WORKING DOCUMENT SERIES CARIBBEAN REGIONAL GENERAL WORKING DOCUMENT 83 A SURVEY OF THE LITERATURE ON INCOME DISTRIDUTION AND THE FULFILLMENT OF BASIC HUMAN NEEDS IN THE CARIBBEAN REGION* *Antigua, Barbados, Belize, British Virgin Is., Cayman Is., Dominica, Grenada, Montserrat, St. Kitts-Nevis- (Anguilla), St. Lucia, St. Vincent, Turks & Caicos Is. Clarence Zuvekas , Jr . Sector Analysis Internalization Group Office of International Cooperation and Development U.S. Department of Agriculture September 1978 i 3 Rural Development Division Bureau for Latin America and the Caribbean Agency for International Development BESTAVAILABLE COPY WORKING DOCUMENT SERIES: CARIBBEAN REGION GENERAL WORKING DOCUMENT i\3 A SURVEY OF THE LITERATLTRE ON INCOME DISTRI13UTION AM> THE FULFILLMENT OF BASIC HUMAN NEEDS IN THE CARIBBEAN REGION* *Antigua, Barbados, Belize, British Virgin Is. , Cayman Is., Dominica, Grenada, Montserrat, St. Kitts-Nevis- (Anguilla), St. Lucia, St. Vincent, Turks & Caicos Is. Clarence Zuvekas , Jr . Sector Analysis Internalization Group Office of International Cooperation and Development U.S. Department of Agriculture September 1978 i I This document does not bear the approval (nor imply such) of the U.S. Department of Agriculture, the United States Agency i for lnternationai Development, or any of j tneir offices. In view of its nacure as I G workiag paper, it should not be quoted I w!~hoci?erm;ssion of the originating O.:; -CZ. ,I; Any coinments wo"id be appreci- : L:2~, 6.;~can De addressed to the author , 6c: I 4112 ndditors Buiiding I I 14x1 & Independence Avenue, S.W. Washington, D.C. 20250 BEST AVA MBLE COPY PREFACE Most of the data discussed in this survey were reviewed in an earlier document (Zuvekas 1978b) which presented a "profile" of small farmers in the Caribbean Region *I but was not intended to provide much interpretation or analysis. The present document, which focuses on income distribution and levels of living in -both rural and urban areas, discusses the significance of the data in more detail. It also examines income distribution policy and makes suggestions for additional research on income and levels of living. The information in this document comes primarily from the 1960 and 1970 population censuses of the Commonwealth Caribbean, agricultural censuses undertaken between 1971 and 1975. and the following small-farmer surveys (see References for full citations): Author Countries Antigua (1977) Antigua Brierley (1974) Grenada Mills (1976) St. Kitts Momsen (1970) Barbados, St. Lucia, (Martinique) Weir's Ltd. (1976) Dominica, Montserrat, St. Vincent Yankey (1969) Dominica Defined operationally by AID as comprising the smaller English-speaking states in the Caribbean, viz., Antigua, Barbados, Belize, British Virgin Islands, Cayman Islands, Dominica, Grenada, Montserrat, St. Kitts-Nevis- (Anguilla), St. Lucia, St. Vincent, and the Turks and Caicos Islands. TABLE OF CONTENTS PREFACE LIST OF TABLES AND FIGURES I. INTRODUCTION 11. INCOME AND INCOME DISTRIBUTION STATISTICS 1. National Accounts Data 2. Census Data and Other Data on Income Distribution 3. Farm-Level Surveys 4. Emigrants' Remittances 111. THE DISTRIBUTION OF AGRICULTURAL LAND IV. OTHER LEVEL-OF-LIVING INDICATORS Unemployment and Underemployment Education Housing Water Supply Toilet Facilities Electricity Infant Mortality Life Expectancy Nutrition V. INCOME DISTRIBUTION POLICY VI. DIRECTIONS FOR FUTURE RESEARCH REFERENCES LIST OF TABLES Rates of Growth of Real Per Capita GNP, 1960-70 and 1970-75, and Real Per Capita GDP, 1976; and Per Capita GDP at Market Prices, 1976 The Distribution of Individual Incomes, by Income Level and Sex, 1970 Estimates of Remittance Income, Various Years, 1961-1977 The Distribution of Agricultural Land Percentage Distribution of Land Area, by Farm Size Category IV. 1 Unemployment Rates, by Sex, 1960 and 1970 IV. 2 Combined Male-Female Unemployment Rates, 1970 IV. 3 Level of Education of the Working Population 15 Years of Age and Older, by Sex, 1960 and 1970 IV. 4 Level of Education Attained by Head of Household, 1970 IV. 5 Distribution of Dwelling Units by Number of Rooms, 1970 IV. 6 Type of Household Water Supply, 1970 IV. 7 Type of Household Toilet Facilities, 1970 IV. 8 Infant Mortality Rates, 1972 IV. 9 Life Expectancy at Birth IV. 10 Nutritional Status of Children Less than 5 Years Old LIST OF FIGURJIS 111.1 The Distribution of Agricultural Land in Barbados and Belize 111.2 The Distribution of Agricultural Land in the Windward Islands 111.3 The Distribution of Agricultural Land in the Leeward Islands I. INTRODUCTION During the 1970s economists have become less concerned with economic growth -- as measured by per capita GNP -- and more concerned with econ- omic development, or how the benefits of growth are distributed among a country's people. We can no longer assume that the benefits of growth will automatically "trickle down" to everyone. Specific policies and programs are needed to ensure that the poorest segments of the popu- lation will benefit from growth. Development is now generally defined in terms of progress towards reducing the incidence of poverty, unemployment, and income inequalities. In the last few years, strategies promoting development have become widely referred to as "basic needs" strategies. As defined by Francis Blanchard, Director-General of the International Labour Office (ILO l977:7), basic needs are the minimum standard of living which a society should set for the poorest groups of its people. The satisfaction of basic needs means meeting the minimum requirements of a family for personal consumption: food, shelter, clothing; it implies access to essen- tial services, such as safe drinking-water, sanitation, transport, health and education; it implies that each person available for and willing to work should have an adequately remunerated job. It should further imply the satisfaction of needs of a more quali- tative nature: a healthy, humane and satisfying environptent, and popular participation in the making of decisions that affect the lives and livelihood of the people and individual freedoms. Other things equal, the higher is a country's per capita income, the more it is capable of meeting the basic needs of its people. But per capita figures are notoriously deficient even as indicators of economic grFwth,L/ and they tell us little about hcw aggregate GNP is For a brief summary of these problems, see Zuvekas (1979: Ch. 1). distributed among a country's population -- i.e. the extent to which a country's resources actually are used to help meet basic needs. Income ------distribution data can give us some clrres about how we1 1 hasic h~lmnn needs are being met, but the usefulness oi these data is limited both by statistical problems of measurement and by theoretical problems of . interpretation./ Thus income distribution data should be suiplernented with various basic needs indicators, though the limitations of these indicar~rsshould also be kept in mind. In the Caribbean Region, income figures from national Bccounts tables, censuses, and sample surveys are generally of poor quality. Detailed national accounts data are not even available on an annual basis for some countries, and in these cases per capita income figures are only rough estimates. Survey data tend to underestimate real household income, giving the impression that levels of living of small farmers in some countries are as low as in Haiti or the Andean highlands of South America. Survey data also imply that aggregate income distri- bution is very unequal. An examination of other level-of-living indicators suggests that this picture is very misleading. The basic human needs of both rural and urban populations appear to be fulfilled to a higher degree than in most other Latin American and Caribbean countries. Nevertheless, living standards for most people are still well below what is desirable, and in a number of countries they have deteriorated during the 1970s. Part II of this document reviews data on income and income distri- bution and explains why these data are not good indicators of living standards or changes in 117717~standards over time. In Part I11 we examine briefly the disbributi~nof agricultural land, since this form 1' See Zuvekas (1975) and Zuvekas (1979: Ch. 11). of wealth is an important determinant of present and.future farm incomes. Part IV provides data for level-of-living indicators other than income and wealth. In Part V we comment briefly on government policies that directly or indirectly have affected income distribution. Finally, in Part VI, we present several suggestions for research to provide better data on income, income distribution, and other level-of-living indicators. INCOME AND INCOME DISTRIBUTION STATISTICS National Accounts Data During the 1960s economic growth in the Caribbean Region was very rapid. Except in Belize, where per capita GNP increased at a modest annual rate of 1.9%, growth rates ranged from 3.4% in Barbados and S't. Vincent to 8.1% in St. Lucia (see Table 11.1). Increased tourism played a major role in the expansion of the Eastern '~aribbeaneconomies during the 1960s, though other economic activities, including banana production in the Windward Islands, also were important factors. Economic trends during the 1970s have been very different. Between 1970 and 1975 per capita GNP rose only in Barbados and Belize, at a mediocre annual rate of 1.3-1.5%. In the Windwards and Leewards it declined in all countries, particularly in Grenada. In 1976 Grenada began a strong recovery, and the other Windwards experienced modest gains; but in the Leewards per capita GNP continued to fall. Reasons for poor economic performance during the 1970s vary, but among the more important factors have been increasingly uncompetitive sugar production, adverse price trends for other export crops, social and political unrest, drought, stagnation or decline in tourist arrivals, and sharply rising prices for imported fuel. In 1976 per capita GDP at factor cost in the Caribbean Region (ex- cluding the British Virgin Islands, Cayman Islands, and Turks and Caicos Islands) L' ranged from US$320 in St.