The uncertain outlook for the coming decade

1. The political and socio-economic prospects of Latin American and Caribbean society

Political stability: Virtually all the Latin American and Caribbean countries have democratic Governments elected by popular vote and are consolidating democratic institutions. As a result of the hard lessons of the political violence of earlier decades, they attach great value to social peace and their domestic political forces are strongly committed to democratic legitimacy. Although political conflicts have been generated by the social conflicts stemming from poor income distribution, unemployment, lack of opportunities for young people and economic instability, political democracy and the rule of law seem to be surviving such difficulties. The region can therefore expect to witness, at least for the coming decade, a trend towards the continuance of democratic regimes and the further development of mechanisms for improving accountability, reducing government corruption and broadening the participation of social actors in decision-making processes. While a tendency towards political authoritarianism and populism is still apparent in some countries, it should not preclude respect for the rules governing democratic institutions.

Economic growth:  The growth potential of the Latin American and Caribbean economies is unclear because it is highly dependent on external factors that are currently volatile or adverse, such as financial capital flows, foreign direct investment, trade barriers in industrialized countries, the uncertain economic outlook in the region’s export markets and competitiveness in comparison to other regions.  In addition, increasingly sustained investments in human capital are needed to maintain high levels of economic growth over the long term and to generate high-quality jobs for future generations. Thus far, however, the education reforms of the 1990s have not had a positive impact on the quality of human resources in the countries of the region. Accordingly, so long as growth continues to depend on trade and financial cycles instead of reflecting a strong increase in the capacity of human resources for productive innovation, development will be precarious and its impact on job creation will not necessarily be positive.

Social problems: Today, income is very poorly distributed in most of the countries of the region, and in some of them (Venezuela and Argentina), distribution patterns have deteriorated significantly. The liberalization and privatization model being imposed in nearly all the countries has not had a positive impact on income distribution, has generated new vulnerabilities in social groups that are not closely linked to the modern sector of the economy and has created a serious gap between included and excluded groups. This gap has been widened by the digital divide, since only 6% of the Latin American population has access to electronic networks, and most of this group is in the high-income or higher-middle-income category. Lastly, the pattern of economic modernization has tended to reinforce long-standing negative trends in the region such as residential segregation, the loss of a sense of solidarity between different income groups and tremendous disparities in productive capacity.

2. The impact of youth unemployment on society

Sustained high rates of youth unemployment have multiple effects on society. First, they mean that the countries are failing to take advantage of the human resources they need to increase their productive potential, at a time of transition to a globalized world that inexorably demands such leaps in productive capacity. Second, they reinforce the intergenerational transmission of poverty. Third, owing to the discrepancy between more education and exposure to the mass media and fewer employment opportunities, they may encourage the spread of disruptive behaviours, recourse to illegal alternatives for generating income and the loss of basic societal values, all of which erode public safety and social capital. Fourth, they may trigger violent and intractable political conflicts. Fifth, they may exacerbate intergenerational conflicts when young people perceive a lack of opportunity and meritocracy in a system that favours adults who have less formal education and training but more wealth, power and job stability.