: End the Credit
Squeeze on
Latin America’s
Poor.
ver the past two decades, democracy
has taken hold in the vast majority of Latin
American countries. Notwithstanding an anti-market backlash led by Venezuela, the region
as a whole has benefited from stable economic
policies and improved growth rates. Yet these
gains remain imperiled by persistent poverty
and income inequality.
According to a May 2008 report from the
Council on Foreign Relations (CFR) Task Force
on U. S.-Latin American relations, to which I contributed as the president and CEO of ACCION
International, economic growth in Latin America has lagged behind that of other developing
regions. The CFR report, citing figures provided
by the World Bank and World Economic Forum,
noted that Latin America’s combined economies grew a scant 2. 1 percent between 1995 and
2005. The regional poverty rate, now 37 percent,
has barely budged in a quarter century. Indeed,
the number of poor has risen from 136 million
in 1980 to nearly 200 million today.
1
The United States plainly has a vital interest in reversing these bleak statistics. Failure to increase wealth more quickly and
to reduce income inequality undermines
support for democracy. A survey of 19,000 people across Latin America by the polling firm
Latinobarómetro found that the percentage that
preferred democracy to all other forms of government dropped from 63 percent to 54 percent
between 1997 and 2007.2
By working with Latin American governments to reduce poverty and inequality
throughout the hemisphere, the incoming
administration can also ease immigration pressure on the United States. Indeed, an enlightened immigration policy would aim not only
to provide decent options for guest workers in
the U. S., but also to help Latin American nationals who work in the U.S. put their earnings to
productive use back home. An important means
to that end is microfinance—the provision of
small business loans (and, increasingly, other
financial services) to the self-employed poor.
Lack of access to core financial services—
credit, savings, insurance, pensions, electronic
payments—is a major impediment to upward
mobility for Latin America’s poor. Throughout
the region, according to a 2006 Inter-American
Development Bank report, just 10 percent of the
population has access to credit accounts, and
