Social Investment and Neoliberal Legacies: Breaking the Mold?

In this paper, we examine the extent to which there has been a turn to social investment in Latin America, and we explain why some countries have seen greater advances than others. We argue that the concept of a “turn” is not useful, because it evokes a turn away from transfers, or the passive welfare state, and toward social investment, or the active welfare state. Rather, both transfers and services have been expanded in Latin America since 2000, with transfers on average growing faster than investment in health and education. This is in large part a result of policy legacies, namely the fact that the passive welfare state in Latin America had left anywhere from 20 to 80 percent of the population without coverage and that poverty rates at the turn of the century were high. Thus, in order for social investment to be effective, anti-poverty policies in the form of transfers had to be part of the reform strategy. On the other hand, simple expansion of conditional cash transfers, even if tied to school attendance and medical check-ups, without accompanying investment in equitable access to health and education services, did not constitute an effective social investment strategy either. We examine four kinds of policies: Conditional cash transfers, education, early childhood education and care, and health care. We assess progress in these policy areas with three criteria: Extent of coverage of the policies, generosity of benefits or quality of services, and equity in access to the benefits and services.