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Latin America's Growth and Equity Frustrations During Structural Reforms

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  • Jos� Antonio Ocampo
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    Abstract

    This paper argues that Latin America's market-oriented reforms, together with increased monetary and fiscal discipline, were successful in bringing down inflation, inducing export growth and diversification, and attracting foreign direct investment. Nonetheless, economic growth was frustratingly slow. Pro-cyclical macroeconomic policies generated, in turn, strong business cycles in the face of unstable access to international capital markets. Higher productivity in leading firms and sectors failed to spread throughout the economy and led to increasing productive sector dualism. Furthermore, despite the democratic dividend reflected in increased social spending and coverage of social services, weak economic performance and additional distributive tensions led to disappointing results in terms of employment generation and poverty reduction. Overcoming these frustrating outcomes would require counter-cyclical macroeconomic policies, open-economy productive development strategies and mainstreaming social objectives into economic policies.

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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0895330041371349
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    Bibliographic Info

    Article provided by American Economic Association in its journal Journal of Economic Perspectives.

    Volume (Year): 18 (2004)
    Issue (Month): 2 (Spring)
    Pages: 67-88

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    Handle: RePEc:aea:jecper:v:18:y:2004:i:2:p:67-88

    Note: DOI: 10.1257/0895330041371349
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    Cited by:
    1. Bernard Hoekman & Alan L. Winters, 2005. "Trade and Employment: Stylized Facts and Research Findings," Working Papers 7, United Nations, Department of Economics and Social Affairs.
    2. Edward F. Buffie & Manoj Atolia, 2011. "Exchange‐Rate‐based Stabilisation, Durables Consumption and the Stylised Facts," Economic Journal, Royal Economic Society, vol. 121(555), pages 1130-1160, 09.
    3. Paunov, Caroline, 2012. "The global crisis and firms’ investments in innovation," Research Policy, Elsevier, vol. 41(1), pages 24-35.
    4. Rozenwurcel, Guillermo, 2006. "Why Have All Development Strategies Failed in Latin America?," Working Paper Series RP2006/12, World Institute for Development Economic Research (UNU-WIDER).
    5. Manoj Atolia & Edward F. Buffie, 2006. "Exchange-Rate-Based Stabilization, Durables Consumption, and Stylized Facts," Computing in Economics and Finance 2006 416, Society for Computational Economics.
    6. Alvaro CUERVO-CAZURRA & Luis Alfonso DAU, 2008. "Structural Reform And Firm Profitability In Developing Countries," William Davidson Institute Working Papers Series wp940, William Davidson Institute at the University of Michigan.
    7. Lazzarini, Sérgio G., 2012. "Strategizing by the Government: Industrial Policy and Sustainable Competitive Advantage," Insper Working Papers wpe_289, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
    8. Dodig, Nina & Herr, Hansjörg, 2014. "Previous financial crises leading to stagnation: Selected case studies," IPE Working Papers 33/2014, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
    9. Ffrench-Davis, Ricardo, 2010. "Macroeconomía para el empleo decente en América Latina y el Caribe," ILO Working Papers 459069, International Labour Organization.
    10. Birdsall, Nancy & de la Torre, Augusto & Caicedo, Felipe Valencia, 2010. "The Washington consensus : assessing a damaged brand," Policy Research Working Paper Series 5316, The World Bank.
    11. Nina Dodig & Hansjorg Herr, 2014. "Previous financial crises leading to stagnation – selected case studies," Working papers wpaper24, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    12. Bruno, Randolph Luca, 2010. "Labor Market and Globalization: A Comparison of the Latin American and the East Asian Experiences in the 1980s and 1990s," IZA Policy Papers 16, Institute for the Study of Labor (IZA).
    13. Sánchez-Fung, José R., 2008. "The day-to-day interbank market, volatility, and central bank intervention in a developing economy," MPRA Paper 15648, University Library of Munich, Germany.

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