O DEVELOPMENT IN LATIN AMERICA AFTER THE 2008 FINANCIAL CRISIS

Abstract

The present article describes the context in which the financial crisis of 2008 reached Latin America and the Caribbean. The bankruptcy of Lehman Brothers, followed by the credit crunch, interrupts a period of economic growth with significant reduction of poverty and indigence and also the drop, even though slightly, of inequality, which had lasted from 2002 to 2008. This fact generates a concern about what would be the region’s degree of economic and social resilience to the financial crisis. In fact, there was a sharp downturn in 2009 and the unemployment rates have risen and the poverty rates stopped falling, but the very next year there is a rapid recovery, with the beginning of active monetary, credit and tax policies. Mostly, there was a concern to maintain and even extend social spending and protect the most vulnerable sectors of the crisis. This strategy was successful and the social indicators continued to improve in 2010 and 2011. The remaining concern is that poverty and inequality are still high and can only be faced with a reduction in structural heterogeneity, which implies significant differences in productivity between sectors that influence the distributional process and the quality of jobs. In order to achieve this reduction, productive policies oriented to productive convergence are needed, with the support of appropriate macroeconomic policies and growth of public and private investments.