In many countries, significant regional inequalities of income and wealth remain or have reemerged. The problem is so acute that several studies on the geography of discontent, especially looking at Western European Countries and North America, have been published lately. In this article I call attention to the fact that in the Global South as well, many regions have become or remain ‘left behind’. Moreover, regional inequalities have been persistent and self-sustaining. Looking at regional imbalances in less developed countries continues as a critical issue since aside from the economic aspects of such disparities, there are broader social and political consequences.
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Placing inequality in Latin American on a global scale
It is widely known that Latin America is the most unequal region in the world in the distribution of wealth. Around half of the 20 most unequal countries in the planet are in this region and, according to the Gini index, the region’s average is 4 percentage points higher than that of Africa and 11 higher than China. What is not so well known is that enormous spatial disparities exist within countries. Regional and urban imbalances are a significant component of overall inequality. Despite the region’s economic growth and the slight but steady decline inequality and poverty in recent decades, regional disparities have not shrunken. Different figures illustrate such inequalities.
In Latin America, individuals’ incomes are nine times higher in the richest regions than in the poorest. On average, regional economic disparities are four times higher in Latin American countries than in those of the Organisation for Economic Cooperation and Development (OECD). It would take the poorest region in Colombia 200 years to reach Bogotá’s per capita income levels.
Regional income differences and development
A recent study argues that in general, regional income differences are larger in richer countries than in poorer ones, and that large disparities across regions are a common outcome of the development process. At early stages of development, regions across the country tend to be similarly poor, but as the national economy grows, some regions emerge as development poles, becoming more productive, paying higher wages, and attracting a more educated population. In Argentina and Mexico, GDP per capita in the poorest regions is sixteen times lower than in the richest, while in Honduras and Uruguay, this difference is just three times lower.
These disparities are a key issue that deserve significant attention. However, over the past three decades they have tended to slip from the public agenda in favour of economic policy focused on macroeconomic problems, aggregate economic efficiency and competitiveness. Interestingly, social unrest has been growing in recent times in several countries across the sub-continent. During 2019, protests broke out in major cities in Chile, Colombia, and Ecuador. Population in those countries took the streets of their respective capitals to demand, among other things, equal treatment and better opportunities. Part of this discontent may be deeply rooted in the profound spatial divisions within countries.
Case study: Mexico
In Mexico, regional disparities have been relatively more studied. Economic disparity between the richest and the poorest regions are wider than in any other OECD country. The central and northern states typically boast more dynamic and advanced economies than those in the south. The evolution of regional disparities over a century has followed an N-form reflecting the country’s development path since the late nineteenth century. Inequalities increased during the periods of greatest international openness: during the agro-export-led growth stage (1895–1930) and the neoliberal trade liberalisation. Particularly in the former period, regional divergence grew with the establishment of a strong concentration of economic activity in Mexico City and a clear division between the rich north and poor south. The import substitution period saw some regional convergence although with geographical concentration of industry in Mexico City.
Interestingly the large economic downturns over the last three decades have coincided with decreases in regional inequality. Decreasing inequalities during economic recessions may be the result of the stronger and immediate negative effect on the most advanced economic centres in the country. On the other hand, most backward regions might have developed a kind of resilient capacity as they are less dynamic sheltered economies which are dependent on public employment, transfers and investment and are less exposed to changes in market conditions. Regional disparities and their short- and long run variations must continue being systematically studied as they have extremely important implications for regional economic policy and the left behind places.
Alejandra Trejo Nieto (Twitter @AlejandraTrejoN) is a Professor at the Centre for demographic, urban and environmental research, El Colegio de Mexico.
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