Democracy & Governance in Latin America & the Caribbean
There is growing consensus that corruption is leading to a crisis for democracy in this region. Corruption is seen not only as a consequence of weak governance, but as a barrier to economic development and the growth of democratic and strong societies. A 2003 study by the Center for Strategic and International Studies reports that a corrupt or inefficient justice sector can slow economic development, undermine the strength and credibility of democratic institutions, and erode the social capital necessary for development. Research by the World Bank Institute shows that countries that tackle corruption and improve the rule of law can increase their national incomes by as much as four times in the long term, and child mortality can fall as much as 75%.
Surveys show that awareness of corruption has significantly increased, both among policymakers and the public. A 2003 survey by the World Economic Forum of business leaders in 102 countries found that seven of the 10 countries with consistently high measures of political corruption are in Latin America. Growing awareness of corruption has influenced the rhetoric of politicians, and some officials have won elections by promising to battle corruption. Similarly, civil society organizations and the media have been increasingly active in promoting transparency, lobbying for reforms, and informing citizens.
LAC countries have adopted a range of legal, accounting, and auditing procedures to combat corruption, and some are prosecuting corrupt public officials. While these are positive steps, the pervasive nature of high-level corruption across the region makes this a priority issue. In December 2003, former Nicaraguan President Arnoldo Alemán was sentenced to 20 years in prison for corruption. Although he was found guilty of money laundering, fraud, embezzlement, and electoral crimes, and accused of helping to divert nearly $100 million of state funds into his party's election campaign, Alemán has been released from prison to serve his sentence in his home, where he continues to negotiate political deals that could result in reversing his conviction. In January 2004, prosecutors in Guatemala opened a formal investigation of embezzlement charges against former President Alfonso Portillo, as well as his vice president, finance minister, and three other top officials, who are now in jail. Former Costa Rican President Miguel Angel Rodriguez resigned as secretary general of the Organization of American States in October under allegations of corruption, and is under house arrest. And in Paraguay, six Supreme Court justices charged with corruption were impeached and replaced in 2004 with judges selected in an open and transparent process for the first time in Paraguayan history.
Just and effective legal systems increase government legitimacy in the eyes of citizens and bolster support for democratic institutions. The 2004 United Nations Development Program Report on Democracy in Latin America draws attention to declining public faith in democracy due to persistent poverty and governments' inability to effectively deliver public services, including security. In addition, countries with more effective and equitable justice systems provide more stable and attractive investment environments by offering legal protections for investors. Although countries across the region have made strides in adopting procedures to make criminal justice more transparent, efficient, and participatory, more work remains to be done to fully implement these reforms and provide access to justice for all citizens. Crime and organized gangs, fueled by a combination of population density, rapid urbanization, and persistent income inequality, present a growing problem that places further stress on democratic institutions. A study by the Inter-American Development Bank notes that Latin America's per capita gross domestic product would be 25% higher today if the region had a crime rate similar to the rest of the world.
Free and fair elections have become the norm in the LAC region; however, in Haiti, fraudulent parliamentary elections in 2000 led to a protracted political impasse characterized by growing arbitrary and authoritarian rule, lawlessness, and violence. The impasse ended in 2004 with the resignation of President Aristide.
Despite bold efforts by Colombia, Bolivia, and Peru to combat narcotrafficking, the lack of state presence in some areas has allowed illegal narcotics production and armed terrorist organizations to continue to flourish. Narcotics wealth gives large trafficking organizations the means to corrupt and undermine legitimate governments, and the lack of effective rule of law threatens business interests and puts citizens and Americans at risk.
Economic growth in LAC reached 5.5% in 2004 (preliminary estimate by the Economic Commission for Latin America and the Caribbean, or ECLAC), outperforming the most optimistic forecasts. With the exception of Haiti (where GDP fell 3.0%), every country in the region posted positive growth. This growth is an exception to the trend in the region where GDP has grown, on average, by just 2.0% annually for the last nine years.
The region's macroeconomic performance is closely tied to the international economy. World economic activity picked up in 2004 and global GDP is expected to grow just under 4.0% (up from 2.6% in 2003), while world trade is expected to grow more than 9.0%. This international environment, especially rising prices for oil and metals, was also decisive in a recovery of the terms of trade in LAC. 2003 marked the region's first balance of payments surplus in 50 years, and the region posted a modest surplus again in 2004 as a result of improved terms of trade and migrant remittances, which rose 16.8% over 2003 levels.
Significant challenges remain, however, to overcome the years of low economic growth, compounded by external shocks, natural disasters, and domestic crises. LAC is the most unequal region in the world in terms of income disparity; inequality is high both in and across countries. Nearly 128 million people (about 25% of the population) earn less than $2 per day and 50 million people earn less than $1 per day. The urban unemployment rate has hovered around 10% for the last several years.
External debt for the region has increased considerably since 1990, from $444.7 billion at the beginning of the decade to $747 billion in 1999. Although external debt started to creep back down in 2000, that reversed in 2002 when debt for nearly every LAC country increased and debt for the region rose $25 billion to $726.5 billion. ECLAC estimates that external debt will fall by $3.5 billion in 2004. External debt as a percentage of GDP averaged 42.8% in 2003 for the region. This indicator was highest for Guyana (202%), Nicaragua (162%), Argentina (130%), and Belize (90%).
Spurred by a growing global demand for timber and paper, illegal and destructive logging remains one of the key threats to the world's oldest forests. Illegal logging destroys forest ecosystems, robs governments and communities of needed revenues, and acts as a disincentive to sustainable forest management. Only 0.5% of all forests are under ecologically sound management, as certified by independent international certification bodies.
Inequalities in access to quality health services, especially for maternal and child health, present major obstacles to achieving overall health improvements as well as economic and social development in LAC. The adult HIV/AIDS prevalence rate in the Caribbean is surpassed only by Sub-Saharan Africa, and AIDS has become the leading cause of death in the Caribbean for both men and women aged 15-24. Social patterns of early sexual initiation and multiple partners, particularly in the Caribbean and the Central American Basin, as well as stigma and discrimination, which keep the disease underground and discourage people from seeking testing and treatment, increase risk of transmission. More than 140,000 people died of AIDS in 2004 and more than twice that number were newly infected with HIV. Given the significant mobility of populations for employment, education, and tourism, USAID's health-related assistance in the region is critical to the security and health of the United States.
The quality of primary and secondary schooling in LAC is poor. In a recent study by the Organization for Economic Cooperation and Development of math and science skills among 15-year olds in 43 countries, the five participating LAC countries ranked among the lowest. The majority of students attend weak and under-funded schools, and fail to acquire basic skills in mathematics, language, and science. Educational systems lack adequate financing, which translates into poorly trained and motivated teachers and a dearth of materials. Rural and poor populations, the majority in most LAC countries, face many obstacles - language barriers, long distances to schools, and poorly trained teachers - resulting in very high dropout rates. Fewer than 30% of students in the region complete secondary school, and many who do finish lack the skills to compete in the workplace, let alone in an increasingly competitive global economy.
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