Latin America: Limits to Alternative Economic Policies

From 2003 to 2008, Latin America had a remarkable period of growth with few precedents in its economic history. This corresponds to the strengthening of economic policy options far from those advocated by the International Monetary Fund, World Bank, or the Washington Consensus agenda. With the exception of Venezuela, the international financial crisis and the great recession did not significantly affect economic growth. In the following years and until the end of 2011 and the beginning of 2012, GDP continued growing. From this moment forward, there was a change in economic growth tendencies and in some countries even strong recessions. The literature has argued that the change was the result of a rapid and significant drop in the international prices of raw materials, all relevant component of these countries’ exports. This article argues that there are other macroeconomic data that also explain the change in the dynamics in the some LA economies. Structural reforms and economic policies implemented since the 1980s through the early years of the last decade had effects that transformed economies and economic power relations. The changes carried out by governments, which were promoting an alternative economic policy in the region, were not able to advance sufficiently in the creation of new institutions. At the same time, they could not modify economic power relations to the point of creating significant increases in the rate of investment and the expansion of internal productive chains within the industrial base to give continuity to the process of economic development.