Latin America and the Caribbean THE WORLD BANK Regional Challenges Latin America and the Caribbean 2007

Latin America and the Caribbean’s Twin Development Challenges Income per capita With respect to OECD 1950-2005 Low and volatile growth and persistently high inequality contribute to high levels of poverty in an essentially a middle income country (MIC) region. Gini Coefficient, 2000-5 60.0 (average) 50.0 40.0 30.0 20.0 10.0 0.0 2 ECA SA EAP MENA LAC Source: WDI, simple average of country figures 2000-5

Latin America and the Caribbean is one of the most unequal regions of the world Latin America & Caribbean East Asia & Pacific Sub-Saharan Africa Middle East & N. Africa High Income Countries Europe & Central Asia Source: WDR 2006

Recent Progress in Growth Recovery and Job Creation Due to favorable external conditions and good macroeconomic policies. 4

Taking advantage of good times to reduce vulnerabilities Accumulated international reserves and primary surpluses Reductions in public debt/GDP ratio Reduced vulnerability and increased capacity to cope with future exogenous shocks. 5

But, modest progress in Investment Climate and Infrastructure Total infrastructure investment in LAC remains very low around 3% of GDP compared to 7% of GDP in EAP (East Asia and the Pacific region). Private investment has not compensated for the fall in public investment. 6

And in Poverty Reduction and Equity 7

With challenges in some MDG targets Based on data from ECLAC (2005). Maternal mortality rates were obtained from United Nations (2005), Statistical databases: http://millenniumindicators.un.org0 8

To address these challenges, the WB strategy in LAC is centered around the four themes – “4Gs” GROWTH & JOBS Improving investment climate Increasing investment in infrastructure Deepening financial systems Increasing innovation GINI & Poverty (Social Inequality) Reduce poverty and inequality Improving equality of opportunities Improve quality and delivery in education and health Provide comprehensive and affordable social protection Support direct anti-poverty programs (CCT’s) GOVERNANCE Building inclusive and effective institutions Improving efficiency and targeting of public spending Increasing accountability for service delivery Reducing corruption Monitoring and evaluating results GLOBAL Climate change Migration and remittances Trade negotiations Crime and violence Energy HIV/AIDs Avian Flu

Looking to the future Continued need to achieve sustainable growth with greater equity Large unmet demand for infrastructure. LAC is still lagging behind other MIC countries Global issues remain relevant and have a growing importance and impact on the region (e.g. climate change, trade, remittances, energy)

Conclusion The LAC challenge is to overcome the twin disappointments of low growth and persistently high inequality The WB response is to energize our partnership through knowledge leadership, innovative lending and customized implementation support Our goal is to meet the hopes and dreams of Latin American and Caribbean peoples for a more equitable, inclusive and secure society