The Challenges of Attracting Foreign Direct Investment for Latin America’s Sustainable and Diversified Economy: Lessons Learned From Ecuador Nathalie Cely S.1 and Gustavo Domínguez
1. Latin America: a decade of sustained growth and recovery of the middle class
For the last decade Latin America has been, an important actor in the growth of world economy, experiencing economic growth rates above 4% according to the ECLAC. The region has also experienced a reduction in overall poverty rates -- from 43% in the year 2000 to 32% in 2009 and 29.4% in 2011, and extreme poverty has dropped from 19% to 11.5% during this same time period. Additionally, since 1998 and with greater force in the past decade, the concentration of income has begun to give way, so that the GINI inequality reduction coefficient was reduced in 13 countries. These improvements in income have not only arisen as a result of a greater growth and the creation of more and better jobs, but also because of redistributive social policies undertaken by countries such as Ecuador. In spite of these advances, growth has been uneven; 32% of the Latin American population saw cumulative measured growth at rates smaller than an annual 1% per capita from 1982 t0 2012, and income inequality remains a challenge, the given that the richer 10% concentrates 32% of total income, while the poorer 40% only receives 15% (ECLAC 2013). One positive effect of growth, and of public policies promoting access to social provisions such as education, healthcare, job creation, and a more equitable redistribution of income, is a growing middle class2. According to the World Bank3, the middle-class population in Latin America and the Caribbean has grown by 50% − from 103 million people in 2003 to 152 million, or 30% of the continent’s population, in 2009. According to the same report, today in the region the middle class and the poor represent approximately the same proportion of the population. Historically, Latin American elites and upper classes have shown very little commitment towards the equal development of their countries and had very few expectations for their governments, which is to say, they paid very little taxes and did The opinions issued herein are personal and do not represent the views of the Ecuadorian Government. A report by the World Bank defines as middle class those with incomes between US.10 and US.50 per day and per capita. 2 A report by the World Bank defines as middle class those with incomes between US.10 and US.50 per day and per 3 World Bank, Economic Mobility and the Rise of the Latin American Middle Class, 2012. capita. 1 2
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World Bank, Economic Mobility and the Rise of the Latin American Middle Class, 2012.
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