The latest OECD report on Latin America, Latin American Economic Outlook 2009, points out something very obvious for any observer of the region: the need for greater public investment in health and education.  It is very difficult to assert the legitimacy of democracy and free markets on context of pervasive poverty. Especially if a state operating  as  a free market democracy does not seen to improve the quality of living of most of their population . The report focus on the fiscal policy of countries in the region. In other words, the economic benefits of growth, and tax revenues have not translated  in less inequality . This is not surprise, taxes  and fiscal policy is only a small part of the problem.

From OECD website:

Are Latin American governments maximising the potential of fiscal policy as a development tool? The 2009 edition of the annual OECD Latin American Economic Outlook analyses the progress governments in the region have achieved in the fiscal realm during the last decade.[…]

At present, surveys show, fewer than one in four Latin Americans believes that money from taxes is being well spent. With more than 200 million people – nearly 40 percent of the population – living in poverty, the region has the highest levels of inequality of any region in the world.  Stronger economic growth is likely to help raise fiscal revenues, but Latin American countries need to spend these revenues in a more effective and fairer manner, in order to reduce poverty and maintain citizens’ trust in democratic systems.

Link: Multimedia page

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