Inequality Traps, Economic Elites, and Redistribution in Latin America (VIRTUAL)

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Laura Garcia Montoya
Profesora Principal, Universidad del Rosario
Kellogg Institute Visiting Fellow

This session covers the introduction and two chapters of Garcia's book manuscript, which aims to answer two questions: Why is economic inequality so persistent in many countries in Latin America? Conversely, why do some countries escape inequality traps? Unlike most research on this topic, Garcia integrates comparative historical analysis and quantitative tools, which allow her to identify inequality traps and unveil moments of divergence lost in cross-country statistical analyses. Her argument begins by recognizing that inequality is dynamic and profoundly political: it is shaped by redistributive pressures from the losers of inequality and wealth defense strategies from the winners of inequality. Through its redistributive powers, the State is at the center of this struggle. Economic elites' wealth-defense strategies shape state responses to redistributive pressures, ultimately determining whether countries can escape inequality traps. To demonstrate this empirically, Garcia integrates case studies and quantitative methodologies, zooming in on Perú and Colombia in the 1960s – a moment of intense redistributive pressures and institutional reforms in both countries, but sharply contrasting inequality trajectories. To understand why Perú escaped an inequality trap while Colombia did not, she draws on primary and secondary sources related to five tax and agrarian reforms. The in-depth comparison of these two cases shows the importance of considering winners and losers of inequality and the role of ideas about development and progress as critical to the politics of redistribution.