Academic Theory – Page 17

Understanding the Poverty Impact of the Global Financial Crisis in Latin America and the Caribbean

Any time there is an economic crisis; there is the very real potential that its consequences for human welfare will be severe. Thus when the developed world plunged into such a crisis in 2008 and growth rates in Latin America and the Caribbean (LAC) began to plummet, fears rose that the region will suffer rising unemployment, poverty, malnutrition, and infant mortality, among other things. This study confirms and quantifies many of the sobering links between crisis and poverty, but it also shows how powerful good policy in stable times is in attenuating those links. It thus underscores the need for sound growth policies, good macro prudential care, fiscal balance, low debt, reasonably flexible exchange rates, and the like to help prevent and manage crises. It equally shows how effective social protection responses built on adequate existing programs can be. This study documents the effects of the 2008-09 global financial crisis on poverty in 12 countries in the LAC region, and it comes away with six big picture messages, each with much nuance and many caveats that are explained briefly in this overview.

Citation

“Grosh, Margaret; Bussolo, Maurizio; Freije, Samuel. 2014. Understanding the Poverty Impact of the Global Financial Crisis in Latin America and the Caribbean. Washington, DC: World Bank. © World Bank. https://openknowledge.worldbank.org/handle/10986/18727 License: CC BY 3.0 IGO.”

Latin America and the Rising South : Changing World, Changing Priorities

The world economy is not what it used to be twenty years ago. For most of the 20th century, the world economy was characterized by developed (North) countries acting as ‘center’ to a ‘periphery’ of developing (South) countries. However, the recent rise of developing economies suggests the need to go beyond this North-South dichotomy. This tectonic re-configuration of the global landscape has brought about significant changes to countries in the Latin America and Caribbean (LAC) region. The time is ripe for an in-depth analysis of the dynamics and nature of LAC’s external connections. This latest volume in the World Bank Latin American and Caribbean Studies series will focus on the implications of these trends for the economic development of LAC countries. In particular, trade, financial, macroeconomic, and sectoral shifts, as well as labor-market aspects will be systematically analyzed.

Making Reforms Work in the Caribbean : A Collective Action Approach to Growth

The Caribbean Growth Forum (CGF) was thus designed to respond to these concerns: to be both a forum of dialogue to identify needed reforms, and a catalyst for the implementation of agreed reform priorities, creating the needed accelerators to make reforms happen, while keeping in mind the political economy factors that have impeded reforms in the past. Since inception, the CGF process has been solidly grounded on few core principles: (i) tailoring: the approach is based on locally defined problems and solutions (home grown); (ii) action-orientation: prioritization and sequencing of reforms (e.g., combining gradual reforms with longer term structural changes) and their translation into clear, achievable and measurable targets, dashboards and roadmaps for implementation; (iii) transparency: making both targets and the process public to increase participation and shared commitments, thus creating a routine culture of public reporting to track progress openly (introduce behavioral changes); (iv) flexibility: to ensure that the process allows for adjustments if targets are not reached and to create space for innovation; and (v) accountability: infusing a sense of shared responsibility across the coalition that is supporting change, thus moving from a blaming culture to a culture of finding solutions by doing; and, eventually, anchoring the process around a small group of responsible government officials and support them in delivering policies.