LAV Magazin 2021

C OVID-19 has had devastating economic and health effects in Latin America. Though the region is home to just eight percent of the world’s population, it has suf- fered more than 30 percent of global COVID deaths. Latin America also experienced in 2020/21 the most se- vere economic crisis of any region, with a seven percent GDP contrac- tion, compared to the global contrac- tion of 3.3 percent. In this context, social protection re- sponses, such as cash transfers, are crucial for safeguarding access to ba- sic needs such as food and medicine, and can prevent humanitarian ca- tastrophes. Unlike in developed coun- tries such as Germany, where social security reaches the vast majority of the population and access to housing, sanitation and basic needs are broad- ly met, in most Latin American coun- tries a significant number of the pop- ulation works in the informal sector, half of the labor force in the region, and live day-to-day and in precari- ous conditions. When the pandemic hit, governments were ill-prepared to provide the far-reaching safety-nets they activated in Germany, even as they decreed lockdowns of various stringency. Even though less at risk epidemiolog- ically, children were at particular risk socially when the pandemic hit. Al- most half (46 percent) of the children already lived in poverty, while the corresponding figure for those over 65 years was just 15 percent. Even though the last twenty years had seen a significant expansion of govern- ment programs that provided moth- ers with low income with cash trans- fers in exchange for health check-ups and school attendance of children, the scope of the programs was no- where near the breadth and suffi- ciency needed. Moreover, as schools closed due to the pandemic, children also lost their regular school-provid- ed meals. Given these dire conditions, the last year and a half have witnessed a rapid expansion of social protection mea- sures by governments, most centrally cash transfers aimed at providing vul- nerable households with the means to survive these social distancing mea- sures, as well as the economic crises that soon followed the other mea- sures. What may be surprising is how dra- matic the variation in these social protection efforts has been, and not necessarily in intuitive directions. Brazil, despite a far-right president who is openly derisive of the poor, passed the most comprehensive initial emergency assistance program in the region. The reform was driven by the opposition and unanimously passed by Congress, leaving the president lit- tle option but to implement it. Once it was in place, it resulted in the low- est levels of extreme poverty record- Merike Blofield Director, GIGA Institute for Latin American Studies Professor of Political Science, Universität Hamburg Prof. Dr. Merike Blofield, Director of the GIGA Institute for Latin American Studies German Institute for Global and Area Studies - GIGA, in Hamburg Biography Merike Blofield is since 2020 Director of the Institute for Latin American Studies at the German Institute for Global and Area Studies (GIGA), and Professor of Political Science at the University of Hamburg. Before coming to Hamburg, she was Professor of Political Science and Director of Gender and Sexuality Studies at the University of Miami. With a focus on Latin America, the enduring question that her research addresses is: when and how do governments produce more equitable and efficient public policies? Blofield has pub- lished widely in scholarly journals and policy outlets. She grew up in Finland, spent the past thirty years across North and South America, and looks forward to learning German in Hamburg. ed in the country by July 2020. Since then, assistance has decrease, while incremental expansion in Chile, also driven by opposition pressure over a reticent conservative president, has led to an even more comprehensive program in that country. Meanwhile, at the opposite end, we find Mexico, where a leftwing, self-de- clared champion of the poor, has done little to help vulnerable households weather the devastating effects of the pandemic. The government did not initiate any national-level cash trans- fer programs in response to the hard- ships of the COVID-19 pandemic. As a result, UNICEF reported in Septem- ber 2020 that four out of five fami- lies with children were not meeting basic nutritional requirements. With my co-authors, we have document- ed these differences in social protec- tion measures in ten Latin American countries. Aside from vaccinating the popula- tion, the region now faces two mon- umental, and related, challenges. First, governments need to establish a new social contract with children, to begin alleviating and redressing the lost time and hardship that they have endured over the past two years. The physical school closures in Latin America have been the longest in the world, and combined with nutritional insecurity, family mental stress, and reduced access to healthcare, the ef- fects have been devastating. Poverty has increased, and school dropouts among the poor have sky-rocketed. This new social contract requires both broad investment in cash trans- fers for children, but also bolstering public education coverage -including full-time days, and extending it to younger children- and quality. The good news is that the efforts that gov- ernments have undertaken to update their databases as they developed new emergency assistance programs can help in extending the reach of both cash transfers and services to vul- nerable families and children in the future. The bad news is that if gov- ernments do not immediately invest in children and youth, they will face several lost generations, with incal- culable negative effects not just on well-being, but very importantly, on human capital and productivity. The countries’ economies will fall further behind. The second challenge is the even tougher one: funding the new social contract through a new fiscal con- tract. As governments extended new emergency programs, they mostly did so on credit, kicking the difficult po- litical decisions down the road. The money has mostly dried up, while the need for investments in children is larger than ever. Establishing sustain- able sources of revenue can partially be addressed through more efficient and progressive expenditures. How- ever, it fundamentally means expand- ing the tax base. Latin America as a region has a much lower tax base than other countries at similar levels of de- velopment, and Latin American elites are also notoriously good at skirting taxes. Yet the only path toward more sustainable and productive societies is when the economic and political elites can agree to collectively invest in the future of their countries. Especially in the poorer countries, domestic elites won’t be able to do it More information: German Institute for Global and Area Studies - GIGA 50 years of research on Africa, Asia, Latin America and Middle East The GIGA works with perspectives, concepts, and experiences from dif- ferent world regions. It stands for research that is global in content, reach, and structure. The GIGA is jointly funded by the German Federal Foreign Office, the Free and Hanseatic City of Hamburg (Ministry of Science, Research, Equalities and Districts), and the other federal states. As a member of the Leibniz Asso- ciation, the GIGA is committed to the Leibniz principle of “theoria cum praxi”: science for the benefit of society. alone, and these countries should re- ceive multilateral assistance. The past year and a half have not only pro- duced losers, but winners as well, and now that an international multilateral tax reform has been agreed upon, it is up to all of us to ensure that it is im- plemented and enforced in a way that benefits those who need it the most. And to do so before the next pan- demic hits. A new social and fiscal contract for Latin America 36 37 Institut für Lateinamerika-Studien – GIGA