The Urban Poor in Latin America

With three quarters of its population
living in cities, Latin America is now essentially an urban
region. Higher urbanization is usually associated with a
number of positives, such as higher income, greater access
to services, and lower poverty incidence, and, Latin America
is no exception. Today, urban poverty incidence, at 28
percent, is half that of in rural areas; extreme poverty, at
12 percent, is a third. Despite this relatively low poverty
incidence, the absolute number of poor people is high, and
most studies agree that about half of Latin America's
poor live in urban areas. The Bank's own estimates
suggest that 60 percent of the poor (113 million people) and
half the extreme poor (46 million individuals) live in urban
areas. The report reviews what is specifically urban about
poor people living in cities, which reveals a number of
facts, critical to understanding the challenges facing the
urban poor, and the means to address these challenges. Three
preconceived ideas are discussed, that tend to cloud
judgment about urban poverty. All three spring from the
common misperception that urban statistics are
representative of the urban poor. However, the relatively
low incidence of poverty in cities, combined with Latin
America's high inequality, imply urban statistics are
almost never representative of the urban poor. Concerning
the differences between urban and rural poor, the need for
differentiated strategies to tackle urban as opposed to
rural poverty is implied, and, the first and most important
differential is the greater integration of the urban poor
into the market economy. Second, while urban areas are not
systematically unequal than rural areas - it depends on the
country, and, within countries, on the city - they are much
more heterogeneous socio-economically, or with respect to
economic activities and processes. Third, heterogeneity
notwithstanding, Latin American cities tend to be highly
segregated. As a result, social exclusion coexists with
(relative) physical proximity to wealth, services and
opportunities. This gives rise to negative externalities, or
neighborhood effects that result in a lower ability to
access jobs, lower earnings, and lower educational
achievements. Fourth, social networks are less stable in
urban areas, with relationships based more on the quality of
reciprocal links between individuals and friends, than on
familial obligations. Fifth, urban living also means much
greater exposure to organized crime, drugs and gang
violence. This is true for the population as a whole, but it
has particularly dismal implications for the poor living in
the slums of Latin America's large cities, where
drug-traffic is now pervasive. Finally, another important
characteristic of urban poverty has to do with overwhelmed,
rather than absent services. The underlying hypothesis of
this report is that, indeed, the causes of poverty, the
nature of deprivation, and the policy levers to fight
poverty are, to a large extent, site specific.