Transformation in Latin America

In Latin America, import-substitution industrialization has been replaced by open economies; or rather trade liberalization, at a rapid pace, with sometimes dramatic consequences for the national industries and the labor market. At the same time, in that continent, where public enterprises represented a very substantial part of the economy, privatization is taking place on a large scale. It started in Chile in 1973 after the military takeover, a bit later in Argentina, after the coup of 1976. Mexico followed in the 1980s and Brazil joined the ranks in the 1990s. In July 1998, Telebrás, the Brazilian telecommunications company, was put up for auction, the largest single privatization in any emerging market.2 Furthermore, in a number of Latin American countries, the whole social security system is being revised, retirement and health schemes are being modified, mostly privatized, and job security for civil servants is being abolished. Unemployment, an increasing informal sector, growing poverty, increasing inequality, and unrest are the results. For instance, the fortune of the richest Mexican was estimated at 6.6 billion dollars in 1995, equal to that of the earnings of the 17 million poorest of this country.3 Inequality has only increased since, and not only in Latin America.