Tag Archives: Latin America

A Tale of Two Cities: Development in Latin America

Looking out upon the city from the top of a modern high-rise, one cannot help but note the contradiction. The urban sprawl of luxury apartments, malls, and cafés gives way to the eclectic but destitute clusters of favelas; the multi-colored and corrugated steel-roofed slums that dominate the periphery. The city is Rio de Janeiro, but it could easily be Lima, Peru, Buenos Aires, Argentina, or Bogotá, Colombia. This caricature of rich-meets-poor ambiguously describes nearly every major city in Latin America, a region in which a growing number of countries occupy the margin between developed and developing status.

The global trend of urban migration is particularly strong in Latin America, compounding development shortfalls for safe and adequate housing in capital cities. In Rio, for instance, 1.5 million people live in the favelas—about 24% of the population. There are over 1000 of these neighborhoods in the city, the majority of which are illegally constructed. Brazil is the region’s largest country, economy, and the presumptive regional hegemon, but like others in the region they struggle to spread the benefits of growth to all socioeconomic classes. Nearing the milestone of developed status, Latin America is starting to question exactly what developed truly means.

Development by the Numbers

The World Bank sorts countries of the world into four income categories: low income, lower middle-income, upper middle-income, and high-income countries. Half of the world’s countries fall into the two middle-income categories, which contain 70% of the world’s population and 72% of the world’s poor. All low-income and middle-income nations are eligible for Official Development Assistance (ODA)—the collective non-military aid, grants, and financial instruments intended to promote economic development and welfare—which totaled $142.6 billion dollars in 2016.

Once middle-income nations reach and maintain a per capita Gross National Income (GNI) of $12,745 USD or greater for three consecutive years (2013 numbers), they “graduate” from upper middle-income status to high income status, rendering them ineligible for ODA. Latin American ODA totaled nearly $5 billion dollars in 2016, but sable growth within the region over the last 25 years places countries such as Brazil, Argentina, and Mexico—those with large populations and high inequality—on a path to graduation from ODA eligibility.

development
The projected GNI growth (2015) will cause the majority of Latin American middle-income countries to graduate and lose ODA by the year 2030, based on OECD projections. Photo credit: https://www.oecd.org/dac/financing-sustainable-development/ODA-graduation.pdf.

The body that determines these categories is the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD). The DAC, in conjunction with the International Monetary Fund and the World Bank, meets every two to three years to refine the list of eligible aid recipients. Middle-income countries constitute 90% of Latin America, and by the year 2030, 80% of the region will no longer be eligible for ODA.

The first wave of this phenomenon hit the region in August when Chile, Uruguay, and Costa Rica graduated to high-income country status. The graduations come after a period of GDP growth  in the region averaging 3% between 2000 and 2015. In countries like Brazil and Argentina, next on the list of prospective graduates, poverty has decreased drastically since the turn of the century. According to the World Bank data, poverty in Brazil decreased from 12.3% in 2002 to 3.7% in 2014. Argentina’s poverty level fell from 14% to 1.7% over the same period.

But these indicators only reveal part of the story. The World Bank international poverty line is drawn at $1.90 dollars of income per day, or about $685 dollars per year. Inequality figures in the region are the highest in the world. The 2016 Gini Index—the measure of statistical indicators that assign a value to inequality—show Latin America occupying 13 of the top 25 spots for highest inequality in the world. The top 20% of the population still holds 57% of the wealth and it has the fastest growing number of billionaires in the world, numbering 151 in 2015, a 38% increase over the previous year. Given that context, reaching the $685 dollars per year milestone seems to leave much room for improvement.

Graduate to Cooperate

The steady loss of ODA will be Latin America’s next development challenge, and the millionaires and billionaires will not be the ones feeling the impact. Chilean government officials have already been vocal in their objection to the graduation process, arguing that the loss of ODA comes at the most critical point for developing nations. They contend that the process is one-dimensional and does not reflect the complex set of issues that countries in this category face in sustaining development. This is true, but many of the challenges come from within Latin American governments and cannot be solved with ODA. Tax systems are archaic and welfare programs, especially in a non-welfare state like Chile, are limited or not sufficient to bridge the gap of inequality.

development cooperation
ODA is used on a wide range of development themes. Chile relies on development funds for programs related to climate change, the effects of which are more pronounced in the Patagonia region of the south. Photo credit: https://visualizingclimatechange.wordpress.com.

The real implications for ODA graduation are unknown. The OECD lacks the requisite data to be able to predict how ODA graduation affects future development. Additionally, development assistance varies from year to year, is given at the complete discretion of the donor countries, and is subject to global foreign policy trends. A retraction in globalism, increases in terrorism and security concerns, and global migration and refugee flow will continue to influence the distribution of aid. As countries in the global south continue their efforts in development, relying on ODA cannot be the only strategy to sustain development.

One opportunity lies in increasing South-South Cooperation, characterized as a framework of collaboration across multiple domains between countries of the global south. South-South Cooperation focuses on the transfer of knowledge, technical expertise, and human capital—all critical components of development. This collaboration already exists in the region, but the programs are few, the level of institutionalization is low, and domestic and regional politics often hamper cooperation efforts. Unlike the regional bodies (like MERCOSUR and UNASUR) that have high levels of institutionalization with low output, South-South Cooperation is accomplished through existing, state-level institutions like a country’s Ministry of Foreign Affairs. This allows them to engage in programs on a limited or enduring timeline, bilaterally or multilaterally, at both the national and sub-national levels.

Latin America—and the global south in general—must seek internal solutions for development. They will also need to find a way to better incorporate NGOs and the private sector, who have an increasingly important role to play in the global system. Regional economic leaders, such as Brazil, Chile, and Mexico, can accelerate the pace of regional cooperation initiatives and counter the loss of ODA over the next decade. Bureaucratic inefficiency and corruption make reforms difficult, but South-South Cooperation provides an existing framework and  support from the United Nations Office of South-South Cooperation (UNOSSC). A failure to reform and generate intra-regional development programs may not slow economic  growth, but it will threaten future social and political stability and undermine long-term regional security.


The views expressed in this article are those of the authors and do not reflect the views of any  government or private institution.

Major Patrick “TISL” Parrish is the Blogmaster and editor for the Affiliate Network. He is a US Air Force Officer and A-10C Weapons Instructor Pilot with combat tours in Afghanistan and Libya. He is currently serving as an Olmsted Scholar in Santiago, Chile.

Bolivarian Devolution: The Venezuelan Crisis

This morning nearly 25,000 Venezuelans will cross the Simon Bolivar bridge into Colombia in search of work and a hot meal. Most will return in the evening with extra food for their families if they are lucky. They make the trip hoping to earn money peddling goods on the street, seeking routine medical care, or standing in line for hours to receive one of the thousands of free meals served daily by churches and non-profit organizations. The bridge, a piece of shared infrastructure by which 80% of trade goods pass between the two countries, has become a humanitarian lifeline for those trying to escape the Venezuelan crisis. Recent surveys suggest 93% of Venezuelans cannot afford to purchase food and hospitals there lack 95% of medical supplies needed to provide basic care. The cost of Venezuela’s failed Bolivarian Revolution, a phrase coined by the late President Hugo Chavez, is being paid by the citizens it promised to protect, and the growing spillover into Colombia threatens to turn a Venezuelan problem into a regional one.

The Bolivarian Revolution began rather inauspiciously in 1992 when then-Lieutenant Colonel Hugo Chavez led an unsuccessful military coup to oust the democratically elected president. Released from prison two years later, Chavez went on to win the 1999 election as a populist fringe candidate under a socialist ideology he called “Chavismo”. In a case of extradinarily bad timing, his anointed successor, a former bus driver-turned-Finance Minister by the name Nicholas Maduro, assumed the presidency following Chavez’s death in 2013. Within a year, the global drop in oil prices triggered an economic crisis in Venezuela, catalyzing the failure of the socialist experiment and intensifying social unrest. President Maduro responded to the resultant popular criticism with a heavy hand, using the military to violently suppress protests and working internally to subvert Venezuela’s democratic institutions.

The situation in Venezuela represents a complete reversal of fortunes from two decades ago. Beginning in the 1970s, nearly four million Colombians fled to Venezuela to escape violence and terror wrought by the drug cartels and the FARC. In 1999, the flow of migrants began to steadily reverse, and 1.5 million people have since left Venezuela for Colombia. Two recent events illustrate the ironic role reversal. On the 15th of August, the FARC officially completed a peaceful disarmament process and was incorporated into the Colombian democratic system as a political party. Then, just three days later, the pro-Maduro Constituent Assembly in Venezuela seized control of the opposition-led Congress, removing yet another democratic impediment to his rule. The move sparked regional outrage, but engendered little surprise as the Venezuelan political apparatus moved one step closer to authoritarianism.

Venezuela Devolution
Thousands of Venezuelans line up every morning to cross the Simon Bolivar Bridge to obtain food and basic necessities on the Colombian side. Photo Credit: http://www.houstonchronicle.com/news/article/Thousands-cross-Venezuela-border-to-Colombia-for-8383342.php

Socialist Expropriation and Crime

Venezuela controls some of the world’s largest crude oil reserves, a critical piece in a calculated strategy to safeguard the Chavez regime by distributing wealth. The scheme has been remarkably successful over the last 18 years and is probably the only reason his successor is still in power, but corruption, subjugation of private industry, and ill-fated socialist policies have depleted the nation’s wealth. Upon his election in 1999, Chavez nationalized much of Venezuela’s industry. By 2011 Venezuela was receiving only a $5M share of Latin America’s total $150M in annual foreign investment and the number of private businesses had decreased from 14,000 to roughly 9,000. Oil accounted for 95% of Venezuela’s exports at the time, but the billions of dollars earned in the post-9/11 oil boom have vanished. Most of the money was funneled to political supporters and a large share was invested in strengthening the military.

Four years after Chavez’s death, the question remains whether the military will stay loyal to Maduro, to the Revolution, or abandon them both in favor of the opposition. Maduro’s ability to continue lining the pockets of his generals and politicians dwindles by the day. His support is already weakening in the lower ranks of the military where the effects of the economic crisis are most palpable. Worsening conditions increase the potential for a military uprising against Maduro in favor of a leader more capable of advancing the Chavismo ideology. Considering also the historical influence of Cuba’s Castro regime and ongoing support from Russia and Iran, it stands to reason Chavismo will endure even if Maduro’s political capital dries up.

Command of the lucrative illicit drug trade is also a factor. Throughout the Chavismo era, corrupt politicians profited from the trade by exploiting military and police fealty. The details of their corruption were published almost a decade ago when a seizure of data exposed integrated cocaine distribution networks between Venezuela and the United States. Notably, in 2016 two of Maduro’s nephews were convicted in the US for conspiracy to transport cocaine, suggesting possible ties to the President himself. If indeed Maduro is on the take, the growing scarcity of pay-off funds from other sources raises concern he may lose control over the illicit drug trade, leaving a vacuum that could lead to increased violence, volatility, and regional instability.

All-American Solutions

Despite President Trump’s recent refusal to rule out a “military option” in Venezuela, the United States lacks the domestic and international political capital to impose its will there. Furthermore, his intransigence on immigration and the proposed border wall with Mexico have not earned him additional support in a region where one-third of the population sees American power and influence as a major threat. During a recent Latin American tour, Vice President Mike Pence spent much of his time softening Trump’s message on Venezuela and assuring leaders Washington is open to a wide range of options including economic sanctions. Despite the assurances, Colombian President Juan Manuel Santos explicitly rejected the notion of a military response in a joint press conference with Pence, insisting Venezuela’s neighbors must use “other measures to bring about change in the country.” Clearly a more indirect and cooperative approach will be required if the United States wishes to influence the situation in Venezuela.

Venezuelan Crisis
Colombian President Juan Manuel Santos addresses the Colombian press during a joint conference with US VP Mike Pence. Despite the positive state of US-Colombia relations, President Santos emphatically rejected the US military option that President Trump mentioned the week prior to the visit. Photo credit: http://www.infobae.com/america/america-latina/2017/08/14/juan-manuel-santos-le-pidio-a-estados-unidos-descartar-una-posible-intervencion-militar-en-venezuela/

Despite President Santos’ strong stance, there is no reason to believe Latin America is capable of responding effectively on its own. Any admonishments of Maduro’s despotism by Venezuela’s neighbors are tempered by their own dogmatic respect for state sovereignty; a common paradox in a region composed of weak states with strong leaders. Additionally, domestic political concerns consume nearly every country in the region. Brazil is embroiled in its own government scandal and focused on economic and political instability. Argentina is still nursing an economic recovery after years of fiscal mismanagement under the Kirchners. Colombia is coming to terms with a difficult peace agreement with FARC revolutionaries and wants to keep growing economically. Chile, despite being an economic growth leader for a decade, has yet to truly find its voice in regional politics and continues to struggle with domestic political impediments. As is characteristic of Latin America, there is a lot of talk, but no coherent regional stance.

Throughout Latin America, citizens are bracing for the political and economic effects of an influx of Venezuelans seeking work, housing, and social assistance. Violent civil war is a concern, as is the resurgence of illicit transnational networks—a trend that had been on the decline in recent years thanks to progress in neighboring Colombia. A US military intervention would most certainly exacerbate existing regional security challenges. The only sustainable solution to this Bolivarian Devolution rests on the ability of Latin American states to look beyond their respective domestic challenges and respond with an uncharacteristic level of regional cohesion. To enable such a response, the United States should pursue collaborative regional solutions focused on mitigating the economic and social impacts of the growing humanitarian crisis.


The views expressed in this article are those of the authors and do not reflect the views of any  government or private institution.

Major Patrick “TISL” Parrish is the Blogmaster and editor for the Affiliate Network. He is a US Air Force Officer and A-10C Weapons Instructor Pilot with combat tours in Afghanistan and Libya. He is currently serving as an Olmsted Scholar in Santiago, Chile.

Major Kirby “Fuel” Sanford is a US Air Force Officer and F-16 Instructor Pilot with combat experience in Syria, Iraq, and Afghanistan. He is currently serving as an Olmsted Scholar in Buenos Aires, Argentina.