What is the cause of the gap between rich and poor in Latin America?

The Nature of the Problem. As you’ve learned in this unit, the income gap in Latin America has many causes, some of which reflect the impact of colonialism in the region. There are three angles to exploring the income gap: it is a moral issue, an economic dilemma, and a political problem.

What are the effects of poverty in Latin America?

Poverty in Latin America: Inequalities & Social Justice On one hand poverty has a negative effect on economic growth. It does so by typically bringing down levels of human capital (education, professional experience & training, health) and by increasing crime.

What type of economy does Latin America have?

The Latin American economy is an export-based economy consisting of individual countries in the geographical regions of North America, Central America, South America, and the Caribbean.

Why are Asian countries more successful than Latin America?

In contrast to Latin America, Asian countries also had a stable macroeconomic environment during this time—smaller fiscal deficit (sometimes surpluses) and low and stable inflation rates. Asian economies also avoided overvalued currencies, something that Latin America was unable to do. But there have been a few success stories in Latin America.

What are the roots of Latin America’s economic development?

In a new book, The Economics of Contemporary Latin America , Beatriz Armendáriz and Felipe Larraín analyze the historical roots of Latin America’s economic and social development dating back to the colonial times.

What are the challenges of Latin America’s diversification?

The first challenge, as mentioned, is how to diversify, in a good way, out of commodities, so that Latin America is less dependent on the booms and busts of commodity markets. However, diversifying will take time, and many countries will still be heavily reliant on commodities.

How did Latin America recover from the crisis?

It took Latin America a while to recover. After this experience, the region became more outward looking and more conscious of the importance of maintaining macroeconomic balances—low fiscal deficits, low and stable inflation, and avoiding overvalued exchange rates. The region also strengthened its policies and created better institutions.