"Latin America is ideologically divided."
Not as much as you think. Many think that there is an ideological race in the region, reminiscent of Cold War tensions between East and West Germany. The popular perception is that one of the camps is led by Venezuela's president, Hugo Chávez, while the other camp is formed by the right-of-center governments of Colombia, Chile, and Peru.
In reality, most countries -- with the notable exceptions of Bolivia, Cuba, and Nicaragua -- have definitively rejected Chavez's "21st century socialism," which is based on heavy state intervention, forced nationalizations, and fiscal profligacy. The disastrous economic consequences in Venezuela are visible: Inflation hovers at around 30 percent and investment has been falling continuously since 2007. The economy contracted by 1.4 percent in 2010, in sharp contrast with the rapid growth of other countries in the region. Fewer and fewer countries are tempted by the populist rhetoric and the attacks on private enterprise.
A pragmatic Latin American consensus has emerged in contrast to the more ideologically driven Washington consensus. This new thinking combines market-friendly policies with a much more ambitious social agenda. While preserving macroeconomic stability, both left and right governments are aggressively combating poverty with programs like conditional cash transfers, first introduced by former President Ernesto Zedillo in Mexico, which have become a model for countries outside the region. Latin America's economic growth and effective public interventions have created an unprecedented expansion of the middle class. In a forthcoming Brookings publication with Homi Kharas and Camila Henao, we estimate that by 2020 10 percent of Latin America's population will enter the global middle class, bringing nearly 60 million individuals up to the same level of income as lower-middle-class citizens in such European countries as Portugal and Italy.


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