Editorial: The Tyranny of Statistics
31 May 2012
The tyranny of statistics is back with a vengeance. First, we had Bill Gates in February telling the Spanish government that it makes no sense to “help countries like Peru, a middle income country with a per capita income of US$ 10,000, while there are children dying of malaria and people unable to get medicines for AIDS”. “Peru”, said Gates “has resources to exploit and could be as rich as a European country”.
Our own Department for International Development (DFID), of course, cut Peru off its aid list some years ago, but it now appears the coalition government is putting pressure on the EU to wield the axe more widely. On 16 May Stephen O’Brien, Parliamentary Under-Secretary of State for International Development, told the Commons: “As a result of concerted UK pressure, the EU is currently reviewing key aspects of its entire approach to aid; this includes cutting funding to countries that don't need it, such as some middle-income countries in Latin America”.
For the sake of accuracy, Bill Gates’s figure of US$ 10,000 a year is adjusted for purchasing power – the raw figure is US$ 5,400 – but the US$ 10,000 is the figure relevant for discussions of poverty. Again for the sake of accuracy, while malaria is not currently a major problem for Peru, the country’s poor children have enough to be going on with. A hardship map shows that in the Andes and Amazon between 89 and 100 percent of young people have basic needs unmet.
The huge problem of Latin America is inequality, between a rich minority and a poor majority, but also between regions within the same country. In the rich countries that make up the OECD, the widest income gap between the richest and poorest regions is 100%, while in Peru it is over 600% and in Brazil over 800%.
The reasons for this are complex. There is the legacy of colonialism, in which Latin American countries were basically seen as sources of raw materials or profit for the metropolitan countries (a situation reproduced today in the mining and hydrocarbon industries). And colonialism depended on slavery, either of the indigenous populations or of transported Africans, as in the case of Brazil. Both these population groups remain disadvantaged today.
In the case of Peru, the gap is between the coast and the jungle and the highlands. An important report published in April by Christian Aid, The Scandal of Inequality in Latin America and the Caribbean, devotes a chapter to Peru. The country’s economy overall has grown at an average of 6.4% since 2002 with an estimate for 2011 of almost 7%. Poverty rates nationally have fallen from 48.3% in 2004 to 34.8% in 2009, but while the figure for Lima was 15.3%, in the poorest department, Huancavelica, it was 77%. It was also over 59% in five other departments.
One reason for this is the low level of tax revenue, 14.9% of GDP in 2010 (in the UK it is over 35%). Another reason, or set of reasons, lies in Peru’s decentralised administration, examined by Andrew Nickson in a recent article written for the Peru Support Group. The royalties from the mining bonanza of recent years go to the regions and municipalities where the mines are located, and this has led to increasing inequality in the availability of resources across the country. The Finance Ministry (MEF) is obsessed with fierro y cemento (infrastructure), says Nickson, rather than social spending on health, education and water and sanitation.
There has also been inadequate training for regional and local officials in dealing with their increased budgets. The Christian Aid report quotes a Congressman from Huancavelica as saying that the department annually returned S/100 million (US$ 38m) to the MEF over the last ten years.
Gender disparities are another factor in the persistence of poverty, and these are examined in this article by Paula Escribens. She reports the horrifying statistic that an average of 10 women die a month from extreme violence, 70% at the hands of their partners.
There is much useful support DFID and the European Union could give the Peruvian government in matters of taxation and regional administration, but perhaps they too see aid as primarily a matter of fierro y cemento. For the non-governmental development agencies there remains a crucial role in supporting small pilot programmes in agriculture, education and micro-finance that can then be taken over by local public and private agencies. Above all, they have a role in supporting local civil society in holding government to account.
Here at home, when considering poverty in Latin America, there is also a need to insist on the message: ‘It’s the inequality, stupid!’.
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