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Economic Opportunities Elusive for Latin America’s Indigenous Peoples – Still Living in Dire Poverty—New World Bank Report

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Press Release No:2007/254/LAC



Stevan Jackson (202) 458-5054

Patricia da Camara (202) 473-4019


WASHINGTON, February 28, 2007Despite Latin America’s significant progress in reducing poverty in recent years, more than 80 percent of the region’s indigenous peoples are still living in abject poverty, a trend that has changed little since the early 1990s, says a new World Bank report launched today.

The report—Economic Opportunities for Indigenous Peoples in Latin America”—examines why even with better education, job training, and other skills, the majority of Latin America’s 28 million indigenous peoples are not able to convert these skills into higher earnings and boost their living standards on a par with non-indigenous populations.

This report highlights that low income and few resources are mutually reinforcing. Low levels of education hinder entry into higher paying jobs, while the lack of credit or access to farm machinery are roadblocks to increasing agricultural productivity,” said Harry Patrinos, a lead World Bank education economist and co-author of the report. “It also finds that as a result of their historic exclusion, indigenous peoples continue to have low levels of human capital, limited access to productive land, basic services, financial markets, and poor infrastructure,” added Emmanuel Skoufias, World Bank lead economist and co-author of the report.


The report finds that indigenous peoples mostly work in just a few occupations, live in rural and remote areas, and suffer from lack of access to well-paying jobs in the mainstream job market.


Employment and sources of income: In rural areas, indigenous peoples have a higher dependency on the agriculture sector, and are more likely to work as unskilled laborers compared to the non-indigenous. While in urban areas, indigenous workers are less likely to work for wages and are more likely to have informal jobs, which lack security, access to social benefits, health care, unemployment insurance and so on. In Guatemala, for example, less than 50 percent of urban indigenous work for wages, compared to 65 percent for non-indigenous. In Ecuador, only 28 percent of urban indigenous are formally employed compared to over 50 percent of the non-indigenous population.


Distribution of land: Distribution of land is unequal in Latin America. The size of indigenous landholdings is almost two times smaller compared to non-indigenous land holdings in Peru, and is roughly eight times smaller in Ecuador. In Guatemala, indigenous peoples are much less likely to hold formal title of their lands, making land holdings useless collateral and limiting their access to credit and finance.


Access to financial services: Only a small fraction of indigenous households have access to formal or informal credit. Education in Peru increases the likelihood of obtaining credit for indigenous peoples, mainly through increased access to information. In rural Ecuador, indigenous business owners are deterred from seeking a loan due to high interest rates.


Access to infrastructure and basic services: Access to running water and electricity can help to increase productivity and diversification of income generating activities. In rural Mexico, for instance, the marginal value of land depends not only on complementary assets such as education – more skilled farmers produce more –, but also on access to roads – vital for ensuring that produce makes it to the market. Added on top this is the fact that land holdings by indigenous peoples are significantly smaller and of lower quality, thus producing less output to begin with. Lack of infrastructure and basic services also reduces welfare.


Importance of social networks: Indigenous peoples have strong social ties that are important for their survival and prosperity. However, these networks currently help indigenous peoples find work but mainly in the informal sector, through agriculture and self-employment. Social networks are inadequately primed at increasing the mobility of the indigenous into different or new types of occupations, thus perpetuating the current poverty and inequality patterns.


In order to achieve better poverty reduction for indigenous peoples in the region, the report recommends focusing on two areas:


  1. Improving human capital by designing multi-sector development programs that include increasing infrastructure, as well as access to credit, land, health, education and nutrition. Few social programs are explicitly targeted towards indigenous populations. A good example is Mexico ’s successful conditional cash transfer program, Oportunidades, which through investments in health, education and nutrition can potentially generate economic opportunities in spite of the absence of credit and financial services in indigenous areas.


  1. Raising awareness of the needs for indigenous peoples through complementary initiatives targeting both poverty and development. The United Nations launched the Second International Decade of the World’s Indigenous Peoples in 2006, scheduled to end in 2015, the same year that the Millennium Developments Goals (MDGs) are to be achieved. This suggests two actions that indigenous communities could consider:


  • Argue for a linking of the indigenous decade with the MDGs. This means collecting data on indigenous peoples’ indicators in terms of poverty, education and health to highlight how far they are in terms of reaching the goals, thus setting specific targets.
  • Draw on the commitment to the indigenous peoples decade and the MDGs to argue for results, such as specific reductions in illness rates or increases in school completion.


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