This post is a summary of two reports. The first one, with the title above, published at http://www.ft.com/, on November 13, 2012. Written by Jonathan Wheatley. The other, with the title of, "New World Bank Report Find 50% increase in Middle Class in Latin America Over Last Decade." Published at http://www.worldbank.org/, on November 13, 2012.
The World Bank publish a 200-page report on the rise of the middle class in the region. The economic boom has allowed tens of millions of people to migrate from their countries`s lower to middle incomes levels. But they also raise a big question: with incomes on the rise, why has so much else remained unchanged?
At least 43% of all Latin America changed social classes between the mid-1990s and the end of the 2000s, and most of this movement was upward. Rising incomes are, of course, to be cheered. But the W.B. report also point to low levels of intergenerational mobility in the region: while people`s fortunes have improved, there are still enormous barriers to social mobility between generations. The children of poor parents still face daunting challenges making their way in the world. " We are measuring the extent of correlation between backgrounds of parents and achievements of their kids," says Augusto de la Torre, the W.B. chief economist for Latin America. " The correlation is very high in Latin America compared with other regions. Family background is much more important." Augusto describes this as a problem result of "self-sorting" behaviour. "Better-off families send their children to schools that less well-off families can not afford," he says "that is different from Asia, where public education is relied on by everybody." It is not just education. Better-off Latin Americans opt out of public health systems by buying private health insurance. They opt out of public security services by paying private guards. They even opt out of public electricity by buying their own generators." Gated communities are advertised that way," says de la Torre.The middle class tend to opt out, so the quality of public services becomes even worse." The situation is compounded by low levels of tax collection and, even where tax take is high, such as in Brazil, by low levels of spending on basic services. With few middle class costumers agitating for improvements, the quality of public goods, especially education, enters a vicious circle of decline. Such opting out is not an automatic consequence of a rising middle class. In the rest of the world, the W. B. found, countries where the middle class make up a large share of the population have better indicators of citizenship and a tendency to have stronger democratic institutions. How to bring about change? That is the big question. Augusto de la Torre says, " We need to study cases like Costa Rica, Uruguay and Chile. Public education in Chile is much better than in other countries in the region."
The report found that some of the key factors favoring the upward mobility in Latin America were higher levels of education, higher employment in the formal sector, more women in the labor force, and smaller families. Around the world, a larger middle class mean better governance, deeper credit markets, and greater spending in social sectors such as public health and education. But this promise has not been fully realized for Latin America. The report concluded that the right set of reforms will results in the middle class becoming an increasingly powerful agent of change to expand prosperity to those left behind.
Background - education, employability and social circumstances of a person.
Make up - way in which something is formed or put together.
Background - education, employability and social circumstances of a person.
Make up - way in which something is formed or put together.
