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Professor Blanco Explores Instability and Inequality in Latin America

When inequality and instability is found in the political structure of a nation, it is often reflected economically also. Luisa Blanco Raynal, assistant professor of economics at Pepperdine's School of Public Policy, has been researching how political instability causes economic inequality, specifically in Latin American countries. She presented her work at the Pacific Coast Council on Latin American Studies (PCCLAS) 2008 Conference on November 7, at the University of Nevada, Las Vegas.

Blanco's paper, titled "Income Inequality and Political Instability in Latin America," drew on her research into the disparity between the tremendous wealth and crushing poverty of different Latin American populations, and the ways in which this divide may contribute to, or be a result of, political instability in those regions.

"I am especially interested in investigating whether inequality and political instability are the causes behind underdevelopment in the region," Blanco says.

Explaining that Latin America is one of the most unequal regions in the world, she continues, "Between 2000 and 2005, the richest 10th of the population received on average more than 42 percent of the total income, while the poorest 10th received between 0.25 and 1.46 percent," Blanco explains. "While in terms of political instability, it experienced between 1971 and 2000 more than 20 coups and 113 crises that threatened the government."

She explored the correlation further with samples of 20 Latin American countries between 1960 and 2000. "I find that political instability, in the form of ethnic and revolutionary wars, has a robust significant negative effect on the investment share of GDP," says Blanco on her Wordpress blog, from which her paper can be downloaded and read.

Around 100 papers were presented at the conference held by the regional organization PCCLAS, which was attended by scholars and students with a shared interested in Latin American issues from various academic disciplines. Blanco's paper was surprising, as she found that while inequality does not cause political instability, political instability does, conversely, "have a negative effect on investment, which is relevant for policy making in the region."

"This analysis suggests that policies focusing on diminishing political instability, especially ethnic and revolutionary wars, will be beneficial in terms of physical capital accumulation in the region," she says.

Blanco earned both her bachelor's and master's degrees in business administration from Midwestern State University. She went on to get a Ph.D. from the University of Oklahoma, where she taught Intermediate Macroeconomic Theory and Principles of Macroeconomics at the undergraduate level. Her research interests, besides issues related to economic development in Latin America, include public finance, specifically international taxation policy.

In January 2009, Blanco will continue to present her work on Latin American economics and politics with a paper titled, "The Impact of Resource Abundance and Resource Inequality on Capital Accumulation in Latin America," at the American Economic Association Annual Meeting in San Francisco, California. She will also present the same paper in June 2009 at the Latin American Studies Association international conference in Rio de Janeiro, Brazil. Blanco is due to have a paper published in the December 2008 Journal of Development Studies, in which she analyzes the determinants of political instability.