18 December 2014
In an earlier article I reviewed a number of the high-profile contributions to the September 2014 conference on inequality. It is now time to dig deeper into the material presented at the event. This article features a few of the country case studies and methodological approaches.
Declining inequality in Latin America
The Latin American story on income inequality was presented by Giovanni Andrea Cornia (2.1) whose book summarizing a major UNU-WIDER research project on this issue was recently published. His presentation showed a significant decrease in income inequality measured in Latin America since the turn of the millennium. This is as a result of new, more egalitarian policy approaches in many countries of the region, following on from the 1980s (the Washington Consensus and the 'Lost Decade') and the 1990s (the 'Augmented Washington Consensus'). He argues that the decline in inequality is structural rather than cyclical, since in countries where there is data available we can see that the decline continued during the 2008-12 period of financial turbulence.
On average the fall in inequality has accounted for about 40% of the decline in poverty which has taken place, with growth accounting for about 60% (with significant variation among the countries).
Among the data presented some points stand out. The return to democratic politics and dissatisfaction with the result of Washington Consensus policies of previous decades favoured social democratic and left-wing governments with a more redistributive agenda, although right-wing governments in the region also introduced some social democratic policies. The impact of better education opportunities and fiscal policies (taxation, transfers in cash-and-kind) also deserve mention. Cornia concluded with comments on the challenges to be faced if efforts to reduce inequality still further are to be pursued. These depend on avoiding the temptations of populism and maintaining prudent macroeconomic policy, which requires further efforts to strengthen tax collection particularly in countries with low levels of tax revenue generation.
National analysis and comparisons: South Africa and Brazil
The conference provided considerable material for comparing South Africa and Brazil. Leibbrandt (2.2) presented a careful study on the effects of decreasing schooling inequality on general income inequality in Brazil and South Africa. Declining schooling inequality in South Africa did not lead to...