Impact of Agricultural Trade liberalization on Poverty in Latin America

There are many reasons why poverty is very high in Central America. In Rural areas of Central America 2/3 of the people that live there are at or below the poverty line (Marrone, 2016). According to a study in 2002, 45% of people in rural areas were poor and the other half was extremely poor (IFAD, 2009). The money that the poor make, they only get 3% of their income, and the money that the wealthy of the poor make get 60% of their income (Marrone, 2016). Countries have not done very much to help poverty and one of the worst countries dealing with poverty is Honduras as 75% of their population live in poverty (Marrone, 2016).

Agriculture is arguably the main focus of discussion when considering the geographical cause of low economic development. The different climate and soil conditions in tropical ecological zones (Gallup et al., 2003, p.32), mean there is less

However, some believe, that a shift in the way we produce food may have some unintended consequences. They contend that poverty in nations such as Africa and Asia, is caused by the low productivity of the unindustrialized farm labor. The U.S. Agriculture Department projects, without reform, there will be over a thirty percent increase in the numbers of the ‘food insecure’ people in those nations over the next decade (Paarlberg 179).

In the cities of Wichita Falls and Vernon, the thought of economic growth and the reduction of poverty does not usually cross the minds of most citizens, but as the economic advisor of both cities, it is the main concern of my career. There are many factors that contribute towards these issues, like tax cuts, infrastructure spending, deregulation, and tax rebates (DePersio), but one focused inducer is agriculture development.

South Asia is one of the most densely populated regions of the world, where despite a slow growth, agriculture remains the backbone of rural economy as it employs one half to over 90 percent of the labor force. Both extensive and intensive policy measures for agriculture

In the United States of America, people take food for granted. Anyone can go to the local grocery store or a farmers market and buy almost every type of food produced in the world. Globalization of food in first world countries has created “food scenes” in large metropolitan areas, and we can agree that this is spreading to smaller towns every day. Anyone can think of their favorite food and everyone would give a different response, whether it would be Mexican, Italian, or a local cuisine. This is possible through technological advances in farming techniques developed to produce food year round, due to strong states of government, with policies that empower this to be true. The lack of government involvement in Malawian farms is the predominant reason for a constant state of poverty.

The purpose of this paper is to critically analyze a socio-economic issue that is affecting the Latin American Countries. Throughout the years, Latin American countries have been known to be poor and underdeveloped which stems from a low level of education. A recent report by Fernando Reimers (2017) stated that “more Latin Americans are living in poverty now than what was previously reported despite the economic growth.” Latin America remains at the bottom of the rank although education and human capital are often identified as an important element of growth. The subject of poverty is directly linked to the poor that are still illiterate or hardly literate. Therefore, the negative and positive impact of education and poverty in the Latin American Society will be highlighted as well as comparing and contrasting the issue to the Jamaican society. Further, recommendations as to how to address these issues will be perused.

Nowadays, worldwide economy has behaved in a very explosive and surprising manner. Specially in developing countries, the local economy has faced a great challenge for the people towards globalization. In South America, Peru is a traditional country trying to fit its customs and techniques in agriculture with the fixed and aggressive markets of the world. According to Javier Escobal and Denice Cavero (2014), Peruvian national statistics indicate that the country has experienced persistent economic expansion recently (annual growth averaging over 5% during the last 15 years). However, poverty has not been reduced, specially in rural areas, where it affects two of every three inhabitants. Commonly, people within this marginal regions, have practiced agriculture as a profession and as a tradition since ages.

When strategizing for economic development as early as the 1960’s, the Brazilian government chose to focus on the growth of the agricultural industry (Martinelli, 2010). Not only was significant funding invested into agricultural research, but the government also implemented policies designed to accelerate the growth of this industry, such as fiscal subsidies and trade policies which incentivize exportation (Martinelli, 2010). Though the government was successful in allowing Brazil to develop into one of the global leaders in the agriculture industry, this prosperity was not evenly distributed throughout the population and large inequalities continue to exist today (Martinelli, 2010).

Compared to other Latin American countries, agriculture has had a much smaller impact on Venezuela’s economy. With the emergence of oil in the early 1900s, the agriculture sector suffered from steady decline until the 1980s when specific programs where designed to restore agricultural production. As opposed to previous methods of deregulation, extensive government intervention seemed to be the only way to boost overall agricultural production. After the peak of agriculture production in 1989 as demonstrated in Figure 1, new governmental policies caused the continual decline of agriculture. Due to economic priorities, the agricultural sector that once accounted for 22 percent of GDP in the 1930s, now only accounts for barely 1 percent of GDP.

The gap between rich and poor nations is still growing. Although rich nations have provided aid and technical assistance to Third World nations, the developing nations face many obstacles in their drive to modernize. The population explosion, inflation, natural disasters, poor planning, and even government corruption have upset the development plans of many Third World nations. Some progress has been made in increasing food production. Researchers developed new

Liberalization is a term that has dominated the minds, and governments of Latin America from the advent of the region-encompassing debt-crisis of the 1980s. Many reforms, with the idea of opening up the market and reducing barriers to trade in order to increase growth, control inflation, and reduce social unrest, have taken hold in the region in notable countries such as Mexico. In, “Programs on Poverty and Inequality: Chile, Mexico, and Peru,” John Sheahan explores the reasons as to why liberalization programs have seemingly worked in some countries, and have had lackluster effects in others. Chile, for example, is often cited as the shining beacon of economic example in Latin America, and is also grouped in with the East Asian economies that developed to the level of Western Europe from the 1980s onwards. Conversely, Mexico has had disappointing growth that has never recovered to pre-1980s levels, along with social unrest and failures in governance. This paper will explore the questions: Why does poverty persist so much in some countries in the region e.g. Mexico, and Peru to a lesser extent, and why does it seem effectively controlled in other parts, such as in Chile? Sheahan argues that direct social programs are increasing in popularity as effective forms of controlling the negative effects of liberalization reforms, but that they

The agricultural workforce is made up of 80% of the country’s people while the other 20 percent works in services and industry. Even though unemployment doesn’t exist, the country is still poor but hopes to see some significant progress and changes to offset the housing shortages, the lack of clean water, infrastructure reconstruction, jobs, education, and economic reform.

Several factors that were considered are accepted as common predictors of agricultural adoption in developing countries. However, three questions related to explanatory variables were not included in the final questionnaire. Firstly, we did not consider access to bank loans because coffee farmers in Mexico are mostly unable to obtain investment credit from lending institutions. Coffee producers usually have the option of obtaining short term financing (cash advances) either from local traders or from coffee cooperatives for those who are members. However, the availability of long term credit has virtually disappeared making it difficult for producers to defer the costs of implementing over several years (AMECAFE, 2009).

Several factors that were considered are accepted as common predictors of agricultural adoption in developing countries. However, three questions related to explanatory variables were not included in the final questionnaire. Firstly, we did not consider access to bank loans because coffee farmers in Mexico are mostly unable to obtain investment credit from lending institutions. Coffee producers usually have the option of obtaining short term financing (cash advances) either from local traders or from coffee cooperatives for those who are members. However, the availability of long term credit has virtually disappeared making it difficult for producers to defer the costs of implementing over several years (AMECAFE, 2009).