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April 13, 2016
With the recent G8 Summit taking place in Northern Ireland, the eight world leaders focused on ensuring that developing nations and less economically developed countries would get the aid they need for a better future. According to ‘The Economist’, the top 1% earners in the United States now have 20% of their home economy which is double to what the figure stood at over 30 years ago. This phenomenon of inequality is exactly what the G8 Summit is looking to reduce and create a more equal world. It is important to point out that poverty alone does not generate social unrest and is not enough to spark a wider conflict but it is in fact the intrinsic inequality and injustice involved that is causing the worst tensions. There is no escaping from the truth that, Latin America, largely as a result of its past political instability, has held the position as one of the highest regions with social inequality.
Some economists view Latin America as a region in disaster in terms of its economy, poverty, and inequality and government corruption. However, they are perhaps only concentrating on the negatives as is human nature, and ignoring the positive developments in recent years and how the region has come on leaps and bounds to become the proud and shining region that is present today. Latin America is the region of the future, with Brazil to host the 2014 World Cup and 2016 Olympic Games; Buenos Aires and Medellin making up two of the three candidate cities for the 2018 Summer Youth Olympics and the recent election of Pope Francis in March 2013 the world’s eyes will be concentrating on Latin America over the next few years. The growing economies of Latin America and the growth of the middle class could perhaps teach the European nations facing austerity a lesson or two.
It was only a matter of years ago that European economists viewed the economy of Latin America with horror. Burdened by debt, plagued by hyperinflation and devastated by unemployment, the region was a financial bomb that if it had not already exploded, was merely seconds away from doing so. Today, the situation could not be more different. Latin America is enjoying unprecedented stability and prosperity meaning that these dark days of which the economists of Europe viewed Latin America are near gone. The relationship between the economies of Europe and Latin America has been inverted. It is easy to see that the Europeans are struggling with austerity measures, unemployment and a debt crisis that is close to being out of control. The President of Chile, Piñera, said: “Latin America is going through a very positive period, both compared to the rest of the world and to its own history” ahead of the EU-Latin America summit in Santiago (Chile) back in January 2013. Piñera has a reason to be so upbeat and positive as, the economies of Latin America grew by 3% in 2012, higher than the overall world growth of 2% and in stark contrast with the European economy which contracted by 0.5%.
While Spain, Greece and Portugal deal with double-digit unemployment; the unemployment rate in Latin America fell by 6% in 2012. Many Latin Americans, who fled to Europe in search of work whilst their home economies were struggling, are now returning as their host country fights for survival. Inflation in the region was slightly higher than most economists and governments would have liked, especially in Argentina and Venezuela which remain economically volatile with inflation close to 20%. However, even though there is this slight drawback, inflation overall is still lower than the figures produced by the region in 2011. Years of growth have led to the rapid development of a prosperous middle class. The World Bank estimates that the percentage of Latin Americans living in poverty fell from 44% to 30%, while the number of middle-class Latin Americans increased from 103 million to 152 million.
There can be no avoidance of the truth that every region in the world has its own problems and even with these positive aspects, Latin America still remains one of the most economically unequal region in the world. Governments have made some progress in trying to diminish this problem in the last decade however; the majority of their efforts have fallen short. It is not all doom and gloom as the Human Development Report 2013 shows that the region has in fact developed and improved in terms of life expectancy, literacy, education, standard and quality of life. The study also found that poverty in Latin America is relatively low and the overall life satisfaction as measured by the Gallup World Poll is the highest of all the regions in the world. With a prosperous 2013 and future, Latin America looks set to be one of the world’s most powerful regions. The essential parts to ensuring this bright future are the governments within Latin America. Only they can establish the laws and regulations that can ensure that the region’s prosperity filters down to the poorest citizens in order to reduce the salary gap, the region’s poverty and to begin to eliminate the levels of social inequality