The Causes of Poverty in Latin America and the Caribbean: The Role of Political Institutions and Governance

A large proportion of the 420 million people living in Latin America and the Caribbean (LAC) have begun the Third Millennium living under conditions of poverty. Near 40% of LAC households are poor and 16% extremely poor (CEPAL, 1999.) Poverty is even more widespread and deep in rural areas where 32% of LAC population live and work. Near 55% of rural households are poor and about 33% extremely poor. This is a sad record for LAC --most of its countries constituted themselves as nation states after 1810, under the liberal ideals of equality, liberty and fraternity. Furthermore, all those countries undertook massive economic development programs after WWII many of them financed by the World Bank, the IADB, USAID, UNDP, and many other international agencies and donors. In this paper, we seek to explain poverty in LAC, by looking at its ultimate causes that we propose include the nature of political institutions and ethnic differentiation.