Friday, November 23, 2012

World Bank Report : Upward Social mobility in Latin America

The latest WBR (November 9th , 20129) brings out interesting outcomes concerning social mobility in Latin America. Over the last 15 years , 43% of Latin americans changed social class and Middle class increased its size by 30 million people , making up in 2009 a total of 152 million, well above the 103 million people within this segment in 2003. Between 2003 -2009, almost 2 million people in Chile , became part of middle class segment leaving behind their poverty condition. Chilean society has 42,3% of its population within this segment, just below Argentina (46,5%) and Uruguay (56,3%).Other countries like Brazil which has 32% of its population within this segment, has also made significant gains in the last ten years. WB report set middle class income ranging from U$$ 10 up to U$$ 50 daily .Besides it identifies a fourth segment with incomes ranging from U$$4 up to U$$ daily, which represent 40% of the population. This segment ,is still considered to be fragile with important chances of becoming poor again. So public policies must keep close attention to it.- What are the implications of these changes: a.- Middle Class was the driven force of history in the XX century, and it will be so again this century. In Latin America ,very much of social and economic changes since the seventies (with cost and benefits), had the middle class as its main engine. b.- Increasing Middle class share means key features for economic progress such as : more stability and social cohesion ,higher demand for services and complementary products, large size of markets for goods with high value added, higher average of education level which improve innovation flows and induces higher productivity . c.- Middle class shift the focus of politics from needs and demand (captured voters), to expectations and supply (autonomous voters), changing the nature of government involvement in economics .- d.- Important Middle class segment mean a government focused on efficiency and quality of services ,capable of fulfill higher expectations than just provide basic and limited assistance . Thus, the surge of Middle Class is not only the outcome of good economic policies , economic growth, and better institutions, which policy makers can count on as a measure of success and effectiveness. It is also the opportunity to move along with stronger policies to eliminate poverty,(30% of Latin America population),as long as it also ignites the virtuous circle of prosperity .