Assessment of Socio- Economic Development through Country Classifications: A Cluster Analysis of the Latin America and the Caribbean (LAC) and the European Union (EU)

The aim of this paper is to provide an assessment of socio-economic development through a multi-tiered approach relying both on traditional and modern understanding and the measuring of human development. A systematic approach is adopted to classify countries using a non-hierarchical clustering method. Three macro-scenarios are considered - classical, modern and extended - which contrast information regarding inequality, poverty and the quality of employment with the role of education, health, institutions and environmental sustainability. Our approach is based on new estimates of inequality and poverty that are derived from Atkinson’s Pareto interpolation, which bridges the discrepancy between national income accounts and household surveys. This may serve to offset the statistical bias in the estimates of income inequality and poverty, and to better interpret national and regional socioeconomic performance. The analysis is carried out in a comparative framework between the Latin America and the Caribbean (LAC) region and the European Union (EU)