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Neo-liberal Market Reform in Latin America

Neo-liberal Market Reform in Latin America. Shift Towards Neo-Liberalism in Latin America in 1990s. International factors made liberal economic policies dominant ideologically in 1980s and 90s Regional factors pushed Latin American countries towards liberalization of economies in ’90s.

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Neo-liberal Market Reform in Latin America

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  1. Neo-liberal Market Reform in Latin America

  2. Shift Towards Neo-Liberalism in Latin America in 1990s • International factors made liberal economic policies dominant ideologically in 1980s and 90s • Regional factors pushed Latin American countries towards liberalization of economies in ’90s

  3. International Factors • Reagan and Thatcher led charge towards liberal economics in 1980s (smaller role for state in economy) • Collapse of state socialism and Eastern Bloc, late-1980s

  4. Regional Factors • Crisis of ISI across Latin America in 1970s and ’80s • Chilean neo-liberal “boom” of late-1970s and early-1980s; “boomlet” after post-Pinochet economic recovery • Debt crisis of 1980s – foreign banks had a lot of “petrodollars” b/c of oil boom, LA countries borrowed billions and became stuck with high foreign debt --IMF offered LA countries exit strategy, but with neo-liberal strings attached (“IMF conditionality”)

  5. What were goals of neo-liberal reforms? • Tame hyperinflation • Improve competitiveness of industry • Open up economy to global markets • Get prices and wages “right” (supply/demand regulation)

  6. Key Neo-Liberal Policies • Eliminate sources of economic inefficiency --subsidies to industries --subsidies to consumers • Privatizationof state-owned industry • Austerity Measures --cuts in govt spending on educ., health, envtl prot 4. Remove tariffs and other trade barriers

  7. Economic Effects of Neo-liberal Policies • More connected to international economic system – international investment, openness

  8. Latin American Countries Among Top FDI Recipients

  9. Lower Tariffs and Trade Restrictions • Average tariff rate in Latin America fell from 42% in 1986 to 14% in 1998

  10. Economic Effects 2. Improved macroeconomic outlook over medium and long-term

  11. Economic Effects • Decline in average wages • Larger gap between rich and poor, greater concentration of wealth

  12. Political Effects • Less inclusive public policy that tends not to reflect needs and interests of poor • Multiple, competing economic demands on state that were ignored under dictatorships hard to meet, given demands of neo-liberalism • Recent electoral backlash against neo-liberalism – Lula da Silva in Brazil, Gustavo Noboa in Ecuador, Chavez in Venezuela

  13. Cultural Effects • Loss of communitarianism and solidarity --greater emphasis on the individual, as opposed to working together to achieve common good 2. Weakened national identity – in context of U.S. hegemony, integration can spell the decimation of a national culture

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