It is an honor to testify before the House Subcommittee on Western Hemispheric Affairs, and to discuss the proposed Social Investment Fund for the Americas. I believe that the proposal to create a fund has a great deal of merit. My remarks are organized around two objectives. The first is to present findings from my research in the region which contribute to the rationale for the fund as stated in the proposed amendment. These findings highlight the need to address pressing and unresolved social welfare and income distribution issues. The second objective, based on the stated rationale for the fund, is to provide some suggestions for structuring it and for establishing priorities for the activities it should invest in. It will be important to be selective, given the scope of the region’s need and the necessarily limited scale of the fund.
Public Frustration and Reform Fatigue:
A Rationale for a Social Investment Fund for Latin America
Latin America is a region with great potential. Yet that potential is jeopardized by its vast and unmet social needs. Long gone is the optimism about Latin America’s turn to the market and establishment of democratic government. Instead the 21st century has opened with news accounts of one crisis after another, beginning with Argentina’s economic collapse in 2001, and now followed by threats of defaults in Uruguay and Brazil, by fears of a populist backlash in a much broader set of countries, and by weak growth performance even in the strongest economies; Chile, Latin America’s tiger, is slated to grow at only 2.5% in 2003 and unemployment — at 9.5 % — is higher than it has been in two decades. Most recently, one of the region’s most committed democratic reformers, Gonzalo Sanchez de Lozada, was forced to resign as president of Bolivia amidst a wave of popular protest against market policies.