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An ominous economic trend may be returning to Latin America, and it could have deadly consequences
(Patricia Araujo with children in front of their stilt house, a lake dwelling also known as palafitte or "Palafito," in Recife, Brazil.Thomson Reuters)
Latin America and the Caribbean make up the only region that managed to reduce inequality during the first decade of this century, according to the UN Development Program.
Since 2000, the population in poverty has fallen from nearly 42% of the region's almost 600 million residents to just over 25% — "in absolute terms, this translates to at least 56 million people lifted above the poverty line," according to Americas Quarterly.
Moreover, 82 million people in the region were hauled into the middle class from 2000 to 2012, and the region's Gini coefficient, a measure of inequality, improved, falling to 51.8 in 2012 from 55.6 in 2003.
But many of those workers whose economic status has improved are now imperiled by the economic headwinds that have struck the region.
The largest group of the region's workers, the 38% who make $4 to $10 a day, are vulnerable and at risk of slipping back into poverty, according to the World Bank.
A December 2014 paper from the World Bank found "stagnation in the pace of reduction of income inequality in Latin America since 2010."
The paper singled out Mexico and parts of Central America for increases in inequality, noting that Colombia, Ecuador, and Bolivia had seen a slowing rate of inequality reduction.
And slowing or reversed poverty reduction could bring even more inequality to a region that already has 10 of the 15 most unequal countries in the world.
(A resident of the Metro Mangueira slum was comforted by neighbors during an eviction in Rio de Janeiro on May 29.REUTERS/Pilar Olivares)
And as research has shown, a higher level of economic inequality is linked to a higher level of violence.
A paper published in 2014 examining the Mexican drug war found that from 2006 to 2010, "an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants."
This relationship wasn't found to exist before 2005, only after Mexico's war on drugs started in 2006. This is "likely because the cost of crime decreased with the proliferation of gangs ... which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005," according to the paper's authors, emphasis added.
(Genaro Perfecto, 38, and his wife, Cecilia Feliciano, 37, inside their house in San Quintin in Baja California, Mexico, on April 18.REUTERS/Edgard Garrido)
If this finding holds for the region at large, it may augur an increase in violence in what is already one of the world's most deadly regions: In 2012, 13 of the world's 20 highest homicide rates belonged to countries in the region, according to the UN.
As of 2015, Latin America and the Caribbean was home to 41 of the 50 most violent cities in the world. The region accounts for one-third of global homicides, despite being home to just 8% of the world's population.
More inequality, more violence
Inequality, with its link to violence, remains a persistent problem for Mexico in particular.
A 2015 report found that 2,540 of Mexico's nearly 125 million residents held 43% of the country's individual wealth. "In the most unequal economies, poor people tend to receive fewer benefits from economic growth," according to El Daily Post.
More worryingly, in a "more unequal setting, the higher the rates of violence," America's Quarterly notes.
(A girl seen outside her home on the outskirts of Oaxaca in 2011. When President Felipe Calderon came to power in 2006, he pledged to cut rampant poverty in Mexico. Instead, millions more joined the ranks of the poor.REUTERS/Jorge Luis Plata)
And in 2015, Mexico experienced its first increase in homicides since 2011, with a rise of 7.6%, reversing declines the country had seen over the previous two years.
The north-central Mexican state of Zacatecas is perhaps the best example of what this trend may look like.
From the end of 2008 to the beginning of 2015, Zacatecas saw income inequality worsen the most in Mexico, driving its Gini coefficient up to 0.428 from 0.403 — the fourth highest of Mexico's 32 states at the beginning of 2015, according to the think tank Mexico Como Vamos.
(Both total homicides and intentional homicides have risen consistently in Zacatecas, Mexico, in recent years.Christopher Woody/Infogram/Mexican government data)
Over that same period, the number of intentional homicides (i.e., deliberate killings) in the state rose consistently, from 74 in 2008 to nearly 300 in 2015, according to government data.
And there are signs that a rise in violent deaths has a cooling effect on economic opportunity.
For every increase of 10 percentage points in homicide rates in Mexico, "you see an increase in unemployment in that region of half a point," said Viridiana Rios, a Harvard Ph.D. and research fellow at the Wilson Center in Washington, D.C.
"Unemployment currently in Mexico is 5%, so for each 10 points of increase in the homicides rates, you see half a point extra on unemployment. That's pretty significant," Rios added at a conference on Mexican security at the Wilson Center in late January.
'Virtuous and vicious circles'
Violence and economic troubles are not uniform in Mexico.
Aguascalientes state, just south of Zacatecas, had about one-fifth the number of intentional homicides as Zacatecas in 2015, while Mexico state, further south, had almost 10 times the number of intentional homicides last year.
Moreover, some Mexican states have done quite well economically recently, like Aguascalientes, whose gross domestic product grew 14.2% in 2014, while Mexico state's grew just 1% over the same period.
And in Mexico, as in much of the region, divergent trends in growth "threaten to aggravate already deep economic divides, creating virtuous and vicious circles in terms of infrastructure, education, and opportunities," wrote Shannon O'Neil, the senior fellow for Latin American studies at the Council on Foreign Relations' Civil Society, in June.
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