New CROP Poverty Brief
"The productive bottlenecks of progressive social policies: lessons from Costa Rica and beyond", by Juliana Martínez Franzoni & Diego Sánchez-Ancochea.
In Latin America, production regimes have limited the chances to establish universal welfare regimes. Even Costa Rica, a showcase of universal social policy, shows how challenging it is for many other developing countries to build and sustain productive regimes that enable truly redistributive welfare regimes.
A primary challenge has been the difficulty to simultaneously upgrade the leading sectors while modernizing the low productivity sector.
Many Latin American countries have recently witnessed poverty reduction and decreased inequality due to a simultaneous expansion of social assistance and secondary education. Nevertheless, a sustained reduction of poverty and inequality may require the consolidation of universal social systems that are accompanied by successful production regimes that demands skills while providing funding and formal jobs.
In terms of policy implications, it is critical to promote both leading and low productivity sectors as well as securing stable funding sources for welfare regimes.