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The impact of structural adjustment on government spending and debt in Latin America

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  • Jon Jonakin †
  • Mark Stephens ‡

Abstract

In theory, the policies associated with adjustment and stabilization (AS) in Latin America were designed to contain wasteful government spending, enhance economic efficiency, and forestall recurrent debt and liquidity crises. In practice, AS succeeded in shrinking the size of government, but regional debt rose and debt servicing remained historically high. Government spending on physical infrastructure and subsidies fell sharply, while military spending in much of the region escalated. The changing magnitude and relative pattern of government expenditures corresponded with slower economic growth, higher unemployment, and continued liquidity crises.

Suggested Citation

  • Jon Jonakin † & Mark Stephens ‡, 2004. "The impact of structural adjustment on government spending and debt in Latin America," Defence and Peace Economics, Taylor & Francis Journals, vol. 15(2), pages 157-171, April.
    • Handle: RePEc:taf:defpea:v:15:y:2004:i:2:p:157-171
    DOI: 10.1080/1024269032000110531
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    References listed on IDEAS

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    1. -, 2002. "Current conditions and outlook: Economic Survey of Latin America and the Caribbean 2002," Estudio Económico de América Latina y el Caribe, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1092 edited by Eclac, September.
    2. Lora, Eduardo & Olivera, Mauricio, 1998. "Macro Policy and Employment Problems in Latin America," IDB Publications (Working Papers) 6077, Inter-American Development Bank.
    3. Eduardo Lora & Mauricio Olivera, 1998. "Macro Policy and Employment Problems in Latin America," Research Department Publications 4116, Inter-American Development Bank, Research Department.
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    2. Arimah, C. Ben, 2010. "The Face of Urban Poverty Explaining the Prevalence of Slums in Developing Countries," WIDER Working Paper Series 030, World Institute for Development Economic Research (UNU-WIDER).

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