The Inefficiency of Inequality

Thirty-Seventh Session of ECLAC (Havana, 7-11 May 2018)

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Inequality is inefficient because it hinders learning, productivity, innovation and growth. Equality is, then, not only an ethical principle inherent to development, but also a key tool for achieving it. This document examines the mechanisms by which inequality erodes dynamic efficiency in the Latin American and Caribbean economies. It analyses and measures the productivity and income effects of unequal access to health and education, as well as the consequences of inequality of opportunities arising from gender-, race- or ethnicity-based discrimination. It also examines how these inequalities play out at the level of territory, infrastructure and urban dynamics, where their costs not only weigh on productivity, but also worsen energy inefficiencies and environmental degradation, thereby compromising the development possibilities of present and future generations. ECLAC proposes strategic guidelines for increasing the dynamic efficiency of the Latin American and Caribbean economies on the basis of equality.

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Equality at the centre of development

The Economic Commission for Latin America and the Caribbean (ECLAC) has proposed strategic paths towards development throughout its seven decades of existence. Since 2010, equality has had a central focus in that undertaking, as can be seen in the principal documents submitted for consideration by the countries of the region at the Commission’s four most recent sessions. Thus, for almost a decade, ECLAC has identified equality as a foundational value of development and as a non-negotiable ethical principle, in keeping with the increasing importance of the topic in public demands and policy debates.

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