October 25, 2012
AP published an article yesterday on the recent electoral success of incumbents in Latin America. Though the article focuses on the advantages of incumbency and the concentration of power in the presidency, there is another far more compelling reason for their success. A quick mention of the “decade of economic growth” in the article gives us a clue that something different may, in fact, have been occurring.
As CEPR Co-Director Mark Weisbrot pointed out in the New York Times, the reelection of incumbents and their political parties has more to do with increasing living standards than anything else. Following a twenty-year economic growth failure associated with neoliberalism, a new wave of leaders campaigned against these policies and for a greater distribution of wealth, and have largely backed up those campaign pledges.
At this point, it might prove fruitful to dig a little deeper into the recent economic context of Latin America, and as it just so happens, CEPR has been doing exactly that for many years now.
A few examples indicate that policies leading to significant economic and social advances are likely playing a strong role in countries where the reelection of incumbents has occurred:
- Under the consecutive governments of Néstor Kirchner and Cristina Fernández, Argentina’s economy grew more than 85 percent from its collapse in 2002 to 2011, one of the highest economic growth rates in the world. Poverty, income inequality and unemployment have fallen by two-thirds, one-half and more than one-half, respectively, since their peaks after the 2001 crisis. In 2010 poverty had fallen to fourteen percent of the population and unemployment to 8 percent. Cristina Fernández won reelection easily in 2011.
- In Venezuela, Chávez has presided over a 49.7 decline in the poverty rate. Extreme poverty declined 70 percent from 2004-2011. At 26.7 and 7.0 percent, respectively in 2011, both poverty and extreme poverty have reached historic lows for the country. From 1980-1998 Venezuela’s GDP per capita actually declined by 14 percent, while it has increased by 2.5 percentage points annually since 2004 once the economy had recovered from the devastating opposition oil strike of 2002-2003. (Of course it grew even faster if measured from 2002). Hugo Chávez was most recently re-elected two weeks ago on a platform of continuing the economic and social gains that his country has seen in the last decade, and which has resulted in the largest decrease in inequality in the hemisphere.
- Since Rafael Correa became president of Ecuador in 2007, large increases in social spending have led to significant improvements in health and education and have led to substantial and consistent reductions in poverty and unemployment rates. Rafael Correa was reelected by a wide margin in 2009.
- Bolivia’s economic growth under Evo Morales was also higher than at any other time in the previous 30 years. Morales was reelected under a new constitution in 2009 after his country regained control over their natural resources and used the funds to increase public investment and social spending.
