Based on extensive experience with modernization programs in Latin America, there is sufficient historical evidence and theoretical framework to support the claim that the persistence of regional underdevelopment is linked to the political choices made by national governments. Since the period of economic liberalization, the region has been awash with promises, ambitions, and aspirations for progress that, like great waves of expansion, have tried their luck without success in terms of development. While some groups in society have achieved prosperity, many more sectors remain excluded from the benefits of economic progress. The new wave of modernization has widened and deepened the gaps of social inequality and the economic, political, and cultural marginalization of regions, communities, and populations that the model neither plans nor needs to integrate.

The new international economic conditions imposed by globalization and neoliberal policies are part of this long history of failures, although they undoubtedly achieved a qualitative leap in shaping new forms and degrees of socio-productive “divergence,” both between the economies of the Region and developed economies, and between regions, sectors, and social groups. Along with the economic liberalization measures and the new forms of financial concentration that swept through the Region, economic instability, unemployment, poverty, and social exclusion also increased.

These macroeconomic policies acted directly on markets, affecting the distribution of wages and income; indirectly, they modified the welfare and social protection framework. Thus, accompanying the changes initiated in each country during the 1980s, "traditional" social policies and social assistance programs were transformed. Structural reforms restricted or eliminated the public provision of services. Public education (primary and secondary levels) is perhaps one of the most affected sectors due to the combination of decentralizing, managerial, privatizing, and targeted reforms. The still-debated result is that social inequality has increased in the medium term due to the connection between learning, credentials, and young people's access to the labor market.

To what extent does this thesis hold true even under the new political, economic, and social landscape of the region in the 21st century? In most countries, unlike in previous decades, this landscape features a favorable external sector, which, within a framework of greater state intervention, enables high rates of investment, growth, and consumption, as well as fiscal balance, trade surpluses, and increased social spending. This has led to a recovery in employment and a reduction in poverty, among other indicators of well-being. In at least some countries, social policies have been reoriented, although without entirely abandoning the paradigm that prevailed in the 1990s. State investment has increased, and new strategies have been developed based on a rights-based approach—one that rejects the idea of ​​clientelism.

However, the promised “convergence” has not materialized; new developments are intertwined with persistent issues, and the resulting contradictions leave little room for envisioning radical change. No structural changes are observed in terms of reversing inequalities and poverty; the region's relative productivity lag compared to developed countries persists, and internal productivity gaps between and within productive sectors, and between regions within countries, remain.

The great challenge for Latin American countries is to increase productivity by raising the level and pattern of productive investment, as well as physical and social infrastructure. Overcoming this challenge requires a reorganization of internal interests and economic and political relations with developed countries, as well as South-South relations. Only with a new investment pattern will it be possible to overcome the current economic and social heterogeneity and promote development with greater cooperation.

This CLACSO Working Group aims to reflect on the points raised above. It proposes a critical analysis of Latin American literature on development and inequality to construct its own theoretical framework for debating the challenges of public policies and their political arrangements as strategies for reducing inequality and poverty through economic and social transformation.

Many voices, from both neoliberal and neo-developmentalist perspectives, continue to argue that achieving growth with greater equality requires promoting policies of productive convergence. The agreement on the need for a growth strategy with public policies geared, on the one hand, toward greater equality of individual opportunity and, on the other, toward attracting more capital and productive investment is striking. In other words, “more market,” whose dynamism should have positive future effects on income distribution and social inclusion. However, the problem is more complex, and accepting this development policy without an accurate diagnosis could mean falling once again into the illusion of a “transition to modernity,” effectively generating a “development of underdevelopment.” It is essential to establish a comprehensive strategy and public policies that address the outcomes of growth but prioritize intervention in the structure of economic investment and physical and social infrastructure, including the arrangement of interests and political disputes.

In this context, as Latin American academics committed to our scientific work and our historical reality, we believe it is urgent and necessary to promote research that recovers our tradition of regional development analysis, with the aim of establishing a theoretical foundation that incorporates the process of economic and social formation in Latin America, critically updating the concern for identifying the challenges to achieving a development model that overcomes structural heterogeneity. This requires producing objective social knowledge and fostering political and ideological debate on the matrix of structural heterogeneity that hinders development and is reproduced in different national, regional, sectoral, and political scenarios, as well as on the sociopolitical conditions that enable and perpetuate it in the current phase of capitalist globalization. This initiative is heir to the political challenges, social ideals, and original theoretical contributions formulated in a pioneering manner by prominent Latin American thinkers and researchers during the last century.

These are the concerns that motivate our proposal; seeking to contribute to clarifying and giving substance to the central themes of a new agenda for regional social change: 1) To build an analytical framework on development and inequality based on the tradition of Latin American thought; 2) To reflect on the fundamental axes of a public policy strategy and an investment pattern oriented towards overcoming structural heterogeneity and the prevailing socio-political conditions in the region; 3) To understand what labor markets, social security institutions, and public policies demand to achieve a process of socio-economic inclusion and convergence; 4) To analyze national differences in terms of opportunities and constraints for an inclusive development process; 5) To leverage the relevance of regional relations to broaden national development perspectives; and 6) To enhance the knowledge acquired by the participating nodes regarding the issues of national and international migrations forced by political or economic reasons; the deterioration, crisis, and reconversion of regions or productive enclaves of import substitution development; and the differences in educational quality at the primary and secondary levels and their effect on social mobility.

The causes of underdevelopment remain the subject of theoretical and political debate, as do the solutions offered to overcome it. The fundamental debate that must take place is, first and foremost, theoretical rather than empirical, situated within the context of dualistic theories of development and modernity that have inspired both neoliberal and developmentalist policies.

In this context, a question remains relevant regarding regional development: why, given the enormous capitalist mobilization and concentration that has unfolded over several generations across almost all of Latin America and the Caribbean, have neither policies inspired by the “invisible hand” nor those that advocate for the “regulatory power” of states managed to generate a convergence in development levels or a “trickle-down” of well-being on labor markets and the structural population surpluses present in the region?

While the various perspectives agree on the recognition of increased social deterioration in terms of inequality, their interpretations differ. Regardless of the approach, it is essential to link the arguments related to the labor market, well-being, and inequality. In fact, for the different perspectives under debate, the effects of liberalization make sense within the framework of a vision for convergence in terms of economic growth, productive use of surplus population, and income redistribution.

According to the neoclassical approach, for a dual economy participating in the global market to achieve successful convergence, it must embark on an export-oriented path and pursue economic liberalization. Based on the Heckscher-Ohlin theory, a country should specialize in the production of primary goods with competitive advantages, which will increase the demand for labor in the export sector and tend to raise the real wages of lower-skilled workers. This, in turn, would allow for a deeper process of capitalization and labor absorption in the modern industrial sector, promoting the elimination of internal dualism and the integration of the economy into a sustainable development model. It is expected that market liberalization will improve income distribution and, therefore, the well-being of these sectors.

In Lewis's developmental model, long before the complete elimination of surplus labor, a country must open up to the outside world in order to keep real wages low through two means: increasing labor immigration and/or exporting capital. The former was widely used by now-developed countries in the first wave of globalization. The latter consists of exporting capital to countries with a greater abundance of labor. In this case, the capital-exporting country will invest in a country with a surplus of labor in order to produce goods with cheap labor, which it will then import for consumption. The country receiving foreign capital investment for export production gains in employment and tax revenue. The accumulation of fixed capital leads to the elimination of surplus labor.

In contrast, the structuralist approach argues that in the context of a peripheral economy opening up to the outside world, the economic system may experience an increase in capital investment but also in the surplus supply of labor, while labor demand in the most dynamic sectors of the economy remains insignificant. Given an increasingly concentrated accumulation model oriented towards external or high-income markets, the economic and occupational structure will tend to foster productive specialization, generating greater segmentation in the functioning of the labor market, as well as permanent increases in surplus population. The increase in productivity differentials associated with the development of an export sector or non-tradable services will tend to facilitate economic concentration in favor of oligopolistic groups, which will control the technological innovations demanded by the markets of core countries. These agents subsume—through connectivity or outsourcing—a small portion of the productive and labor segments, excluding the intermediate and subsistence sectors. This process can translate, depending on the characteristics of the countries, into: a permanent and sustained increase in the open unemployment rate; an increase in self-employment; and an increase in emigration. The effects of these phenomena negatively impact wages and income distribution.

The first two theses have an optimistic corollary: in an “open” economy, if a country manages to grow sufficiently, it can reach a stage of development where poverty and inequality decline. Therefore, any redistributive measure becomes unnecessary and counterproductive, with economic growth taking priority. The price of redistribution would be to hinder the free flow of capital and, consequently, development.

In contrast, from a structuralist perspective, the forecast is negative: there is no possibility of growth converging into development in a free market context.

From this perspective, given the very low levels of capitalization and technology achieved by the intermediate sectors, the growth rate of average productivity levels—both labor and combined factor productivity—is delayed, potentially becoming negative for extended periods. Greater productive heterogeneity tends to translate into greater social inequality and sluggish economic growth rates, with adverse effects on poverty. Therefore, it is crucial to intervene in the determinants of growth: the pattern of productive, infrastructural, and social investments, as well as the interest arrangements that can support them.

The topics and issues that will be addressed are:

a) Diagnosis of the changes that have occurred in the national socio-productive structures measured in terms of sectoral composition (revision and expansion of the ECLAC-PREALC categories), labor productivity (labor income by sectors, branches and regions) and the quality of jobs and reproduction of absolute surpluses of labor power (labor precarity, subsistence jobs and wages, structural unemployment).

b) Evaluation of how the changes in (a) have impacted income distribution and inequality at the worker, household, and population levels. "Decomposition" of the changes according to sources and consideration of other dimensions: family self-exploitation strategies, human capital, rigidity or flexibility of labor markets, income transfer policies and employment programs, among others.

c) Evaluation of the advantages and disadvantages of the socio-productive structure and public institutions, according to the Region's integration into globalization and its economic policy objectives as a development strategy. The central thesis is that the characteristics and trends observed in the socio-productive structure are one of the factors conditioning the high levels of inequality in income distribution, as well as its variations over time.

d) Analysis of the degree of commodification of social policies (health, security, housing, education), of compensatory social policies and their repercussions on current income inequality.

e) Evaluation of national possibilities in terms of public institutions for a pattern of productive, infrastructure and social investment aimed at reducing socio-economic heterogeneity, inequality and poverty from a multidimensional perspective.

f) Socio-historical description of territorial differentiation during the 20th and early 21st centuries as a constitutive expression of structural heterogeneity in the constitution of political institutions, the distribution of public goods and services, and achievements in sectoral welfare (education, health, poverty).

The study of structural inequalities will be deepened according to the specialization of the participating nodes: a) National and international migrations forced by political or economic reasons (Paraguay, Mexico, Brazil, Bolivia); b) Deterioration, crisis and reconversion of productive regions and/or enclaves (Argentina, Mexico, Uruguay, Chile); and c) Differences in educational quality at the primary and secondary levels and their effect on social mobility (Argentina, Uruguay, Paraguay, Chile, Bolivia).

The working team will be composed of researchers from the following nodes:

· Department of Sociology - DS/UDELAR (Uruguay)

· Faculty of Social Sciences - FCS/UAHURTADO (Chile)

· Institute of Social Sciences - ICSO (Paraguay)

· Gino Germani Research Institute - IIGG/UBA (Argentina)

· Post-Graduation Program in Social Sciences - PPGCS/PUCRS (Brazil)

· University Program of Development Studies - PUED/UNAM (Mexico)

· and the Institute of Socioeconomic Research (IISEC) of the Bolivian Catholic University (UCB) of Bolivia, which is processing its admission as a CLACSO center.