A World of Contrasted but Interdependent Inequality Regimes: The Latin America Paradox

ABSTRACT

The previous issue of this journal published an explanation of three contemporary paradoxes: dramatically increased inequalities in China despite economic development reducing poverty; the excessively large costs incurred by the state following a surge of inequality in the finance-led growth regime of the United States (US); and, within Europe, some social democratic countries continue to exhibit a complementarity between and extended welfare system, more moderate inequalities and a dynamic innovation and production system. This analysis concluded that the US, Chinese and European inequality regimes are different but they express complementary growth patterns. Applying the same socio-economic approach, based upon the concept of inequality regimes, this article addresses another contemporary paradox. Latin America, previously the continent with the highest inequality, has reversed the former dynamics to exhibit a growth pattern based upon inequality reduction, while still relying heavily upon a strong international demand for commodities. This analysis investigates the durability and likelihood of the Latin American U-turn and concludes that there is a possible alternative to the hypothesis of an irreversible globalization of inequality because China, North America, Europe and Latin America do not follow the same trajectory, having developed contrasting regimes of inequality that co-evolve and are largely complementary at the global level. Consequently the future of more inclusive Latin American (and other) economies depends on the interaction between new domestic democratic advances and the reconfiguration of the international economy.

KEY WORDS:

• democracy and inequality
• inequality regimes
• growth and equity
• Latin America
• welfare and innovation systems

JEL CODES:

• B52
• O43
• P52

Acknowledgments

An earlier draft of this paper formed part of a 2013 desiguALdades.net Working Paper.

Disclosure statement

No potential conflict of interest was reported by the author.