The initiatives set in motion in December 1994 by the democratically elected leaders of the Western Hemisphere at the "Summit of the Americas" facilitated further democratic progress in Latin America and the Caribbean during 1995 and 1996. In Haiti, for t
he first time in history, one democratically elected government transferred power to another. The Dominican Republic experienced a peaceful transition during its presidential elections, and Guatemala has been making good progress in completing its peace a
ccords.
This new edition of Latin America and the Caribbean, Selected Economic and Social Data provides information essential for evaluating both positive democratic developments and continuing social inequities in the region. These data, along with thos e on economic variables, trade, investment, and the environment, should enrich policy discussions, and research on recent developments in Latin America and the Caribbean.
In contrast to the positive democratic reforms the region has experienced, the financial crisis in Mexico in 1994-95 slowed the very positive trends in economic growth experienced over the last four years. In 1995, the economic performance of the Latin Am erican and Caribbean countries exhibited a far greater diversity than in previous years. The regional GDP grew by only 0.6% in 1995, compared with 4.6% in 1994 (a fall of 1.1% in per capita terms following an increase of 2.7% in 1994), but this poor perfo rmance was due to a great extent to the setbacks experienced by Mexico and Argentina. Excluding those two countries, all other countries in the hemisphere continued the positive trends of GOP growth per-capita over the four years. Nevertheless, for the re gion as a whole, real per capita GDP remains below 1980 levels.
On a more positive note, the tendency towards lower inflation seen in prior years became more pronounced in 1995. The drop in the inflation rate from three digits to 25% was essentially the result of Brazil's stabilization program. At 25%, this was the lo west rate for average inflation in Latin America and the Caribbean in the past 25 years.
Growth in trade between LAC and the United States as well as intraregional trade, increased again in 1995. U.S. exports to LAC grew by 3% to $95.4 billion, with Mexico accounting for 47.5% of the total. U.S. imports from the LAC region grew much faster, r ising by nearly 20% to reach a total of US$103.4 billion. Most of these imports also came from Mexico, with our imports from that country growing by 27%. U.S. exports to the region continue to support close to two million jobs in the United States.
Another important trend is the diversification of trade among Latin America and Caribbean countries. Intraregional exports grew by 13.9% in 1995 and now account for 18.6% of worldwide LAC exports of US$221.4 billion. Though the LAC region's trade with all of its major partner groups has increased, imports from Japan increased at the fastest rate (20.9%) in 1995.
Expanded trade and lower inflation have enabled the Latin American and Caribbean economies to grow, but poverty and inequality remain serious threats to both sustained growth and democracy. Poverty persists as the fundamental challenge for a region commit ted to economic reform. Sustaining those reforms is essential to growth and growth remains a major direct and indirect contributor in most countries, to reducing poverty. But, as the Hemispheric Summit follow-up Conference on Poverty in January 1996 concl uded, coherent national poverty strategies are urgently required. In the 1980s, the number of poor people increased dramatically, and this trend has yet to be turned around in the 1990s. About 45% of the region's 481 million people live in poverty, with r ural areas significantly worse off than urban ones. The most recent data show signs of reductions in poverty rates in some countries since 1990. This will be an important trend to watch as more data become available. But, even if poverty rates are reduced , persistent and sometimes increasing disparities in income threaten political stability, and thus U.S. national interests, in the region.
The environmental sector shows similar tenuous gains. For example, countries throughout the region are now actively engaged in the protection of fragile ecosystems, but rainforests continue to shrink. From the perspective of many poor urban and rural dwel lers throughout the region, access to clean water, sanitation services and clean air remains the most pressing environmental concern. As increasing numbers move to already overcrowded urban areas, the pressure to provide basic amenities and essential infr astructure will increase.
The social sectors (health, population and education) show major successes, but with critical challenges still remaining which have important implications for future economic progress. The total fertility rate has fallen from 5.3 children per woman in 197 0 to 3.0 in 1995. Infant mortality rates have reached a new low of 43.1 (per 1000 live births), and average life expectancy has reached 69 years of age. In education, the adult (15+) literacy rate has risen from 71.8% in 1970 to 84.7% in 1992. However, ba rely half help of the children who enter the first grade complete primary school. The region must retain girls in school, improve primary completion rates and strengthen the delivery of social services as a whole.
In response to suggestions received from readers of last year's edition, this publication features graphs of cross-sectoral relationships, such as the contraceptive prevalence rate and female literacy. These graphs will hopefully encourage further investi gation into how development activities are related to each other.
This edition also includes an expanded social indicators section, which attempts to identify important data related to social inequities in LAC. Also included for the first time is a section on U.S. investment in LAC, presented in both tables and graphs. As with most data publications that include a variety of indicators, there are some shortcomings due to the lack of environmental data and current social statistics available.
Finally, the shortcomings demonstrate the need to improve the availability and consistency of data and research on social indicators and the environment. The goal of sustainable development can only be achieved with a better understanding of the relations hips between economic growth, poverty, health, population, democracy and the environment.
Mark L. Schneider
Assistant Administrator
Bureau for Latin America and the Caribbean
U.S. Agency for International Development
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