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30 Years of economics for development

The New Policy Model, Inequality and Poverty in Latin America: Evidence from the Last Decade and Prospects for the Future

Project name/title
The New Policy Model, Inequality and Poverty in Latin America: Evidence from the Last Decade and Prospects for the Future
Economic Policy and Good Governance
This project will investigate issues concerning (i) distilling the policy lessons (for Latin America itself and other countries) arising from the 'Open Economy Redistribution With Growth' (OERWG) model developed during the last decade, with particular attention to the gains in the field of growth, inequality and poverty reduction; (ii) test whether the policy shift which followed the transition to democracy and the election of centre-left and other regimes contributed to the growth acceleration and inequality decline of 2002-08; (iii) identify best practice policies in the policy areas illustrated above; (iv) analyse the extent of their distributive and growth effects; (v) assess the future sustainability of OERWG model, given the hurdles Latin American governments still face; (vi) discuss the problems of the OERWG model in the fields of industrial policy and diversification of output-exports towards the technology-intensive manufacturing sector; (vii) examine how Latin America can raise its domestic savings and reduce its costly dependence on volatile foreign savings; (viii) propose an extended version of the OERWG model addressing the structural handicaps still hampering improvements in the field of growth, inequality and poverty reduction in the region.
economic crisis, poverty, development, inequality, Latin America

UNU-WIDER focal point:
Tony Addison, Chief Economist-Deputy Director of UNU-WIDER

Project Assistant:
Janis Vehmaan-Kreula

Project Meetings

Further reading

Financial Reforms and Falling Inequality in Latin America, 2002-12: Are they Connected?
Blogpost by Giovanni Andrea Cornia in

For the last quarter of the twentieth century, Latin America suffered from low growth, rising inequality, and frequent financial upheavals i.e. currency, sovereign debt and banking crises. Things have changed significantly since 2002. Indeed since the turn of the century, the region enhanced its growth performance, reduced inequality, improved its macroeconomic stability and avoided major financial crises. Read the article by Giovanni Andrea Cornia on whether this fall in inequality is due to greater financial stability. What other drivers did the project on new policy models in the region find to be behind diminishing inequality levels in Latin America?

Other publications

In 2014 an article, 'Falling Inequality in Latin America: Policy Changes and Lessons' on the overall findings of the project was published in The World Financial Review.

Research uptake report


The Income Distribution in Latin America (IDLA) dataset. Please click on the database icon documents which include a brief description, listing of variables and definitions.

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