Why Has Productivity Growth Stagnated in Most Latin American Countries Since the Neo-Liberal Reforms?

Abstract

Latin America's economic performance since the beginning of neo-liberal reforms has been poor; this not only contrasts with its own performance pre-1980, but also with what has happened in Asia since 1980. I shall argue that the weakness of the region's new paradigm is rooted as much in its intrinsic flaws as in the particular way it has been implemented. Latin America's economic reforms were undertaken primarily as a result of the perceived economic weaknesses of the region -i.e., there was an attitude of 'throwing in the towel' vis-à-vis the previous state-led import substituting industrialisation strategy, because most politicians and economists interpreted the 1982 debt crisis as conclusive evidence that it had led the region into a cul-de-sac. As Hirschman has argued, policymaking has a strong component of 'path-dependency'; as a result, people often stick with policies after they have achieved their aims, and those policies have become counterproductive. This leads to such frustration and disappointment with existing policies and institutions that is not uncommon to experience a 'rebound effect'. An extreme example of this phenomenon is post-1982 Latin America, where the core of the discourse of the economic reforms that followed ended up simply emphasising the need to reverse as many aspects of the previous development (and political) strategies as possible. This helps to explain the peculiar set of priorities, the rigidity and the messianic attitude with which the reforms were implemented in Latin America, as well as their poor outcome. Something very different happened in Asia, where economic reforms were often intended (rightly or wrongly) as a more targeted and pragmatic mechanism to overcome specific economic and financial constraints. Instead of implementing reforms as a mechanism to reverse existing industrialisation strategies, in Asia they were put into practice in order to continue and strengthen ambitious processes of industrialisation.

Neostructuralism and Heterodox Thinking in Latin America and the Caribbean in the Early Twenty-First Century

“…The findings are also valid for the smaller countries, where structural change is still weak compared with larger countries. The duration and consistency of the industrial and technology policies of the Republic of Korea has been well documented (for example, see the classic studies by Amsden (1989) and ), while in Argentina and Brazil these policies suffered significant interruptions (Bell, 2006;Peres, 2010). A comparison with a greater number of countries, both outside and within the region, may be found in ECLAC (2012).…”

Влияние Внешних Факторов На Развитие Рынка Консалтинговых Услуг

“…This was associated with drastic policy changes involving the retreat of the developmental State (including a continuous decline in public investment), along with trade and capital account opening and widespread market deregulation, in particular of the financial sector. Such changes were expected to prepare the ground for a broad recovery led by private investment, but this never gained momentum (TDR 2003;Palma, 2011). Since the 1980s, investment-to-GDP ratios have been the lowest in sub-Saharan Africa and Latin America, and although they increased in the 2000s, they did not return to their earlier levels.…”

“…Hence, the strategies adopted for activating a dynamic process of private capital accumulation and growth, based on a combination of increased foreign direct investment (FDI) and reduced public investment and State intervention, did not produce the expected results. Indeed, investment rates fell and growth was well below the post-war average in these economies during the 1980s and 1990s (TDR 2003;Palma, 2011).…”

Sraffa and the Reconstruction of Economic Theory: Volume Two

“…In Latin American countries, liberalisation took the form of a radical U-turn (Palma, 2010), from a very weak national position; in Korea and other Asian countries, liberalisation was adopted later and tied to a trajectory of high growth. Other Asian countries like China, Taiwan or India did not dismantle the main developmental institutions.…”