Macroeconomics of Stagnation and New Developmentalism in Latin America

After the failure of conventional orthodoxy to promote macroeconomic stability and development, Latin America has become home to a clear movement for rejecting the “macroeconomics of stagnation” that it contains. Given that, the question is whether there is an alternative to the diagnoses and policies that the North offers to Latin America. In this chapter, after examining the crisis of the national development strategy that was old developmentalism, I compare the rising new developmentalism with its earlier version, as well as with the set of diagnoses and policies that rich nations have prescribed and pushed on developing countries since the neoliberal ideological wave became prevalent world-wide: conventional orthodoxy. In the first section, I discuss old developmentalism, its initial success, its obsolescence due to a series of new facts and distortions, and its replacement with conventional orthodoxy since the late 1980s. In the second section, I discuss the importance of the concept of the nation and of the “national development strategy” institution. In the third section, I discuss new developmentalism as a “third discourse” lying between the bureaucratic left wing’s populism and conventional orthodoxy’s macroeconomics of stagnation. In the fourth section, I compare new and old developmentalism. In the fifth section, I compare new developmentalism with conventional orthodoxy with regard to macroeconomic policies and growth strategies.