Stabilization And Reforms In Latin America

Comprises eight papers which examine Latin America's economic reform process during the 1980s and 1990s, and considers future steps in this reform. Includes: rethinking Latin American economic policy; good governance after stabilization; capital inflows, real exchange rate and the Mexican crisis of 1994; liquidity management in Argentina; regional free trade agreements in Chile; and the social dimension of reform.

Over the last twenty years Latin America has seen a definitive movement toward civilian rule. Significant trade, fiscal, and monetary reforms have accompanied this shift, exposing previously state-led economies to the forces of the market. Despite persistent economic and political hardships, the combination of civilian regimes and market-based strategies has proved to be remarkably resilient and still dominates the region. This book focuses on the effects of market reforms on domestic politics in Latin America. While considering civilian rule as a constant, the book examines and compares domestic political responses in six countries that embraced similar packages of reforms in the 1980s—Argentina, Brazil, Chile, Mexico, Peru, and Venezuela. The contributors focus on how ambitious measures such as liberalization, privatization, and deregulation yielded mixed results in these countries and in doing so they identify three main patterns of political economic adjustment. In Argentina and Chile, the implementation of market reforms has gone hand in hand with increasingly competitive politics. In Brazil and Mexico, market reforms helped to catalyze transitions from entrenched authoritarian rule. Finally, in Peru and Venezuela, traditional political systems have collapsed and civilian rule has been repeatedly challenged. The contributors include Carol Wise (University of Southern California), Karen L. Remmer (Duke University), Carol Graham (Brookings Institution), Stefano Pettinato (United Nations Development Programme), Consuelo Cruz (Tufts University), Juan E. Corradi (New York University), Delia M. Boylan (Chicago Public Radio), Riordan Roett (Johns Hopkins University), Martín Tanaka (Institute for Peruvian Studies, Lima), and Kenneth M. Roberts (University of New Mexico).

This volume is a successor of sorts to the Institute's 1986 volume Toward Renewed Economic Growth in Latin America, which blazed the trail for the market-oriented economic reforms that were adopted in Latin America in the subsequent years. It again presents the work of a group of leading Latin American economists who were asked to think about the nature of the economic policy agenda that the region should be pursuing after a decade that was punctuated by crises, achieved disappointingly slow growth, and saw no improvement in the region's highly skewed income distribution. The study diagnoses the first-generation (liberalizing and stabilizing) reforms that are still lacking, the complementary second-generation (institutional) reforms that are necessary to provide the institutional infrastructure of a market economy with an egalitarian bias, and the new initiatives that are needed to crisis-proof the economies of the region to end its perpetual series of crises. Contributors: Daniel Artana, Nancy Birdsall, Roberto Bouzas, Saúl Keifman, Pedro-Pablo Kuczynski, Ricardo López Murphy, Claudio de Moura Castro, Fernando Navajas, Patricio Navia, Liliana Rojas-Suarez, Jaime Saavedra, Miguel Székely, Andrés Velasco, John Williamson, and Laurence Wolff.

Over the 1980s and 1990s, most Latin American countries witnessed a retrenchment of the public sector away from infrastructure provision and an opening up of infrastructure activities to the private sector. This book analyzes the consequences of these policy changes from two perspectives. First, it reviews in a comparative framework the major trends in infrastructure provision in Latin America over the last two decades. Second, it evaluates the implication of these trends for economic growth and public deficits in the region. The book shows that in most countries private participation did not fully offset the public sector retreat. The result was a slowdown in infrastructure accumulation, which entailed a significant growth cost and weakened the intended impact of the infrastructure spending cuts on public sector insolvency.

A detailed analysis of economic policy in Latin America with particular attention devoted to the problem of controlling inflation and stabilization. Contents include an analysis of economic policies of the 1990s; country case studies of Brazil, Chile, Mexico, Argentina, and Bolivia; a thorough review of competing paradigms; a comparison of monitarist and structuralist approaches to the problem; mathematical and statistical modeling.

This paper reviews the role of fiscal policy in a number of stabilization programs in Latin America since the early 1980s. The paper highlights the importance of sustainable fiscal adjustment in stabilization efforts, and discusses the main issues that arise in this context. By reviewing the Latin American experience, it is argued that responsibility for failed stabilization attempts can be traced to four main factors: inconsistent policy mixes; excessive reliance on temporary factors of improvement in the fiscal accounts; failure to implement fundamental fiscal reforms; and lack of complementary structural reforms.