LATIN AMERICA SUFFERS FROM BOTH the world's highest rate of income inequality and from a lackluster economic performance that puts it well behind the growth levels of other emerging regions such as asia. could there be a connection? recent research suggests that high inequality and low social mobility are more than just poor people's problems: they represent a severe drag on economic growth and stability. in Latin america, vast numbers of people are not only cut off from the benefits of economic progress: they are unable to contribute meaningfully to the development of their societies. An econometric study by Humberto Lpez and Luis Servn (2006)1 found that investment rates are negatively affected by aggregate poverty levels, even when allowance is made for other factors affecting investment.A Furthermore, the negative effect of poverty on investment is significant only in countries with shallow financial markets.B In a subsequent study, Humberto Lpez and I reached a similar finding with respect to human capital investment.2 We found that even when other potential determinants of educational achievement are taken into account-such as public spending on education, fertility, infant mortality rates, and per capita income-poverty remains an important negative factor in explaining low levels of enrollment among secondary students.
HIGH HIGH HigH iNeQuAlity 50 Americas Quarterly s p r i n g 2008 A m e r i c A s Q u A r t e r ly . o r g Want to address L l economic g
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