Venezuela: Latin America's inequality success story
August 6, 2010
Hugo Chavez, Venezuela’s President, has plenty of critics, who often focus on his style (not least his interminable unscripted chat show, Alo Presidente), and in many ways he does fit into the tradition of the Latin American caudillo (the ‘strong man on horseback’). But Venezuela certainly seems to be getting something right on inequality. According to the highly reputable UN Economic Commission for Latin America and the Caribbean, it now has the most equal distribution of income in the region, and has improved rapidly since 1990. Here’s a graph from a recent ECLAC report, ‘Time for Equality: Closing Gaps, Opening Trails‘. It shows the change in the gini index of income inequality in the major Latin American economies from 1990 to 2008.
Any country below the line has lowered inequality over the period (with the gini index, 1 = absolute inequality, zero = total equality). Two points jump out – firstly, as I’ve reported before, most of the region has had a good couple of decades, in which a combination of good social policy and economic stability have brought down historically high levels of inequality. But the thing that surprised me is Venezuela, which has overtaken Ecuador, Paraguay and Costa Rica to become the most equal (or since this is Latin America, the least unequal) country in the region. And this in a massively oil dependent country, when natural resource dependence typically leads to high levels of inequality, because it generates few jobs, and revenues tend to go to the well connected few. Anyone (pro or anti) got any convincing explanations? [h/t Katia Maia]