A quarterly magazine of the IMF

December 2005, Volume 42, Number 4

Latin America's Indigenous Peoples
Gillette Hall and Harry Anthony Patrinos

Despite greater political power, indigenous peoples still lag behind

In December 1994, the United Nations proclaimed 1995–2004 the International Decade of the World's Indigenous Peoples. In Latin America—where indigenous peoples comprise some 10 percent of the population—the ensuing decade coincided with an upsurge of indigenous movements exercising political influence in new and increasingly powerful ways. In 1994, the Zapatista Rebellion took place in Chiapas, Mexico. In Ecuador, indigenous groups took to the streets five times, leading to negotiations with the government and, ultimately, constitutional change; similar demonstrations in Bolivia led to the fall of the Sanchez-Lozada government in 2003. In Guatemala, home to Nobel Prize winner Rigoberta Menchu—an indigenous Mayan—the country's bitter civil war ended in 1996, with the Peace Accords that included an Agreement on the Identity and Rights of Indigenous Peoples. And Peru elected its first indigenous president, Alejandro Toledo, in 2000.

But palpable change on the economic front has been slower. In 1994, a World Bank report (Psacharopoulos and Patrinos) provided the first regional assessment of living standards among indigenous peoples, finding systematic evidence of socioeconomic conditions far worse than those of the population on average. Ten years later, a major World Bank follow-up study (Hall and Patrinos, 2005) found that while programs have been launched to improve access to health care and education, indigenous peoples still consistently account for the highest and "stickiest" poverty rates in the region. This slow progress poses a major hurdle for many countries trying to reach the UN Millennium Development Goal (MDG) of halving the 1990 poverty rate by 2015.

Who are the indigenous peoples of Latin America? While there is great diversity among groups, they share certain characteristics, such as distinct language (even if many no longer speak it fluently), culture, and attachment to land—all stemming from the fact that their ancestry can be traced to the original, pre-Colombian inhabitants of the region. Estimates for the number of indigenous people vary from 28 million to 43 million. In the five countries that have the largest indigenous populations—Bolivia, Ecuador, Guatemala, Mexico, and Peru—indigenous peoples represent a significant share of the population (in Bolivia, they are the majority). There are literally hundreds of different indigenous groups. In Mexico alone, there are 56 recognized indigenous groups and 62 living languages.

A yawning gap

The World Bank's 1994 report uncovered striking evidence of low human capital (education and health) as a driving force behind the high poverty rates, coupled with evidence of social exclusion via labor market discrimination and limited access to public education and health services. What does the picture look like now?

Poverty. For the five countries with the largest indigenous populations, poverty rates for indigenous peoples remained virtually stagnant over the past decade—or where rates did fall, they fell less on average than for the rest of the population (see chart). In the three cases where national poverty rates declined (Bolivia, Guatemala, and Mexico), the rate for indigenous peoples registered a smaller decline, or none at all. In Ecuador and Peru, overall poverty rates increased, but for the indigenous, there was little change. This pattern suggests that indigenous peoples may be less affected by macroeconomic trends, whether positive or negative—although evidence from Ecuador suggests that even if the negative impact of a crisis is small for indigenous households, it takes them longer to recover. The poverty gap (average difference between the incomes of the poor and the poverty line) among indigenous peoples is also deeper, and shrank more slowly over the decade, compared to the same indicators among non-indigenous populations.

Education. Education is one of the main factors that propel people out of poverty, yet indigenous peoples continue to have fewer years of education than non-indigenous ones. In Bolivia, non-indigenous children have 10 years of schooling versus 6 for indigenous; in Guatemala, the years are 6 versus 3. The good news is that in all countries the schooling gap shrank over the 1990s, following trends established in earlier decades. But the bad news is that the average increase in earnings as a result of each additional year of schooling (the private rate of return to each year of schooling) is slightly lower for the indigenous—in Bolivia, it is 9 percent for the non-indigenous and 6 percent for the indigenous. Moreover, the gap is widening at higher schooling levels. What is behind this failure? The culprit may well be the quality of education that indigenous people receive. Recent standardized tests in the region reveal that indigenous students achieve significantly lower scores—from 7 to 27 percent lower—on reading and math tests.

Health. Indigenous peoples, especially women and children, continue to have less access to basic health services. As a result, major differences in indigenous and non-indigenous health indicators persist, ranging from maternal mortality to in-hospital births and vaccination coverage. In all five countries, health insurance coverage remains relatively low, failing to surpass 50 percent of the population. In three of the five countries (Bolivia, Guatemala, and Mexico), coverage of indigenous families lags substantially behind the rest of the population. An important gap to emerge is that indigenous children continue to exhibit extremely high malnutrition rates, even in countries that have otherwise virtually eliminated this problem. In Mexico, just 6 percent of children nationwide are underweight compared with almost 20 percent of indigenous children.

Labor. Evidence that indigenous peoples face significant disadvantages in the labor market is strong across the region. In late 2004, the portion of the difference in earnings between indigenous and non-indigenous peoples that is "unexplained"—perhaps due to discrimination or other unidentified factors—represented one-quarter to over one-half of the total differential, with the average at about 42 percent. This means that while about half of the earnings differential can be influenced by improvements in human capital (education, skills, and abilities that an indigenous person brings to the labor market), another half may result from discriminatory labor market practices or other factors over which the indigenous person has little control.

Starting to make headway

Over the past decade, significant political and policy changes have occurred with potential bearing on poverty and human development outcomes among indigenous peoples. These changes range from constitutional mandates and greater political representation to increased social spending and a proliferation of differentiated programs, such as bilingual education. Yet while some improvements have occurred in human development outcomes, particularly in education, these changes have yet to bring about the desperately needed reductions in indigenous poverty because of poor education quality, poor health outcomes for children, and limited opportunities once today's children reach the labor market. And although political representation of indigenous groups has increased in recent decades, they still cite lack of support from and a lack of voice in government as a substantive reason for their continued poverty.

Against that background, what shape should the future policy agenda take? Our results suggest that it must be broad enough to embrace issues such as land rights, labor legislation, and access to credit. On the human development front, we would suggest the following:

First, more and better education. Functional bilingual education programs are needed—including schools where teachers speak the same indigenous language as the students; teachers are prepared to teach in a bilingual classroom environment; and parents and the community participate in the design of curricular materials. Well-designed, well-implemented, and rigorously evaluated programs can produce significant returns. In Guatemala, indigenous students enrolled in bilingual schools tend to have higher attendance and promotion rates, and lower repetition and dropout rates. Bilingual education, despite the higher cost associated with teacher training and materials, may lead to cost savings through lower grade repetition and hence lower unit costs and more places generated for new students. In Guatemala in 1996, the cost savings were estimated at $5 million, equal to primary education for 100,000 students. Policymakers must also step up efforts to get all children in school, with incentives such as cash transfer programs. From 1997–99, Mexico's cash transfer program—Oportunidades (formerly Progresa)—resulted in higher school attainment among indigenous peoples and a significant reduction in the skills gap between indigenous and non-indigenous children.

Second, better health. Efforts need to be focused on the persistently high levels of malnutrition and associated high infant mortality rates, vulnerability to disease, and low schooling outcomes. Policies should promote equal opportunities for indigenous peoples—a sort of "head start"—including programs for maternal and child health and family planning. In some cases, it may be necessary to ensure that indigenous health practices that have proved effective be made available through national health systems. Ecuador, for example, is experimenting with combined services that offer a choice between modern and traditional medicine. It may also be necessary to train skilled providers in indigenous languages and cultural sensitivity.

Third, better social service delivery. The substantial progress in certain human capital inputs—such as quantity of school and health services—for indigenous peoples over the 1990s may not have led to a significant impact on earnings because of an insufficient voice in service delivery. Thus, there may be a need to explore strategies to strengthen the direct influence of beneficiaries on service providers. These could include enhancing client power or leverage of parents through choice or voice directly at the school level. Putting recipients at the center of service provision could also help by enabling them to monitor providers and amplify their voice in policymaking. Already, Mexico has been putting this idea into practice: the compensatory education program gives indigenous peoples a small but significant role in school management. Impact evaluations have shown this to be effective (Shapiro and Moreno, 2004).

In addition, better analysis of the conditions and needs of indigenous peoples, based on an improved data collection effort, would be essential. At present, there is no systematic way of accurately identifying indigenous peoples in census or household surveys. Thus, a list of standardized questions for surveys in different years and countries should be developed. It could include self-identification, language (mother tongue, commonly used language, language used at home, and secondary language), dominant group in the local community, and parents' mother tongues. Statistical agencies should also include a special survey module to delve deeper into the causes of poverty and constraints faced by indigenous peoples, as well as opportunities. That module could study traditional medicine practice, religious and community activities, land ownership, and bilingual schooling.

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We hope that by building on the changes observed during the first indigenous peoples' decade, the next decade will bring them greater gains—in terms of human development, material well-being, and culturally appropriate economic and social development. The first step lies in setting realistic goals in terms of poverty reduction and human development, starting with disaggregated information on the MDG indicators. This would facilitate monitoring during the decade, coinciding with the culmination of the MDG period in 2015. Along with targets, monitoring, and evaluation, indigenous peoples—not just the leaders but community members and families as well—should participate in realizing these important goals.

In his 1934 book, Fire on the Andes, journalist Carleton Beals wrote "the uncut umbilical cord of South America's future is its duality, still the secret of political turmoil and national frustration. Until this duality is reconciled, [the region] can know no enduring peace, can achieve no real affirmation of its national life." The fact that 70 years later a report must still be written about this very duality signals the great depth of the inequalities, and the great magnitude of the task ahead.