The role of the state, priva te domestic firms, and foreign firms has changed substantially in recent years throughout Latin America's economies. An almost universall y accepted goal in the 1990s seems to be to reduce the presence of the state in the region's economies, to reduce state regulations, to encourage the growth of the private domestic sector, and to welcome the participation of foreign capital not only in manufacturing industries, but also in areas reserved for the state for the 1ast half century (such as public utilities and the exploitation of natural resources). This is quite a change from the mood that prevailed in most of Latin America during the heyday of import-substitution industrialization (ISI) in the three decades following World War n. Then, state firms dominated public utilities, the exploitation of natural resources, and some basic industries (like petroleum refining and steel), and was a prominent player in banking, petrochemicals, and some other industries. A longer view, however, reveals that the current privatization thrust might not be a 180-but rather a 360-degree swing, since in the early decades of this century the private sector (especially foreign capital) was dominant in extractive industries and public utilities. We shall first review the role of the public and private sectors in distinct periods of Latin America's development-the pre-1S1 period, when primary exports were the leading sector; the ISI period, which spanned the period from the Great Depression of the 1930s to the 1960s; and the two decades (the 1970s and the 1980s) when the region suffered external (oil prices and interest rate) shocks, became heavily indebted, and then stagnated during the debt crisis decade of the 1980s. We shall then examine implications of the privatization trend in Latin America-its promises and pitfalls, its implication for a new state rol e in the economy, the extent to which it will require a more open economy, and its implication for a new growth model for the region.

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