Market Liberalism, Growth, And Economic Development In Latin America (routledge Studies In Development Economics)

The principal themes pursued in this book emerge from the great transformation that the Latin American and the Caribbean economies experienced in the aftermath of both the foreign debt crisis of 1982 and the macroeconomic stabilisation policies that vividly and painfully produced the so-called "lost decade" of the 1980s. Latin America implemented an economic liberalisation process during the late 1980s and the 1990s. The main policy reforms involved in that course can be summarized as privatization of state owned firms, trade openness, deregulation of the foreign direct investment (FDI) regime and fiscal discipline. Latin American countries have also embarked in regional trade agreements, the most important ones being Mercosur and the North American Free trade Agreement (NAFTA). This book compares results from the experience of North-South and South-South moulds of integration. Thus, the impacts of these policies on growth, development, technological progress, poverty and inequality are analysed. Orthodox and heterodox economic policies and theories are discussed along with relevant empirical evidence with a view to assess, on the one hand, the relative merits of the various policy reforms applied by different countries in the region, and on the other, the experience of integration into the global economy. There are thirteen chapters in this collection linked in varying ways to the series of economic reforms introduced in the region in the last decades. The book will be of interest to academics, researchers, students and policymakers interested in the study of economic development in emerging economies and in particular in Latin America. Contents 12 Editors’ introduction 30 Part I 30 Part II 31 Part III 32 Trade liberalization, development and regional integration 34 1 Has trade liberalisation in poor countries delivered the promises expected? 36 1.1 Introduction 36 1.2 What is wrong with orthodox trade theory? 37 1.3 Poverty and income inequality within countries 39 1.4 International and global inequality 42 1.5 Trade liberalisation and trade performance 44 1.6 Trade liberalisation and growth performance 48 1.7 Trade strategy for development 49 References 52 2 Beyond the Washington Consensus 55 2.1 Introduction 55 2.2 The Washington Consensus framework revisited 57 2.3 Macroeconomic performance before and after the structural reform 59 2.4 Evolution of the development gap 67 2.5 Beyond the Washington Consensus: the case for industrial policy 79 2.6 Final remarks 82 Notes 83 References 84 3 Foreign trade and per capita income 88 3.1 Introduction 88 3.2 Theoretical aspects 89 3.3 Model derivation 91 3.4 Empirical application 95 3.5 Results 98 3.6 Conclusions 104 Notes 108 References 109 4 Regional integration and its effects on inward FDI in developing countries 110 4.1 Introduction 110 4.2 Theoretical considerations: regional integration agreements and possible effects on inward FDI 111 4.3 Empirical evaluation of inward FDI in Mexico and Brazil 119 4.4 Conclusions 133 Notes 136 References 137 5 Trade blocs as determinants of 140 5.2 142 References 159 Trade reforms and development experience 161 6 Downhill or the long agony of Argentinian development 163 6.1 Introduction 163 6.2 From the hegemonic tie to the commodity boom 165 6.4 The state, foreign capital and spurious competitiveness 171 6.5 Inequality and reprimarisation 174 6.6 Concluding remarks 175 Notes 176 References 177 7 The determinants of FDI in Chile 179 7.1 Introduction 179 7.5 Results 191 7.6 Conclusions 195 Notes 195 References 196 8 Assessment of the distributive impact of trade reforms in Uruguay 198 8.1 Introduction 198 8.2 Trade reform in Uruguay 199 8.3 Inequality and poverty in Uruguay: the stylised facts 201 8.4 Methodology 201 8.5 Estimation 206 8.6 Conclusions and policy implications 219 Appendix: data 220 Notes 221 References 221 Economic liberalization, development and growth in Mexico 223 9 Economic liberalisation and income distribution 225 9.1 Introduction 225 9.2 Theoretical debate and complementary arguments 227 9.3 Individual income distribution 230 9.4 Econometric analysis with disaggregate data (labour income) 235 9.5 Additional forms of income distribution (all income sources) 240 9.6 The effects of market openness on income dispersion 242 9.7 Concluding remarks 244 Notes 246 References 248 10 How risk factors affect growth in Mexico 250 10.1 Introduction 250 10.2 The setting of the economy 251 10.3 The consumer’s decision problem 253 10.4 Wealth dynamics 256 10.5 Consumption dynamics 258 10.6 Simulation exercise 260 10.7 Conclusions 261 References 261 12 Technological innovation and sectoral productivity in the Mexican economy 280 12.1 Introduction 280 12.2 Background 281 12.3 Theoretical aspects 282 12.4 Econometric model 285 12.6 Estimation and model results 287 12.7 Conclusions 291 Notes 292 References 292 13 The robustness of Okun’s law – evidence from Mexico 294 13.1 Introduction 294 13.2 The Okun models 295 13.3 Mexico: output and unemployment data, 1985.1–2006.4 295 13.4 Analysis and discussion 296 13.5 Conclusion 298 Appendix 299 Notes 304 References 305 Index 307 9780415573740,(hbk),9780203816127,(ebk) Economics, Finance, Business & Industry Taylor & Francis Routledge Contents ......Page 12 Part I......Page 30 Part II......Page 31 Part III......Page 32 Trade liberalization, development and regional integration......Page 34 1.1 Introduction......Page 36 1.2 What is wrong with orthodox trade theory?......Page 37 1.3 Poverty and income inequality within countries......Page 39 1.4 International and global inequality......Page 42 1.5 Trade liberalisation and trade performance......Page 44 1.6 Trade liberalisation and growth performance......Page 48 1.7 Trade strategy for development......Page 49 References......Page 52 2.1 Introduction......Page 55 2.2 The Washington Consensus framework revisited......Page 57 2.3 Macroeconomic performance before and after the structural reform......Page 59 2.4 Evolution of the development gap......Page 67 2.5 Beyond the Washington Consensus: the case for industrial policy......Page 79 2.6 Final remarks......Page 82 Notes......Page 83 References......Page 84 3.1 Introduction......Page 88 3.2 Theoretical aspects......Page 89 3.3 Model derivation......Page 91 3.4 Empirical application......Page 95 3.5 Results......Page 98 3.6 Conclusions......Page 104 Notes......Page 108 References......Page 109 4.1 Introduction......Page 110 4.2 Theoretical considerations: regional integration agreements and possible effects on inward FDI......Page 111 4.3 Empirical evaluation of inward FDI in Mexico and Brazil......Page 119 4.4 Conclusions......Page 133 Notes......Page 136 References......Page 137 5 Trade blocs as determinants of......Page 140 5.2......Page 142 References......Page 159 Trade reforms and development experience......Page 161 6.1 Introduction......Page 163 6.2 From the hegemonic tie to the commodity boom......Page 165 6.4 The state, foreign capital and spurious competitiveness......Page 171 6.5 Inequality and reprimarisation......Page 174 6.6 Concluding remarks......Page 175 Notes......Page 176 References......Page 177 7.1 Introduction......Page 179 7.5 Results......Page 191 Notes......Page 195 References......Page 196 8.1 Introduction......Page 198 8.2 Trade reform in Uruguay......Page 199 8.4 Methodology......Page 201 8.5 Estimation......Page 206 8.6 Conclusions and policy implications......Page 219 Appendix: data......Page 220 References......Page 221 Economic liberalization, development and growth in Mexico......Page 223 9.1 Introduction......Page 225 9.2 Theoretical debate and complementary arguments......Page 227 9.3 Individual income distribution......Page 230 9.4 Econometric analysis with disaggregate data (labour income)......Page 235 9.5 Additional forms of income distribution (all income sources)......Page 240 9.6 The effects of market openness on income dispersion......Page 242 9.7 Concluding remarks......Page 244 Notes......Page 246 References......Page 248 10.1 Introduction......Page 250 10.2 The setting of the economy......Page 251 10.3 The consumer’s decision problem......Page 253 10.4 Wealth dynamics......Page 256 10.5 Consumption dynamics......Page 258 10.6 Simulation exercise......Page 260 References......Page 261 12.1 Introduction......Page 280 12.2 Background......Page 281 12.3 Theoretical aspects......Page 282 12.4 Econometric model......Page 285 12.6 Estimation and model results......Page 287 12.7 Conclusions......Page 291 References......Page 292 13.1 Introduction......Page 294 13.3 Mexico: output and unemployment data, 1985.1–2006.4......Page 295 13.4 Analysis and discussion......Page 296 13.5 Conclusion......Page 298 Appendix......Page 299 Notes......Page 304 References......Page 305 Index......Page 307 During the 1980s and 1990s and following the debt crisis in 1982, Latin America was characterized by implementing an economic liberalization process in different stages across most of the countries in the region. This book explores new developments in this region, in terms of the impact these policies had on growth, poverty and inequality. Using a combination of theoretical approaches, the chapters in this book look at the varying success and failures of trade agreement such as Mercosur and NAFTA, how these attempts of regional integration have .. Using a combination of theoretical approaches, this book looks at economic liberalization in Latin America and new developments in this region, in terms of the impact these policies had on growth, poverty and inequality