CAF presents its Report on Economy and Development RED 2007-2008

(Lima, February 22, 2007).- The Andean Development Corporation presented on February 22 the fourth edition of the Annual Report on Economy and Development RED 2007-2008, entitled Opportunities in Latin America: toward a better social policy. This publication contributes to the debate on how to expand opportunities for economic progress for the majority of the inhabitants of the region.

Opening the event, CAF representative in Peru Eleonora Silva said that the objective of the book - prepared by professionals from the CAF Office of Public Policy and Competitiveness with advice from distinguished academics and personalities from the region - is to generate reflections on the path that the countries of this part of the continent should follow to improve opportunities for the social mobility of the population.

Presenting the publication, CAF Chief Economist Miguel Castilla said that RED 2007-2008 stressed the need to optimize the efficiency of social policy in achieving its objectives, which urgently required an integrated approach. Social policy should not be seen in isolation from the rest of the economy but rather as a core element that constantly interrelates with it.

Latin America continues to be the region with greatest inequalities

"The limited opportunities for social mobility in Latin America are reflected in lack of progress in a set of social indicators. Although poverty has been reduced in almost all countries of the region and access to basic services - such as education and health - has expanded Latin America still has the worst income distribution in the world," Miguel Castilla said.

Persistent rates of unemployment and under-employment, and large informal sectors still exist in many countries, even in those which have managed to achieve important recoveries in their economic activity, and the real wages of Latin Americans are below the levels of decades ago, he said.

The CAF chief economist added that the internal development of the countries has been uneven with a growing gap between urban and rural areas. All these factors have led to growing frustration among the majority of Latin Americans about the slow improvement in quality of life and the perception of very few opportunities for social advancement.

"To improve opportunities for the social mobility of the population, the report stresses the need to increase the efficiency of social policy in achieving its objectives. Although, because of their particular circumstances, each country has different priorities in relation to the role of public intervention, this book argues that there is a clear area for improvement in all countries of the region for achieving a more efficient social policy," the economist said.

Castilla added that social policy must be considered as a whole to avoid superimposition of programs, reduction of one-off and erratic actions, dispersion of resources, and duplication of structures. The global intervention of the State in society - he said - is more efficient when there is greater coordination between the various parties.

He considered that social improvements had to be permanent and sustained over time with a long-term view. Priority must be given to public policies which increase provision of human capital in order to break the cycle of inter-generational reproduction of poverty, as well as generating quality employment, guaranteeing expanded access to basic services, facilitating accumulation of physical assets, and promoting expanded coverage of retirement pensions.

"This publication deals with specific issues in each of these areas, emphasizing the challenges of management, and their relation with the rest of social policy. Diagnoses and recommendations are based on recent evaluations of public-policy successes and failures, and guidelines are proposed to increase the efficiency of expenditure in each of the areas considered, which is completed with cross-sectional analyses of the institutions and financing of social policy," he explained.

The fourth edition of Report on Economy and Development (RED) also contains presentations by important experts invited by CAF including Luis Felipe López-Calva, chief economist for Latin America of UNDP; Omar Arias, World Bank economist; and Enrique Vásquez, economist at the University of the Pacific.

The event was closed by Peruvian Economy Minister Luis Carranza Ugarte, who said that RED presented "an extraordinary balance of theory, case studies and policy attempts which have been implemented in the social area in various countries of Latin America."

"I would like to thank the CAF team for this extremely valuable contribution to the thinking and discussion on such a central issue as social policy," he said.

The event was attended by authorities, representatives of the public and private sectors, and national and international specialists with different approaches on how to achieve an integrated development agenda which must be a task shared by all agents of society: government, business, labor, civil society and the international community.