1. A brief history of Latin American Economics

2.

Latin American Development

• Development?

• Measurements

• • Poverty

• • Inequalities

• • Human Development Index (HDI)

• • Capabilities

• Definitions

• • Rostow

• • International emphasis

• • Newer views

3. 4. 5. Why is Latin America considered an LDC?

Economic factors of production

K Capital

L Labour

T Land

E Entrepreneurship

Lack of Investment? Insecure property? Protectionism or foreign influence? Low technology?

6.

Colonial states:

• Extractive states Latin America funds counter-reformation

• Anti-industrialization

• Anti-trade

• No system of checks and balances

• Contrast to North American settlers

7.

16 thC

• Mining

• Looting to tribute

17 thC

• International competition

18 thC

• Bourbon/Pombal reforms trade and industry

• Costs of independence

8.

Building national economies

• Fights between conservatives and liberals

• Neo-imperialism vs role of elites

• Exporting primary goods

• • Backward bending supply curves

• • Market shifts

• • 1850-post WWII exports grow 4% per year.

• • • Led by industrialization of the North

• • Regional inequalities

9.

Great Depression

• D commodities

• foreign currency

• St intervention new deal, Keynes

• Rural-urban migration

WWII

• D raw materials

10. ISI Import Substitution Industrialization

• Singer-Prebisch thesis

• • Deteriorating terms of trade

• • Zero-sum game

• • Autarky

• • Improve BoP

• • Easy to implement

• Results

• Problems

11.

ISI problems:

• Lack of strategic implementation

• Rent seeking

• Lack of progress into later stages

• Worsened BoP

• Overvalued exchange rate

• Limited markets

International lending

Cold War

12. The Oil Crises

1973 Pdue to OPEC embargo

• Petrodollars banks NEED to lend

• Inflationv growth

1979 Pas a result of the Iranian revolution

• Vs inflation, increase interest rates

• oil P (later)

• D for Latin American products

13. 1980s Thelostdecade

Sudden stop to international lending

1982 Mexico cannot service its debt

Decade lost in re-scheduling debt

• New loans to pay off interest on previous loans

• No new investment in development

• Cut back on social investment

• $500 for every man, woman and child in Latin America

14. Washington Consensus

Stabilization

• IMF led

• inflation,G,M

Structural adjustment WB led

• Open the economy

• • Trade

• • Financial markets

• • Labour?

Quick solution -- Privatization

15.

Controversial

• Kuznets inverted U

• Liberalization leads to growth]

• Order of liberalization financial runs

• China, Asian Tigers

Turn to the left

• Inequality

• Limited internal industries

• Short-lived, limited industries

16.

Regional trade agreements

• Mercosur

• NAFTA

• FTA

• • Promises

• • Problems