The three main issues that I believe are attempting against economic development of Latin America are poverty, unemployment, and inequality. While there are many social policies that have strived to reduce poverty and inequality, the problems still persist due to poor productive structures that create unequal personal distribution of labor income (Aguinis et al. 615). Similarly, the main contributors of unemployment in Latin America include demand-shortage and structural elements.
The aforementioned three issues have a negative impact on the economic development of Latin America. Firstly, unemployment means that the government must set aside funds to pay the benefits associated with the loss of the production workers, which, in the end, reduces the gross domestic production. Secondly, high inequality implies that the income will be transferred from low-and middle-saving households to higher-savings—this redistribution end up reducing consumption spending, thus dragging demand growth rate. Lastly, poverty affects economic development by reducing production and economic output: low productivity means loss of goods and services to the nation’s economy.
With that said, I believe the best way to resolve some of the issues highlighted above is to invest more in productive and labor policies: these policies should promote labor insertion for young people. Similarly, the focus should be on expanding programs that foster employment for women and young people. Another way of resolving the issues is to adopt sectoral policies for the rejuvenation of productive activities, such as tourism. Most importantly, there is a need to expand support for Micro, Small and Medium-sized Enterprises (MSMEs) (Hermans and Reyes 157). Lastly, much attention should be to make fiscal policy sustainable—this requires bolstering tax revenue, as well as reducing evasion.
Works Cited
Aguinis, Herman, et al. “Conducting Management Research in Latin America: Why and What’s in It for You?” Journal of Management, vol. 46, no. 5, 2020, pp. 615-636.
Hermans, Michel, and Armando Borda Reyes. “A Value Creation Perspective on International Business in Latin America: Directions for Differentiation between Emerging Market Multinationals.” Multinational Business Review, vol. 28, no. 2, 2020, pp. 157-175.