Key Economic and Social Challenges for Latin America: Perspectives from Recent Studies


The paper draws on recent studies at the World Bank and elsewhere to highlight four aspects of Latin America’s current challenges. First, high inequality, partly related to historical relations between Europeans, indigenous and Afro-descendants, but reinforced by continuing dualism between the formal and informal sectors. Second, education, where the region suffers from a serious “secondary deficit” and weak educational quality. Third, the business climate, which exhibits continuing problems with inappropriate regulation, while infrastructure provision has suffered from cutbacks to public provision, only partly compensated for by increased private investment. Finally, Latin America’s future sources of international comparative advantage: whether in natural resource-based exports or in manufacturing, the region needs to improve performance in mobilizing knowledge and technology.