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Latin America's Growth and Equity Frustrations During Structural Reforms

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  • José Antonio Ocampo

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.

Suggested Citation

  • José Antonio Ocampo, 2004. "Latin America's Growth and Equity Frustrations During Structural Reforms," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 67-88, Spring.
  • Handle: RePEc:aea:jecper:v:18:y:2004:i:2:p:67-88
    Note: DOI: 10.1257/0895330041371349
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0895330041371349
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    1. Escaith, Hubert & Morley, Samuel, 2001. "El efecto de las reformas estructurales en el crecimiento económico de la América Latina y el Caribe. Una estimación empírica," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(272), pages 469-513, octubre-d.
    2. Pablo Astorga, Ame R. Berges and Valpy FitzGerald, "undated". "The Standard of Living in Latin America During the Twentieth Century," QEH Working Papers qehwps103, Queen Elizabeth House, University of Oxford.
    3. Ffrench-Davis, Ricardo, 2003. "Financial crisis and national policy issues: an overview," Copublicaciones, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), number 1785, September.
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    Cited by:

    1. 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, September.
    2. Paunov, Caroline, 2012. "The global crisis and firms’ investments in innovation," Research Policy, Elsevier, vol. 41(1), pages 24-35.
    3. Ffrench-Davis, Ricardo., 2010. "Macroeconomía para el empleo decente en América Latina y el Caribe," ILO Working Papers 994590693402676, International Labour Organization.
    4. Hillebrand Evan E, 2010. "Deglobalization Scenarios: Who Wins? Who Loses?," Global Economy Journal, De Gruyter, vol. 10(2), pages 1-21, May.
    5. Nina Dodig & Hansjorg Herr, 2014. "Previous financial crises leading to stagnation – selected case studies," Working papers wpaper24, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    6. Sámano, Claudia & Szekely, Miguel, 2012. "Did Trade Openness Affect Income Distribution in Latin America? Evidence for the Years 1980?2010," WIDER Working Paper Series 003, World Institute for Development Economic Research (UNU-WIDER).
    7. 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.
    8. Sánchez-Fung, José R., 2015. "Producto, desempleo y la Ley de Okun en la República Dominicana
      [Output, unemployment and Okun’s law in the Dominican Republic]
      ," MPRA Paper 63656, University Library of Munich, Germany.
    9. 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.
    10. Ros Jaime, 2013. "Latin America’s Trade and Growth Patterns, the China Factor, and Prebisch’s Nightmare," Journal of Globalization and Development, De Gruyter, vol. 3(2), pages 1-16, March.
    11. Juliana Martínez Franzoni & Diego Sánchez-Ancochea, 2014. "The Double Challenge of Market and Social Incorporation: Progress and Bottlenecks in Latin America," Development Policy Review, Overseas Development Institute, vol. 32(3), pages 275-298, May.
    12. 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.
    13. 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.
    14. Hillebrand Evan E & Lewer Joshua J. & Zagardo Janice Turtora, 2011. "Backtracking from Globalization," Global Economy Journal, De Gruyter, vol. 10(4), pages 1-19, January.
    15. 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.
    16. Rozenwurcel, Guillermo, 2006. "Why Have All Development Strategies Failed in Latin America?," WIDER Working Paper Series 012, World Institute for Development Economic Research (UNU-WIDER).
    17. Leonardo Vera, 2013. "Some Useful Concepts for Development Economics in the Tradition of Latin American Structuralism," American Journal of Economics and Sociology, Wiley Blackwell, vol. 72(4), pages 917-948, October.
    18. 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.
    19. repec:ilo:ilowps:459069 is not listed on IDEAS
    20. 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).
    21. repec:spr:manint:v:49:y:2009:i:4:d:10.1007_s11575-009-0005-8 is not listed on IDEAS
    22. Humberto F.S. Spolador & Terry L. Roe, 2013. "The Role of Agriculture on the Recent Brazilian Economic Growth: How Agriculture Competes for Resources," The Developing Economies, Institute of Developing Economies, vol. 51(4), pages 333-359, December.
    23. Eduardo Wiesner, 2011. "Colombia: la percepción de justicia distributiva y la demanda política por estabilidad macroeconómica," DOCUMENTOS CEDE 008739, UNIVERSIDAD DE LOS ANDES-CEDE.
    24. Ros, Jaime, 2009. "Poverty reduction in Latin America: the role of demographic, social and economic factors," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.

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