Education
Schooling inequality, crises, and financial liberalization in Latin America
The multi-dimensional role of higher schooling inequality in decelerating liberalisation
Authors:
J.R. Behrman; N. Birdsall; G. Pettersson
Publisher:
Center for Global Development, USA, 2010
This paper examines the relationship between structural, high inequality - measured by high levels of schooling inequality - and liberalisation of the financial sector for a sample of 37 developing and developed countries. Behind its question, the paper is attempting to capture the concentration of power within small political elite, and the undertaking of policy changes that liberalise and open up the financial sector.
The paper underscores the suggestion of recent studies that inequality, contrary to once-conventional wisdom, is bad for economic growth and development. In this respect, the author demonstrates that Latin America, which is given special attention in the paper, suffers from a longstanding problem of inequality of assets, of schooling and of income.
Consequently, the paper registers the following findings:
- the increases in financial liberalisation were associated with bank crises and other domestic and external shocks
- higher schooling inequality reduces the impetus for liberalisation brought on by bank crises
- in Latin America, not only are income, land and schooling inequalities widespread, but income concentration is extremely high in all countries
- the longstanding and high inequality as is the case in Latin America may have had direct effects on the nature and extent of liberalisation reforms
- similarly, it may have had indirect effects on reforms through its impact on the evolution of institutions that were important to the implementation of reforms.
