Table of Contents

  • Countries in Latin America have managed to resist the global economic and financial crisis more successfully than in many other regions of the world. Similarly, they are showing relatively faster signs of recovery. Economic growth in the region is expected to be stronger than in most OECD countries in 2010, confirming the trend signalled in last year’s OECD Latin American Economic Outlook.

  • The OECD Latin American Economic Outlook 2011 was prepared by the OECD Development Centre’s Americas Desk, headed by Jeff Dayton-Johnson and under the supervision of Mario Pezzini, Director of the Development Centre. Responsibility for the various chapters was distributed as follows: Macroeconomic Overview, Alejandro Neut, Sebastián Nieto Parra and Caroline Paunov; Chapter 1, Francesca Castellani, Jeff Dayton-Johnson and Gwenn Parent; Chapter 2, Rita Da Costa, Juan R. de Laiglesia, Emmanuelle Martínez and Ángel Melguizo; Chapter 3, Christian Daude; Chapter 4, Bárbara Castelletti, Christian Daude, Hamlet Gutiérrez and Ángel Melguizo; and the Country Notes (available on our website), Rita Da Costa, Alba N. Martínez and Emmanuelle Martínez, with contributions from Natalia Villagómez Gonzalez. Box 1.1 was written by Caroline Paunov, Box 1.3 by Eduardo Lora, and Box 3.1 by Alba N. Martínez. Box 4.1 was written by Bárbara Castelletti and Hamlet Gutiérrez, and Box 4.2 by Christian Daude and Ángel Melguizo.

  • The 2009 global economic crisis affected Latin American and Caribbean economies severely, as demand for the region’s goods and services plummeted. However, thanks to improved domestic macroeconomic management and regulation, Latin America was better equipped to tackle this crisis than ever before. Domestic demand, fuelled by the expanding purchasing power of those Latin American households in the middle of the income distribution, explains at least part of the Latin American resilience. Because of their capacity to change the region’s economic and political landscape, these middle-income households are the thematic focus of this Outlook. Here referred to as “middle sectors,” they are defined as households with income per capita between 50% and 150% of the national median. This definition is often used as a basis for the analysis of the middle class in OECD countries; in the case of the Latin American region, does this definition identify the same type of people?

  • What do the people in the middle – neither the richest nor the poorest in society – contribute to economic development? How well are these middle sectors doing, economically and socially, in Latin America? Certainly, the growth of a segment of the population with higher living standards than those of their poorest compatriots signals success in the ongoing struggle to alleviate poverty, as well as offering new markets and opportunities for entrepreneurs.

  • The 2009 global economic crisis affected Latin American and Caribbean economies severely. However, despite Latin America’s high level of integration with international markets and its poor growth showing in 2009, several economies in the region displayed noteworthy resilience, reversing the downturn fairly quickly while performing well relative to economies elsewhere in the world. Major external factors contributing to this comparatively good performance were Chinese demand for commodities and timely monetary action of the international community. Nonetheless, this superior economic outcome was also the fruit of internal factors, such as improved domestic monetary and fiscal macroeconomic management on the one hand and prudential microeconomic regulation on the other. Now that Latin America’s long-term growth prospects are positive, the policy measures that led to macroeconomic stability need to be further institutionalised, especially on the fiscal front, and financial system risks need to be addressed through further public regulatory action and financial education.

  • The middle sector is defined as households with income between 50% and 150% of the national median. The relative size of Latin American middle sectors ranges from a high of 56% of the population (Uruguay) to below 40% (Bolivia, Colombia). Household survey data reveal that most middle-sector households are headed by a pair of adults, though the proportion is even higher among the affluent. In most countries, middle-sector working people are not as likely as the affluent to be public-sector employees such as teachers or civil servants. Nor is the middle sector the cradle of entrepreneurship: the share of entrepreneurs is highest among the affluent. Indices of mobility potential are computed to measure how “close” disadvantaged households are, on average, to the middle-sector threshold, and similarly, how close middle-sector households are to falling into the ranks of the disadvantaged.