase female labor force participation, training programs, formality incentives, and minimum-wage legislation.The report found that, if set correctly, the minimum wage can operate as a strong signal for higher wages even in the informal sector, where many of the poor work. However, setting it too low or too high can weaken its effect on both formal and informal sectors. Show Less -