wrapper

Webmaster

Webmaster

Argentina deja de contar pobres

El ministro de Economía de Argentina, Axel Kicillof, se metió este jueves en un berenjenal en una entrevista en una emisora de radio. Le preguntaron por qué su Gobierno, el de Cristina Fernández de Kirchner, había dejado de medir en 2014 el porcentaje de pobres en la población. Entre 2007 y 2013 sus cifras habían sido criticadas por subestimar el fenómeno. Y entonces Kicillof, economista autodefinido como keynesiano y excatedrático de marxismo en la Universidad de Buenos Aires, respondió: "Cuántos pobres hay es una pregunta bastante complicada. Yo no tengo el número de pobres, me parece que es una medida bastante estigmatizante". No tardó en encenderse la polémica con la oposición.

MÁS INFORMACIÓN

El jefe de Gabinete de Ministros, Aníbal Fernández, lo defendió este viernes, en su habitual diálogo con la prensa en la acera de entrada a su oficina: "Definir si un número más o menos me define cuál es la cantidad de pobres... no es la tarea del Gobierno la cantidad. La tarea del Gobierno es ocuparse del hombre y de la mujer de carne y huesos con sus hijos, de un país federal, que tiene que encontrarle respuesta a su gente". El ministro de Economía concedió al mismo tiempo una entrevista a otra radio para aclarar: "Tomaron una declaración suelta y armaron una campaña contra mí y contra el Gobierno".

Kicillof citó este viernes las discusiones que existen en el mundo académico acerca de cuál es la mejor manera de medir la pobreza. "Hay un montón de indicadores de pobreza porque el fenómeno es complejo. En ningún lado del mundo se mide con un solo número. Por ejemplo, la pobreza estructural está relacionada con las necesidades básicas insatisfechas, que obvio que la ultramedimos en cada uno de los censos [de población cada diez años]. O la mortalidad infantil", argumentó el ministro.

Argentina es el único país de Latinoamérica que ha dejado de medir el porcentaje de personas con ingresos menores al nivel necesario para evitar la pobreza. Este viernes, en lugar de referirse a estigmas, Kicillof explicó que su país ha dejado de medirla por lo "complejo" de hacer converger el índice de precios al consumidor (IPC) de Buenos Aires, que era el que se medía hasta 2013 y que subestimaba por lo menos en un 50% la inflación, y el nuevo IPC nacional, que comenzó a regir en 2014 y que, según la oposición, aún arroja una cifra 33% menor a la real.

"No hay duda de la reducción de la pobreza en estos 12 años", se refirió Kicillof . La duda es qué ocurrió en el segundo Gobierno de Fernández

"No hay duda de la enormereducción de la pobreza en estos últimos 12 años", se refirió Kicillof a los Gobiernos de Néstor Kirchner (2003-2007) y su sucesora y viuda (desde 2007). El ministro tiene razón en ese sentido: la pobreza ya no afecta al 49,7% de la población, como en 2003, sino quizá a un cuarto de ella. La duda se instala en qué ocurrió en el segundo Gobierno de Fernández, desde 2011 en adelante.

El Centro de Investigación y Formación de la rama kirchnerista de la Central de Trabajadores de Argentina (CTA), donde ejercían actuales funcionarios del equipo de Kicillof, ha descreído las estadísticas oficiales desde 2007, pero admite un descenso del 20,1% en 2011 al 17,8% en 2013, muy por encima del 4,7% que calculó el Gobierno. Los trabajadores que se opusieron a la intervención gubernamental en el Instituto Nacional de Estadística estiman que la cantidad de pobres se elevó del 18,2% en 2011 al 25,5% en 2014, año de la devaluación del peso. La Universidad Católica Argentina (UCA) también advierte sobre una subida, del 22,9% al 25,6% en 2013. Agustín Salvia, investigador de la UCA, atribuye el presunto aumento al impacto de la inflación en los empleados en la informalidad y en los que trabajan por cuenta propia en la economía sumergida.

Read more...

Aumentó la pobreza en el país y alcanza al 25,1% de la población

Según técnicos desplazados del Indec, 2014 cerró con 9,6 millones de pobres; consultoras privadas calculan una cifra mayor; el Gobierno sigue ocultando el número

Un cuarto de los argentinos vive en la pobreza. A pesar de que el Gobierno parece querer borrarlos de las estadísticas oficiales, expertos en la materia afirman que a fines del año pasado había en el país 9,6 millones de pobres.

Un informe elaborado por técnicos que fueron desplazados de la Encuesta Permanente de Hogares (EPH) después de la intervención del Indec, en 2007, estimó que el número de personas en esa condición aumentó 4,4 puntos porcentuales entre el segundo semestre de 2013 y el mismo período de 2014, un año caracterizado por la devaluación dispuesta por el Gobierno. Algunos informes de consultoras privadas son incluso más pesimistas: un trabajo de la consultora Ecolatina indicó que 2014 terminó con 27% de pobreza. La variación interanual es prácticamente igual a la que presentan los ex trabajadores del organismo oficial.

En la comisión técnica de ATE (Asociación de Trabajadores del Estado)-Indec afirmaron que un 25,1% de los argentinos era pobre a fines de 2014. Un año atrás, su propio cálculo era de 20,7%. Sin embargo, en la comparación con el primer semestre de 2014 se ve una desaceleración de cuatro décimas por "cuestiones estacionales".

El Indec dejó de publicar las estadísticas sobre pobreza a fines de 2013 por "problemas de empalme", según advirtió el entonces jefe de Gabinete, Jorge Capitanich. Agregó que el Gobierno había "erradicado" la pobreza. La cifra oficial difundida para el segundo semestre de 2013 fue de 4,7%. En ATE la estimaban en casi 15 puntos más.

En las últimas semanas el debate sobre la pobreza volvió a calentarse cuando el ministro de Economía, Axel Kicillof, sugirió que el número de pobres no se difunde por una decisión política, ya que tal medida implicaría la "estigmatización" de esos ciudadanos.

El actual ministro coordinador, Aníbal Fernández, fue menos sutil. "El Estado no está para contar pobres", dijo. En la misma sintonía, el director del Indec, Norberto Itzcovich, publicó días atrás una columna en Ámbito Financiero en la que argumentó: "No resulta fácil medir la pobreza". Según su explicación, de acuerdo con los insumos que publica el Indec y con el gusto de los investigadores, existen 6000 formas de calcular la pobreza. No obstante, el organismo que dirige no difunde ninguna.

Tal vez como una respuesta, en el sector académico -fuertemente criticado por el Gobierno, igual que las consultoras- se avanza en ese sentido.

Según pudo saber LA NACION, dentro de un mes el Observatorio de la Deuda Social de la Universidad Católica Argentina (UCA) dará a conocer tres indicadores de pobreza: uno medido por ingresos, otro basado en las necesidades básicas insatisfechas (NBI) y uno con un enfoque multidimensional.

La reacción del Gobierno. Consultado sobre el informe elaborado por técnicos desplazados del Indec, Aníbal Fernández dijo que "no hay estudios privados sobre pobreza" y que "hay un señor que revolea un número".) -60px 0px !important;">) -91px 0px !important;">

El último informe de la UCA, elaborado en 2013, afirmaba que la pobreza se ubicaba entre 25,6 y 27,5%, según las dos canastas de productos y servicios que mide la universidad.

Los técnicos de ATE-Indec -que calculan sobre la base de los ingresos- afirmaron que la canasta básica total (la que fija la línea de pobreza) costaba a fin del año pasado 6384 pesos, lo que implica un incremento trimestral de 4,6% en comparación con el tercer trimestre del año pasado, cuando costaba $ 6101. Por otro lado, la canasta básica alimentaria (que pone un piso a la indigencia) fue de $ 2800 a fines de 2014. Un trimestre atrás era de $ 2676.

El documento, que será presentado hoy en el habitual abrazo al Indec que realizan todos los meses los trabajadores opuestos a la intervención, afirma que a fines de 2014 había en la Argentina 2.161.000 indigentes. Esto significa que un 5,6% de los argentinos no podía acceder a la canasta mínima para procurar su alimentación.

Cuando a comienzos del año pasado Kicillof y su equipo presentaron el nuevo IPCnu -elaborado a instancias del Fondo Monetario Internacional-, dejaron de difundir las canastas mensuales que sirven para calcular la pobreza y la indigencia. Tampoco publicaron los precios promedio de productos y servicios -escondidos desde 2008- ni las composiciones y ponderaciones de las diferentes canastas regionales que se usan para calcular la inflación.

"Para justificar la ausencia de información es que surge el burdo cuestionamiento al método de medición de la pobreza por ingresos, cuando casualmente este indicador, en las mediciones alternativas realizadas por distintos centros de investigación y por esta junta interna, comenzó a mostrar un aumento de los hogares y personas en esa situación. Esto es lo estigmatizante que el Indec y el Gobierno quieren ocultar", afirmaron en ATE.

PESIMISMO ENTRE LOS PRIVADOS

Los cálculos de los economistas privados sobre la cantidad de pobres en la Argentina son más pesimistas que los de los técnicos desplazados de ATE-Indec. Según Ecolatina, en 2014 la pobreza afectó -en promedio- al 27% de la población, lo que significó un incremento de 5,7 puntos porcentuales en un año. En tanto, la indigencia golpeó en ese mismo período a un 10% de los argentinos (un alza de 3,3 puntos).

"El crecimiento es más que importante, ya que implica que el año pasado 2,2 millones de personas cayeron en la pobreza y otros 1,2 millones, en la indigencia. De esta manera, la pobreza afectó durante el año pasado al mismo porcentaje de la población que en 2009", afirmaron, haciendo referencia al año de la crisis financiera internacional. ¿Las causas? La devaluación de enero de 2014 y el ajuste anual sobre los salarios, dijeron en la consultora.

Read more...

Extreme Poverty in Venezuela Drops to Record Low

The poverty index has fallen to 5.4 percent in 2015 from 21 percent in 1998. The level of extreme poverty in Venezuela dropped to a record low of 5.4 percent in 2015, Social Development Minister Hector Rodriguez said Monday.

The index dropped from 5.5 percent last year, the official said, falling despite an economic slowdown caused by economic sabotage and falling oil prices. This means that more than 36,300 people escaped critical levels of poverty in 2014.

The figures are the latest milestone in poverty reduction in Venezuela, following the prioritizing of social investment.

When former President Hugo Chavez came to power in 1998, 21 percent of homes were registered as experiencing extreme poverty and earlier that decade as economic crisis hit Venezuela extreme poverty topped 42 percent.

The objective of the socialist government’s policy is to reduce the extreme poverty index to zero in 2019.

 

Source: http://www.telesurtv.net/english/news/Extreme-Poverty-in-Venezuela-Drops-to-Record-Low-20150302-0034.html

Read more...

Poverty hits 48.4% of households in Venezuela

A survey compiled by UCAB (Andrés Bello University), UCV (Central University of Venezuela), and USB (Simón Bolívar University) shows that the Venezuelan economic crisis, dominated by galloping inflation, was harsher on the most vulnerable sectors of the country last year

Poverty in Venezuelan in 2014 hit 48.4% of households, thus exceeding the figures reported in recent years, according to a social survey disclosed on Thursday by the three most notorious universities of the country.

The survey compiled by UCAB (Andrés Bello University), UCV (Central University of Venezuela), and USB (Simón Bolívar University) shows that the Venezuelan economic crisis, dominated by galloping inflation, hit most severely the most vulnerable sectors of the country last year, AP reported.

Based on the figures of the National Statistics Institute, households living in poverty amounted to 27.3% in the second half of 2013, versus 47% one year later. According to another survey conducted back in 1998, households living in poverty totaled 45%.

Out of the 3.53 million households living in poverty in 2014, "the new poor" account for 33%.

Conducted among 1,500 households in September-October 2014, the survey further found that 1.7 million households live in extreme poverty conditions.

Source: http://www.eluniversal.com/economia/150130/poverty-hits-484-of-households-in-venezuela

Read more...

Andres Oppenheimer: Oil-rich Venezuela’s miracle — record poverty

The recent history of oil-rich Venezuela should be taught in universities around the world as a textbook case of an economic miracle in reverse: despite having benefited from the biggest oil boom in recent history, the country has managed to be poorer.

A joint new study by three leading Venezuelan universities — Andres Bello Catholic University, Central University of Venezuela, and Simon Bolivar University — shows that 48.4 percent of Venezuelan households were below the poverty line in 2014, up from 45 percent of households in 1998, before late radical leftist President Hugo Chávez took office and benefited from nearly a decade of soaring world oil prices.

Luis Pedro España, a Andres Bello Catholic University professor who co-authored the study, told me in a telephone interview that the nationwide survey of 5,400 people was done in October last year, and has a margin of error of 3 percentage points. The survey used the same methodology as a similar study done in 1998 by the government’s office of statistics, which was supervised by a United Nations agency, he said.

The new study is in sharp contrast to Venezuelan government figures, which claim that poverty has decreased in Venezuela under Chávez’s “socialist revolution.”

According to the Venezuelan government’s National Institute of Statistics (INE), the country’s poverty rate has fallen from 44 percent of households in 1998 to 27.3 percent of households in 2013, but it has not published any figures for 2014.

The United Nations Economic Commission for Latin America and the Caribbean (ECLAC), which uses official figures from Venezuela, reported recently that poverty in Venezuela — including extreme poverty — rose by nearly 10 percentage points in 2013 after declining steadily in previous years. But ECLAC does not provide figures for 2014, either.

Asked about the disparity between the joint study by the three Venezuelan universities and the INE and ECLAC poverty surveys, España said there has been a “brutal fall of the purchasing power of the Venezuelan people in 2014, which has led growing numbers of them to be unable to buy basic goods and services.” He added that the INE and ECLAC figures do not reflect the record poverty rate because they don’t report figures for 2014.

Venezuela, which relies on oil exports for 96 percent of its foreign income after Chávez’s “Socialism of the XXI Century” destroyed much of the country’s private sector, has been hit like few other countries by the recent collapse of world prices. After soaring from $9 a barrel when Chávez was elected in 1998 to a record $145 a barrel in 2008, oil prices have fallen to about $45 a barrel this year.

This, and President Nicolás Maduro’s mismanagement, led to an economic collapse in 2014. Venezuela ended the year with a 64 percent annual inflation rate — the highest in the world — and shortages of milk, toilet paper, and several other basic goods.

“And 2015 looks like it’s going to be even worse,” España says. “All economic indicators show that we are heading toward an inflation rate of 100 percent or 120 percent this year, which will be a record in Venezuelan history.”

Maduro blames an alleged conspiracy by the country’s oligarchy and “U.S. imperialism” to wage an “economic war” against the government, and points at new U.S. sanctions “against Venezuela” announced in Washington this week as an example. In fact, the sanctions are not against the country, but against current or former Venezuelan officials involved in corruption or human-rights abuses who will be denied U.S. visas, State Department officials say.

My opinion: It’s hard to recall any case of a country that has received such a windfall in recent history as Venezuela and has ended so poor.

According to Venezuela’s Central Bank figures, the government got $325 billion from oil exports between 1998 and 2008 — more than combined gross domestic product of several Latin American countries.

But instead of investing in education, science, technology, and innovation, or at least build a financial cushion for a rainy day, Chávez embarked on a fiesta or populist subsidies, corruption, and wanton expropriations. It’s a movie we have seen over and over in Latin America, and that invariable ends badly.

Now, despite Maduro’s daily conspiracy theories that increasingly fewer Venezuelans take seriously, the core of Chávez’s “Socialism of the XXIst Century” — the claim that it has reduced poverty — has collapsed. As the joint study by the three Venezuelan universities shows, it has proven to be temporary illusion, which lasted only as long as oil prices were at record highs, and that has left the country poorer than ever in recent history.

Read more...

URUGUAY: One-Third of Elderly Live in Poverty

Multiple media outlets reported on 16-18 March that the economic vulnerability of a large segment of older adults is large (one in three), is one of the conclusions of the study "An Overview of Aging in Uruguay." The study, by IPES details the circumstances of the elderly in Uruguay with the aim of contributing to the development of policies that ensure adequate protection of the elderly in the country. The investigation was coordinated by Federico Rodríguez and Cecilia Rossel, and had the support of UNFPA.

Read more...

Poverty in Uruguay: A Success Story

The number of Uruguayan citizens living below the poverty line of less than $1.25 a day has halved since 1990. This drastic reduction in poverty in Uruguay means the South American country has successfully achieved the first of the United Nations Millennium Development Goals.

In 2012, the rate of poverty in Uruguay, defined as those earning less than $1.25 a day, decreased to 12.4 percent of the overall population. Uruguay’s Minister of Social Development, Daniel Olesker, points to labor and health reforms to explain these achievements.

Ever since the 2002 economic collapse of its neighbor, Argentina, Uruguay has slowly struggled its way out of indigence. In 2004, the poverty rate hit a high of 39.9 percent and has steadily decreased since due to efforts on behalf of the government to provide more funds for social inclusion programs.

In early 2005, the then-President of Uruguay, Dr. Tabaré Vasquez, revealed a two-year Emergency Social Program to aid the most vulnerable members of Uruguayan society. The program addressed pressing issues such as food, shelter, health, work and education for the most destitute in Uruguay.

Other programs aimed at reducing poverty in Uruguay include a family allowance program wherein “vulnerable” families are given a subsidy of around 700 pesos per month, a sum equal to about $31. Families in more extreme conditions may receive up to double that amount.

As a result of these reforms, the number of homeless people living in Uruguay fell to .5 percent of the population. Despite the success of these public policies, it continues to elude the segment of the population in the lowest rung of the income distribution.

The current President of Uruguay, José Mujica, is known as a champion of the poor and sets an example for citizens of Uruguay by living modestly. He donates 90 percent of his income as president to charities working on housing for the poor and lives on a small farm outside Montevideo instead of the presidential palace.

Soyrce: http://borgenproject.org/poverty-uruguay-success-story/

Read more...

Climate imperils Peru's poverty drive

Peru’s efforts to reduce poverty are at risk from the effects of climate change, one example of the problems facing the wider Amazonia region in a warming world.

LONDON, 26 December – Peru is the country chosen to host the 2014 UN climate conference, a key meeting for trying to advance an ambitious plan to rein in greenhouse emissions which is planned for agreement in 2015.

But the country has recently earned a rather more dubious distinction. In 2012, for the first time, the Peruvian Amazon became a net emitter of carbon dioxide rather than oxygen, according to the latest human development country report of the UN Development Programme (UNDP).

The Amazon rainforest usually acts as a carbon sink, absorbing atmospheric CO2 rather than releasing it. Scientists think this reversal of its normal behaviour results from the droughts in the western Amazon in 2005 and 2010 and say it shows Peru’s vulnerability to climate change.

Peru has more than halved its poverty rate in the last decade, from 48.5% in 2004 to 25.8% in 2012. But the 2013 UNDP report said its vulnerability to a warming climate could cancel the progress it has made in directing economic growth into sustained poverty reduction.

Glaciers going

One of the UNDP report’s authors, Maria Eugenia Mujica, said: “If we disregard [environmental] sustainability, whatever progress we have made in poverty reduction or improvement of human development will just be erased due to climate change”.

With a temperature rise in the Andes of 0.7°C between 1939 and 2006, Peru has already lost 39% of its tropical glaciers. Temperature rises of up to 6°C are expected in many parts of the Andes by the end of this century.

Peru’s economic success is in some cases directly linked to activities which contribute to climate change, for example illegal gold mining and logging, and the cocaine trade – all of them environmentally destructive, but lucrative.

“The growth does not come from education or health, but from predatory activities, like [resource] extraction and mining”, said Francisco Santa Cruz, another of the report’s authors.

Peru is trying to protect itself against the ravages of a warmer world, but the odds are against it. It recently announced plans to invest US $6 bn in renewable energy projects: around the same time came predictions that climate change could cost between 8% and 34% of its GDP. A report by the Inter-American Development Bank has said the entire Latin American and Caribbean region will face annual damages from global warming of about $100 bn by 2050.

Taken for granted

The Global Canopy Programme and the International Center for Tropical Agriculture, describing climate change as “a threat multiplier”, called in a report this month for a new security agenda for Amazonia and the countries of the region.

Manuel Pulgar, Peru’s environment minister, said at the report’s launch: “Climate change is a global problem, but one that will multiply local and regional problems in unforeseeable ways.

“In Latin America, we have taken Amazonia and its seemingly limitless water and forests as a given. But recent unprecedented droughts have shown us just what happens when that water security falters.

“it impacts food and energy production, it affects the wellbeing of entire populations, and it leaves governments and businesses with a big bill to pay. The science is clear, so we cannot afford to miss the opportunity for positive action now.” – Climate News Network

Read more...

Usaid's role in extreme poverty reduction lessons from Peru

Peru was a desperately poor country as recently as 1990. Ravaged by civil war and hyperinflation, food consumption had fallen below 1,950 calories per capita, and public sector wages had dipped to $39 per month.1

Macroeconomic stabilization in the early 1990s, followed by political reforms in the early 2000s, set the stage for improved economic growth. Yet this growth was disproportionately concentrated in the capital, leaving out Peru’s poorest regions. In 2004, 20 percent of Peru’s population remained extremely poor,2 and it began to look as if Peru might become a case study for economic growth without poverty reduction. But, as growth spread to the highlands, extreme poverty fell to 11.2 percent by 2007 and 6 percent by 2012.3 Inequality, as measured by the Gini coefficient, also fell.

How did Peru achieve such a dramatic transformation? Three efforts were key to Peru’s inclusive economic growth: infrastructure investment, particularly investments to improve the rural transportation network;4 economic stimulation of market systems in poor regions;5 and Juntos, a well-designed conditional cash transfer program.6 Largely thanks to these efforts, coastal prosperity spread to the country’s impoverished interior.

USAID helped Peru fight poverty on two of these fronts, roads and market systems, by identifying market and government failures that the Agency was well positioned to tackle. USAID’s contributions were small compared to efforts by the Government of Peru and the private sector, yet they nevertheless reflected the potential of catalytic interventions in reducing poverty.

An innovative approach to financing infrastructure

Peru has had remarkable success improving rural access to markets. From 2001 to 2011, the country cut average travel times from 176 of the poorest rural districts to the nearest city by more than half. Districts with these improvements reported rising market prices of both agricultural land (up 88 percent) and housing (up 16 percent).7 Day labor incomes, adjusted for inflation, rose 73 percent. Rural roads also improved access to health and education services.

Public investment in the transportation sector increased from 5 percent of the federal budget in 2000 to 14 percent in 2010. Yet Peru’s successes depended as much on public-sector innovation as they did on increased funding.8

These innovations included build-operate-transfer (BOT) concessions. Under a BOT concession, the government gives a private company a permit to build, operate and maintain specific infrastructure, such as a road or port. For a defined number of years, the private company charges road tolls or port fees to repay its loans and earn a profit. At the end of the concession agreement, the company transfers ownership and operation of the infrastructure facility to the government.9

BOT concessions align political incentives with the public interest more effectively than either government ownership or privatization.10 Previously, the Government of Peru tended to build roads to garner voter support and it neglected road maintenance, even though maintenance tends to be more cost-effective than rebuilding roads over time. Instead, BOT concessions incentivize the private sector to include maintenance as part of their contracts. The better the roads, the more likely toll-paying drivers will be to use them.

Privatization, however, creates another set of incentive problems. Instead of focusing the sale on the long-term public interest, governments often try to achieve the highest possible sale price with offers to the private owner such as monopoly pricing power. In contrast, BOT concessions offer the benefits of privatization—increased investment in infrastructure, specialized technical competency and elimination of the drain on public funds–without generating immediate public funding windfalls. Since no funds change hands between the government and the private entity under a typical BOT concession, the government has no incentives to sell out future consumers for an immediate payout, as has been alleged in past Peruvian privatizations. Instead, future governments benefit from the BOT when the infrastructure facility is transferred to government control.

Successful design of these concession arrangements requires complex economic, legal and engineering expertise. In fact, the Government of Peru decided to concede 11 roads in 1995, but did not actually concede any roads until 2002 because of a lack of technical expertise.

In 2003, USAID began to help the Government of Peru design concessions for two highways connecting the coast with the impoverished interior as well as design an upgrade to the country’s most important port. USAID’s technical assistance also helped the government design contract terms and engineering studies that reduced project risk, resulting in two concessions that attracted private-sector bidding.

USAID invested just $8 million in this activity. Yet the three successful concessions stimulated more than $800 million in private investment for infrastructure.11 The infrastructure built with this investment opened up markets to the interior of the country and played a key role in Peru’s recent economic growth.12 It also likely helped to reduce poverty, although knowing exactly how much is difficult to determine in light of the many other factors affecting poverty reduction. We have not evaluated whether the roads and port would have been built without USAID assistance, and at what cost. This represents one example of a project where the full impacts and attribution may be difficult to measure, but one that USAID will need to pursue in order to influence national poverty rates.

Brokering market linkages

Peru drastically liberalized trade over the past 20 years through numerous bilateral free trade agreements, joining the Asia-Pacific Economic Cooperation and founding the Pacific Alliance with Chile, Colombia and Mexico. However, the informal firms for which Peru’s poorest people are most likely to work13 are seldom equipped to insert themselves into the supply chains that benefit from such agreements.

Why do buyers, such as exporters or grocery stores, purchase from large national suppliers rather than the small local suppliers found in Peru’s poorer regions? In many cases, lack of trust, rather than economies of scale or transaction costs, is the crucial market failure.14 Buyers suspect that small suppliers will fail to live up to their quality or quantity commitments. Meanwhile, small suppliers fear being exploited by large buyers. The government, with its own political interests, is not well positioned to step into the role of honest broker. Likewise, it is unreasonable to expect a buyer and a seller to pay a private consultant to help them trust each other.

In this context, USAID is well positioned to serve as an honest broker. Instead of helping suppliers improve production of goods for which there may not be a market, which many development projects have done in the past, USAID’s Poverty Reduction and Alleviation (PRA) program first helped suppliers identify potential buyers. From there, PRA identified technical constraints, provided modest technical assistance or equipment to pave the way toward new business transactions, and acted as an honest broker for a sale.

PRA saw the win-win potential for a partnership between Piscifactoría de los Andes, a trout processing company in Huancayo, Peru, and SAIS Tupac Amaru, a large farm nearby. Piscifactoría had the capacity to sell up to three times more fish than what its own ponds produced, but it doubted that SAIS and other local farms could provide quality fish. SAIS had been unable to maintain production of its once high-quality trout and did not trust Piscifactoría as a business partner. Yet a partnership could help Piscifactoría expand its operations and bring much-needed investments and jobs to SAIS.

PRA worked as a mediator to help both groups see the value of a potential relationship. As a result of this brokering, Piscifactoría invested $70,000 in the rehabilitation of SAIS’s ponds and improved its ability to meet market quality demands. SAIS enhanced its production to Piscifactoría’s specifications and became a reliable supplier. The approach was profitable for Piscifactoría, enabling the company to turn to additional local suppliers, expand sales by $5.8 million and create 550 jobs.15

The PRA benefited local Peruvians in many ways. Contracts brokered in Huancayo and elsewhere increased the incomes of suppliers, many of whom live near Peru’s poverty line. The work involved in meeting these contracts required additional hired labor. This resulted in improved opportunities for unskilled workers and lifted some above the World Bank’s extreme poverty line. In some cases, PRA also demonstrated the viability of products not previously produced in the region, such as quinoa or artichokes, opening new markets and attracting imitator firms. Finally, workers and suppliers spent their new earnings in the local economy, benefiting entire communities.

USAID funding for PRA ended in 2013, partly as a reflection of the Agency’s move away from economic growth programming. Although PRA was not rigorously evaluated, what it left behind is promising: local market actors better connected to each other and to external buyers, increasing local production, generating jobs and investing locally. In fact, between 2000 and 2007, 1,500 microenterprises and 37,500 individual producers participated in transactions facilitated by PRA, generating $232 million in sales.16 PRA’s role as facilitator paved the way for business relationships that continue to benefit Peruvians.

Conclusion

Peru’s reduction in extreme poverty over the past eight years can be attributed to both economic growth and targeted efforts to ensure that the poor shared in this growth. Before 2003, Peruvian markets and governments failed to connect the country’s impoverished interior to its increasingly prosperous coast. USAID helped address this failure by helping the government design infrastructure concessions and helping small producers connect to markets for their goods. These are no doubt small contributions to the much broader economic growth process. Nevertheless, they are contributions worth learning from and replicating, as they reflect ways that USAID can help catalyze local resources and networks for development.

Read more...