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Democracy, social inclusion 1 00-5-396V.F. 23/05/23

DEMOCRACY, SOCIAL INCLUSION AND POVERTY ERADICATION:

SQUARING THE CIRCLE

Rolando Franco*

* Director of the Social Development Division, ECLAC. This document was prepared for the

Democratic Forum 2000: Democracy and Poverty. The Missing Links?, organized by the International

Institute for Democracy and Electoral Assistance (IDEA) in Stockholm, from 8 to 9 June 2000. It has been

enriched by the discussions and contributions delivered at the seminar on democracy, poverty and social

exclusion, held in Quito Ecuador from 25 to 26 April 2000 by IDEA, the Inter-American Development

Bank, the United Nations Development Programme (UNDP), the Economic Commission for Latin America

and the Caribbean (ECLAC) and the Corporation for Development Studies (CORDES).

The views expressed in this document are the sole responsibility of the author and do not necessarily carry

the endorsement of the organizing bodies or participants in that seminar.


Achieving growth, cohesion and freedom all at the same time

may be difficult; it may even be tantamount to squaring the circle,

in other words, something that can never be done perfectly;

but we can make a start (Dahrendorf, 1995)

Introduction

The countries of Latin America must confront simultaneously the challenges of consolidating democracy,

pressing ahead with economic reforms and overcoming poverty and social exclusion. Is it necessary to

pursue each of these objectives? Are they contradictory or compatible? Can they be considered as mutually

reinforcing? Can they be achieved? Are there recommendations for the decision-makers in this area?

There is room for optimism in this regard. Firstly, the market economy has shown that it can

contribute to poverty eradication and that it has an affinity with democracy. However, it is only in those

countries where economic activity is the responsibility of individuals and groups motivated by their own

interest that democracy has managed to survive (Dahl, 199:187). Moreover, such countries have enjoyed

wealth creation and, thus, have been in a position to address the problem of poverty eradication.

Secondly, the international context today is favourable to democracy and is also associated

with the defence of human rights and the fight against discrimination and poverty. At the end of the Cold

War, democracy emerged as the only politically legitimate principle: witness the international support that

this type of system receives and the endorsement contained in agreements between countries, such as that

of the Southern Common Market (Mercosur) with its “democratic clause”. Some recent examples suggest

that the “solutions” adopted – however imperfect – were only possible because of international pressure,

which overruled the weakness displayed by the democratic regimes in question.


Thirdly, the dominant model compels countries to seek a competitive place in the globalized

economy. This objective cannot be achieved. by exploiting cheap labour or depleting natural resources,

which has been termed “spurious competitiveness”. On the contrary, it demands the incorporation of

innovative technologies which raise productivity and employ better educated workers who have the

capacity and flexibility necessary for facing the changes in their working life (ECLAC, 1990). Hence,

overcoming poverty and inclusion of the whole population is justifiable not only for ethical reasons but also

for its societal and economic significance. However, this does not guarantee, nor does it require,

democracy. Some Asian countries attest to the fact that such social objectives can be achieved under

authoritarian political regimes.

While it is clear that no type of regime fully guarantees good governance and that in any system

there should be a measure of sound public management and levels of technical competence and personal

integrity, one may be convinced that there is a higher probability of finding good governance within the

democratic order, whose moral and technical superiority…stems from its mechanisms for periodic

replacement of leaders and from the demands placed on them in terms of accountability (López Pintor,

1999: 376, 377 and 380).

There are no notable signs, even among the most disparate cultures, of lack of popular

understanding or repugnance for the concept of electing leaders by personal, secret ballot and of having

politicians account for their actions or spell out their intentions for the future (p. 380), even though in many

cases, the democratic pluralist formula is culturally far removed from the traditional authoritarian system

…which does not imply lack of comprehension or rejection thereof (López Pintor, 1999:381). If this is true

of cultures where the authoritarian traditional still holds sway, there is all the more reason to expect this

democratic persuasion in Latin America, which boasts a long democratic tradition, not only in terms of the

discourse in some countries but also in the day-to-day reality in many others.


These encouraging signs show up, however, in the midst of upheavals. There are drastic changes

in the international economic system, in which the countries of the region are struggling to find a place at

the expense of socially costly structural reforms, made worse by the repercussions of the international

financial crises. Moreover, poverty and inequality and the existence of exclusion mechanisms have always

been features of life in Latin America.

From this point onwards, it is therefore relevant to attempt to examine the negative effects and the

non-virtuous combinations existing between democracy, poverty and exclusion.

1. OUTLOOK FOR THE FUTURE: GLOBALIZATION

Efforts will be made to harmonize the objectives mentioned within the framework of a new international

economy. While there have been other periods of globalization, the current phase has qualitative

differences which make it radically different from any earlier trend.

Globalization, as it now operates, is based on the capacity of certain activities to function in real

time at the global level, and relies on information technologies, telecommunications and transport systems,

which have interwoven the strategically dominant functions and units in fundamental spheres of human

activity (Castells, 1999).

This has repercussions especially in the financial sphere, with huge and instant capital movements

affecting the economy of countries throughout the world, since individually they lack the capacity to

sustain their currency but have not come together to establish mechanisms to regulate global capital flows.

With respect to merchandise production, the increasing use of technologies associated with the

information revolution enables us to produce parts, spares and components in geographically scattered

areas and later to bring them together at the place of final assembly. In this way, high technological


productivity can be combined with the low costs (labour, environmental, etc.) existing in countries where

the factories are located.

Consequently, the reduction of barriers to the international movement of goods, services, capital

and technology generates greater interdependency between nations and causes international variables to

acquire a greater weight in comparison with domestic variables. Thus, the pursuit of international

competitiveness has become the fundamental objective of all countries.

These characteristics place us before one of the great mutations in history (Castro, 1997, p.32),

although this should not disguise the fact that, in everyday political debate, globalization is often

manipulated as if it were an ideology.1

Globalization has implications for both employment and income distribution. In the developed

countries, the spread of information technologies has increased opportunities for employment and income

for “symbolic analysts”, that is, those highly qualified workers whose task it is to produce immaterial,

knowledge-intensive goods (Reich, 1993; Rifkin, 1996). Conversely, the assembly-line workers are at a

disadvantage because of the growing requirement for computer literacy and because companies are

transferring routine production processes to other countries (Thurow, 1992).

Elsewhere in the world, global activities are creating direct manufacturing jobs with a higher

productivity than the national average for the host country, although they absorb only a small percentage of

the available labour force in those countries. For example, the maquila companies set up in the north of

Mexico close to the United States border generate over a million jobs, whereas the active Mexican

population is in excess of forty million persons. These industrial plants generally have few technological

linkages with the rest of the national economy. However, the situation can be different when the production

1 Hence the claim that globalization is a pretext. Those who are winning tell the losers that they are suffering, but that such are the laws of globalization, that they must adapt and abandon their existing forms of protection, if they wish the economy to continue to get richer. They must resign themselves to getting poorer. This is the social covenant of the future. Those who are winning no longer want to participate in the social protection or national solidarity system (Fitoussi, 1997, p.18).


of such globalized industrial activities is geared to the domestic market of the countries where their

factories are located, thus generating technological linkages with other activities.

Services, for their part, do create new jobs, but these come at the expense of jobs in pre-existing

companies which are unable to face the competition. Demand tends to become fragmented and specialized.

New types of firms emerge, then, which require a qualified labour force, to cater for this demand. This

contributes to the decline of mass production, loss of job security and rising unemployment rates, hence, to

the emasculation of the worker culture and trade-unionism.


2. THE LOGIC OF INCLUSION/EXCLUSION AND ITS SOCIAL AND POLITICAL

IMPLICATIONS

In any social change, there are winners and losers. And this, also, is occurring as a result of the economic

transformations underway in the region.

On the one hand, those affected negatively are those that belong to corporate groups that used to

participate in the power structure and those employed in companies that had been protected formerly and

who today have to face international competition.

On the other hand, emerging among the winners is a well-educated, professionally well-

established, urban upper middle class, with close ties to modern private business and consumer patterns that

match those of the developed world, and who interact with similar dynamic sectors in the rest of the world.

The widening gap between the salaries of university-educated workers and those of the rest of wage-earners

causes additional tensions, in view of the adverse distributive trend existing in many countries.

These changes also have an impact on those processes through which social actors give meaning

to their action with respect to certain cultural attributes, to which they give priority over possible

alternatives, in other words, they affect the identity of individuals (Castells, 1999), which determines not

only their self-esteem but also their capacity for social organization and political mobilization.

Globalization also jeopardizes the historical content of institutions and organizations. The State’s

management capabilities are overstretched and when it attempts to adapt to the new situation, it is at the

expense of the sectoral interests that it has been protecting until then, resulting in the alienation of a

sizeable portion of the population. The principle of national identity loses meaning for many of those

affected and they attempt to forge an identity in other areas, whether in their oppressed ethnicity, in a sense

of belonging to a region or in certain religious beliefs. Most of these social movements reject globalization

and criticize the State as the rationalizing entity in this process from which they feel excluded.


This is expressed in views that may be interpreted as a loss of support for democracy. Thus

opinion polls in Latin America show that the preference for democracy is not as strong as in Western

Europe, where similar studies were conducted (Lagos, 1998). There are many people whose expectations

remain unsatisfied. In the first few phases of adjustment, the need to escape from hyperinflation rallies

support (Mora and Araujo, 1992). As fear of chaos dissipates and the model’s distributive capacity proves

to be limited and its fruits slow to mature, discouragement and disenchantment set in and criticism of the

State, of politicians and of politics grows. At certain times, the positive macroeconomic indicators have

been clearly at variance with the negative perception of what was happening. Now that even some macro

indicators have deteriorated, this malaise is spreading.

Change invariably weakens social cohesion. Whether this is good or bad depends on the value

judgement concerning the quality of the existing society and the future project. In Latin America, where, in

general, social protection systems similar to those in Europe (which provide protection from the cradle to

the grave, Beveridge dixit), there is as much room for optimism that the changes will benefit the majority –

which is yet to been seen – as for greater pessimism because a new form of exclusion is reportedly being

superimposed on those inherited from the past, which is nurtured by imagining a past that never existed and

which arouses undeserved nostalgia, since the reality also was pervaded by poverty, inequality and

exclusion.


3. THE ECONOMIC AND SOCIAL SITUATION IN LATIN AMERICA

Since the debt crisis, most of the countries have made advances in terms of correcting fiscal disequilibria,

reducing inflation and boosting exports and foreign investment flows.

Figure 1

However, the results have not been up to expectations. For the region as a whole, the growth rate

of the 1990s, 3.3% per year, was 5.5% lower than in previous decades and did not live up to the 6% goal

that various international organizations considered necessary in order to move forward with poverty

reduction at a reasonable pace. Gains in worker and total productivity have also been low.


Figure 2

Figure 3


Figure 4

Economic growth has been subject to sudden fluctuations. Also, the frequency of financial crises

seems to suggest that a number of sources of instability have not been corrected or, in some cases, may

even have worsened. This points to the need to establish a new architecture for the international financial

system (United Nations, 1999).

Figure 5


Job creation has not kept pace with the increase in the number of job-seekers, pushing up the rate

of open unemployment and resulting in seven out of ten jobs being generated in the informal sector. The

traditional employment problems of the economies of the region have been aggravated by the substantial

entry of women into the work force. Young people are especially affected by the difficulties in finding

employment.

Figure 6

Figure 7


Structural heterogeneity has increased: the region now has “world class” corporations, for the

most part subsidiaries of transnationals, but also many micro-, small and medium-sized companies that are

lagging behind technologically.

One of the positive features of the decade is the effort made to increase social spending, which

has reached unprecedented levels. This advance has been accompanied, moreover, by attempts to reform

social services, whose results have been variable. It also shows the marked differences between countries in

the region with respect to the resources allocated for social programmes.

Figure 8


Figure 9

The percentage of households with income below the poverty line declined from 41% in 1990 to

36% in 1997. In the last years of the decade, however, it rose again, and in absolute terms, the poor

population stood at 224 million persons.

Figure 10


Figure 11

Attention should be drawn to the wide differences in poverty levels between countries, as shown

in the figures included, which also serve to demonstrate the heterogeneity of Latin America and, hence, the

inaccuracy of many of the generalizations made concerning the situation there.

Figure 12


Figure 13

Income concentration is also a long-standing problem in Latin America and seems to be getting

worse. It is a particularly important element with regard to democracy and measures to overcome poverty

and social exclusion, because although there are some positive relations between democracy and the

market, there are also conflicts which make this a “stormy marriage” (Dahl, 1999). In pursuing their own

benefit, the economic agents have little incentive to worry about other people’s welfare. This seems to lead

to growing and extreme economic inequality, which some see as a necessary incentive for the creation of

wealth; others, in contrast, consider that this would endanger democracy by upsetting such values as

equality among all citizens, the exercise of civil rights and political liberties, and the enjoyment of public

goods, as well as affecting the acceptance by the less privileged members of society of a social coexistence

arrangement under which they would naturally expect to receive benefits in proportion to their degree of

commitment to the collective interest, regardless of individual wealth. Such a situation could threaten the

sustainability and governance of the whole system of democracy (De Sebastián, 2000).


Gráfico 14

Great emphasis is usually placed on the assertion that Latin America is the region with the most

unequal income distribution in the world. While this is true, it should be noted that the region is very

diverse and includes cases where the distribution is comparable with international levels. Furthermore, this

inequality should be viewed in the light of the region’s intermediate position in terms of income, so that

there is probably little point in comparing it with very poor countries whose superficially better distribution

is due mainly to their incapacity to generate wealth.

It is also worth recalling that the demand for better income distribution is relatively recent. In the

period immediately after the crisis of the eighties, the aim of governments was to create suitable conditions

for recovering economic growth and carrying out poverty relief programmes later. The resurgence of the

distribution issue means that the most dramatic phases of stabilization and adjustment are now over.

It is also necessary to determine in each case what levels of economic and social inequality will

nevertheless allow a democracy to function reasonably well. It is not just a question of differences of

income. There are democratic countries where there are castes, monarchies and aristocracies: dimensions

which undoubtedly involve profound inequalities between persons, even in legal terms. It may be that the

way to settle this issue would be to lay down certain minimum levels of empowerment granted by society

and considered to be essential for forming part of it.


4. PROBLEMS OF LATINAMERICAN DEMOCRACIES

1. At its “minimum” level, democracy means periodically holding elections. This is a necessary but

not of itself sufficient condition for a mature and consolidated democracy, however. In recent

times there has been a rash of “non-liberal democracies” where there are elections but not a State

of Law and the government ignores the constitutional limits on its powers and deprives its citizens

of their basic rights and freedoms (Zakaria, 1997: 22). Half the countries in the process of

democratization are non-liberal democracies, and in Latin America 10 of the 22 main countries

display levels of abuse of human rights which are incompatible with the consolidation of [liberal]

democracy (Diamond, cited by Zakaria, 1999: 28).2

A first effort should therefore be to try to deepen democracy and improve its quality. This means

ensuring the full sway of the State of Law, which requires a State with real authority, not shared with

“power factors”, which can guarantee equality in the eyes of the law throughout the national territory. In

many countries of the region there are groups which have “taken over” part of that territory, as in the case

of guerrilla movements, drug traffickers, powerful rural landowners, or gangs that rule slum areas in the big

cities. In other cases, the State apparatus does not have the capability to carry out its basic functions

properly, such as guaranteeing citizen security, preventing police brutality, or ensuring fair legal treatment,

especially of the poor or of minority groups (ILPES, 1998: 62-63). At the same time, citizens must be able

to defend their rights but they must also recognize their duties and be willing to fulfill them (Hurtado,

1999a).

2. It is also worth recalling that one of the burdens of Latin American democracy is the continued

existence of archaic forms of political activity, such as clientage, prebendage or corporativism, which are

rooted in “historico-structural factors closely linked with the great inequality that exists in the distribution

of income and wealth ….. also expressed in the form of social gaps –often widened by ethnic prejudices-

and as the political gulf between the elite and the masses. In such conditions, the elite have a wealth-based

concept of power, in which the dividing lines between public and private interests become blurred, and

relate with the masses through procedures based on clientage and prebendage. At the root of this kind of

social and political relations is the practical negation of the civil and political rights of those considered to

be inferiors, who are only expected to be loyal in return for favours. Colonial and slavery-based social

structures undoubtedly underlie these forms of relations and inhibit the establishment of democratic social

relations” (ILPES, 1998: 61-62). Slavery has repeatedly been unmasked in Brazil as one of the underlying

causes of inequality and social and behavioural differences (Cardoso, 1998; Faría and others, 1999).

2 These have also been called “delegatory democracies” (O’Donnell, 1997).


Most of the countries of the region have undergone changes which have tended to dilute the

traditional forms of social control (especially those typical of rural areas) and, while they have not done

away with them altogether, have created a potential for modern democracy, although without guaranteeing

it.

Making progress in overcoming these problems also means promoting the capacity to resist the

pressures of groups which have so far been taking advantage of the State. Cardoso has asserted that since

1930 the State has been privatized, deprived of its public character, and turned into an ill-fare, not a welfare

State. The State’s actions are not dictated only by the bureaucracy but also by private interests which have

infiltrated into the State and set up links between private and State affairs which disguise private decisions

and make them look as State decisions (UNDP, 1994: 27). These distributional coalitions (Flisfisch, 1991)

maintain their vigour and do everything they can to defend their privileges, so that systematic and

prolonged State action is needed to deal with them.

3. International competitiveness depends on access to education and knowledge and the capacity to

generate and handle information, but it is also influenced by other dimensions that are often overlooked.

Investors take decisions not only on the basis of the yield of the project in question but also of the

respective country’s rating on international markets, the legal security offered, the existence of clear rules,

and social and political stability: in short, effective functioning of the country’s institutions. It is of

fundamental importance for the domestic actors, too, that the country should have solid, credible and

respected institutions and that both governmental and private organizations should respect the rules and

have the capability to attain their goals. Commitment to the country’s own efforts to become competitive

depends on the existence of basic guarantees, opportunities for developing potential and pursuing

objectives, and suitable conditions for making an effort in this direction. International migrations show that

many Latin Americans feel that their own countries do not offer these conditions.

Latin American political institutions suffer from weaknesses which affect the proper functioning

of democracy.

i. Imbalances between the different powers of the State. Though the “lost decade” was

indeed lost in economic terms, it was nevertheless a period of recovery of democracy and of respect for the

actions of the organs of a democratic State. However, the need to tackle the crisis heightened the preference

for quick decision-making processes and this altered the balance between the different powers and their

control over each other.

The relevant decisions were concentrated in the hands of the Executive, backed up by an

influential economic technocracy, and the prevailing view was that attaining economic goals was primarily


a technical problem, so that there was a tendency to take politics out of the economic debate (Huneeus,

1997) and sidestep the legislative powers. This view has assuredly been influenced by recognition of the

fact that the links between citizens and their representatives are not very solid and that dialogue and

coordination by elected representatives with the Executive have also been difficult in many cases (IDB,

2000).

The Judiciary also suffers from serious problems that call for urgent reforms if it is to operate in a

modern and efficient manner and be free from all forms of corruption. At present, access to justice is by no

means assured for broad sectors of the population, and there are serious delays in doing justice.

ii. The crisis in the political parties and politics. Opinion surveys seem to indicate that

the citizens are increasingly estranged from politics. This is probably due to the fact that election

campaigns are increasingly based on the media, especially television. Mass meetings, face to face contact

with voters and the role of campaign volunteers have lost importance, as have the political fixers who kept

the parties going. It is also due to the idea, mentioned earlier, that achieving economic goals is a technical

problem, so that political activity now looks less exciting.

In this respect, it is worth analysing, on the one hand, whether this is really a crisis that could even

affect democracy itself, as some claim, or on the other hand whether this estrangement, if it really exists, is

necessarily a bad thing.

The interest of the citizens in keeping themselves informed and in talking about politics, is greater

than was thought. This view is strengthened by the fact that there has not been a decline in participation in

Presidential and parliamentary elections, which is an unmistakable sign of support for democracy.

Generally speaking, interviewees feel that their votes can indeed change things, except in countries where

no reasonable person could expect this in view of the prevailing situation.

It could also be maintained that when people criticize democracy they are usually referring in

reality to the performance of governments –especially their economic performance- rather than that of the

political institutions themselves. This assessment is backed up by the strong rejection of authoritarianism

usually shown (Huneeus, 1997).

With regard to the possible estrangement of the population from politics, this could even be

interpreted as a positive aspect: it could be the result of societies which are passing from the first stage of

transition to democracy, with an intensive popular participation, to the next stage of consolidation or

normalization, where such political hyperactivity is no longer needed (Huneeus, 1997: 77). It could also be

an indication that the extreme options have disappeared, giving way to certain political and economic


consensuses, so that citizens now need to pay less attention to politics and can devote more time to other

aspects of their lives.

In this context, in some cases the political parties are criticized for being too highly-organized and

closed and in others for being too weak, which is seen as affecting their functions of processing society’s

demands or contributing to governance. It has even been suggested that the parties’ loss of power could

affect their public service vocation and their projects for the future, increasing the ever-present danger that

they may tend to give priority to securing benefits for their members, thus increasing the danger of

corruption and further aggravating the negative reactions of the public, such as skepticism, apathy,

abstentionism, voting for other candidates out of sheer dissatisfaction, or rebelliousness (ILPES, 1998).

iii. The role of the media. The communications media are increasingly important. They are

“among the institutions which are eroding traditional forms [of authority] all over the world”(López Pintor,

1999: 380-381) and aid in the denunciation of arbitrary acts, corruption and abuse of power on the part of

authorities and politicians, often thus making possible the defence of the victims and the solution of

problems affecting the community, which may not have any other channels of participation for making its

demands heard.

This positive role of the media means that sometimes they are used to promote campaigns aimed

at destroying the credibility of political opponents: a practice which also indirectly affects the prestige of

politicians and politics as a whole.

4. The legitimacy of the State derives not only from the (elected) origin of its authorities but also

from its effectiveness in achieving economic growth and “doing things properly”. Latin American

State structures generally work badly and should be changed in order to correct their limited

capacity to solve problems, which left 64% of the interviewees dissatisfied, on average. Likewise,

60% of those interviewed in seven countries do not have confidence in the State institutions, but

this percentage is only a little higher than those lacking confidence in the institutions of civil

society. The lowest levels of lack of confidence are those relating to the Armed Forces (46%) and

to the Church (27%); in contrast, the level of lack of confidence in the political parties is 72%,

65% in the case of the trade unions, and 63% in the case of business associations.

5. THE OUTSTANDING TASKS

In order to make even-handed progress towards the desired objectives it is necessary to advance

simultaneously in the areas of economic and social reforms while intensifying the political reforms, since

all these actions will form a virtuous circle and mutually strengthen each other.


1) Consolidating economic growth. Without economic growth there is no possibility of social

development or perhaps even of political development. If a country does not manage to integrate into the

globalized world, it will hardly have the economic capacity to bring the whole of its population up to

minimum levels of well-being. This means acknowledging the importance of building on the advances

made in the reduction of fiscal deficits and inflation and taking advantage of the opportunities offered by

the international economy, with the participation of the private sector and an efficient State. At the same

time, it must be recognized that there are no universally valid solutions. There is no single optimum form of

macroeconomic management, or insertion in the world economy, or public-private relations, as is shown by

the Latin American region, where diversity of the solutions adopted in all these areas is beginning to be

seen as more important than pretended homogeneity.

2) Achieving equitable growth. In pursuing development, equity should be the criterion for

measuring the quality of the results obtained. Development needs to be more stable, dynamic and

competitive, but it must also be more environmentally sustainable and more integrative in social terms.

Furthermore, it must be more coherent. We are now in a different stage from that which was marked by the

need to recover the macroeconomic balances and the liberalization of the economies.

The connection between growth and equity is not so simple, however. Countries which have

managed to keep up high growth rates have reduced poverty but they have not been able to improve income

distribution. There is now a bigger gap between those working in jobs using advanced technology and

paying high wages and other workers who, because they have less education, can only find poorly paid

work in the informal sector.

3) Tackling the most crucial areas of inequality. In the social field, there is a phenomenon called

inter-generational transmission of welfare opportunities: the household of origin is a strong

determinant first of the educational opportunities and later of the employment opportunities that will be

open to individuals. It could be said that the opportunities for well-being are virtually inherited in this way.

Public policies must therefore try to help break this link in order to create true equality of opportunities.

Education is a crucial element in the links between the home and employment, so it seems

essential that in order to improve equity –especially now that knowledge has become a vital factor of

production- efforts should be made to improve policies in terms of coverage and quality.

Employment is another vital link, because of the growing differences in terms of quality of

employment and wages deriving from the heterogeneous production structure characterizing the region.

Few jobs are being created in the modern sector, and a large proportion of those entering the labour market

with a low level of educational capital must take refuge in the informal sector. Job creation is a serious

weak point. A great deal of attention is usually devoted to the modern sectors of production, which offer

competitiveness in the international market, but these sectors provide very few jobs. The bulk of


employment is generated in the small and medium-sized enterprises and the informal sector, due to wich

public policies should be designed which can improve both the job opportunities and the labour

performance, remuneration and social security coverage in this sector, and in the services sector.

Figure 15

4) Recognizing new forms of identity. This could reconcile the principle of political citizenship

with the assertion of cultural identity. In the past, the dominant criterion in terms of identity has been the

national identity, built around the State. As we have already seen, however, new principles of identity are

now emerging. Public policies should not seek to impose a particular identity, but should go along with the

dynamism displayed by civil society, seeking channels of communication among the new identities

emerging and trying to stop them from being exclusive, fundamentalist or separatist.

5) Strengthening cooperation with other States and participation in the international system.

In the present circumstances, the State must form alliances with other States, participate in

international organizations, and establish areas of regional integration. All these alliances increase

the capacity for influence and negotiation, but at the same time reduce sovereignty. The opposite

alternative –placing emphasis on national sovereignty- simply leads nowadays to the irrelevance

of a State’s decisions.

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