the leftist shift in latin america; the impact on the economy

7/30/2019 The Leftist Shift in Latin America; The Impact on the Economy

1/24

0

The Leftist

Shift in

Latin

America

The Impact on the

Economy

Petr Bohacek


2/24

1

Introduction

After the fall of the Soviet Union and the Iron Curtain capitalism established itself as the

leading economic ideology in the world market dictating free market and economic liberalism.

Neo-liberalism was a synonym for economic growth. But not every country has a stable

population, strong middle class, and resources to maintain the neo-liberal system in work like the

United States or other Western countries. A rise of leftist movements hit Latin America in the

21st century. It was fueled by broken promises of the right-winged governments. Socialism

spread across the region in order to improve the poor economic situation as well as to address

some other social issues. The countries had very high debts, high unemployment and big outflow

of capital; together with relatively low living standard and a wide gap between rich and poor the

economy needed to be dramatically improved. The leftist movements in Latin America put

economic reforms on the top of their agenda. While the center-left is enjoying very big support

in Europe the United States are traditionally skeptical toward the left. Despite the infamous

economic history of leftist movement moderate leftist policies can be very successful and

efficient in the current world. This study will show if leftism is dead or if it still has its place in

the world by analyzing its impact on economy in Latin America during the 2000s.

Research Design

The main goal of this study is to detect the improvement in the economies after

implementing the leftist reforms in Latin America. To discover an improvement in an economy

we have to study different aspects of it to get an overall picture of the development. To be able to

detect all the changes the study will focus on three basic macroeconomic indicators that are

going to be our dependent variables: gross domestic product per capita, unemployment rates and


3/24

2

external debt. Gross domestic product per capita indicates the level of productivity despite the

size of population. It tells us how many dollars every person of nations work force generates

annually. However, the GDP per capita can be deceiving especially in countries with a wide gap

between rich and poor; like countries of Latin America. The next dependent variable is

unemployment, the percentage of the countrys work force without a job. High GDP

accompanied with high unemployment rates indicate high incomes for the rich with very low

incomes for the poor, unemployed class which is the case in Latin America as we can see in the

Graphs 1 and 2 that show us the tendency. The mix of these two variables tells us the actual state

of the economy. The external debt was one of the big problems in Latin America causing the

countries to be high risk for investments, therefore, lowering the foreign direct investments (FDI)

and causing general outflow of capital. To bring more investors it is necessary to lower the risk

of investing with increasing the fiscal responsibility which comes from creating a finance-

friendly environment, repaying debts and lowering the overall external debt. Also, high debts are

a sign of an economy that is not functioning well and devalues other aspect of economy like the

GDP. This is a very significant macroeconomic indicator that helps us to analyze an economy.

If the leftist shift improved the economy it dramatically changed the three

macroeconomic indicators, the GDP per capita, unemployment and external debt. The

hypotheses will be concerned with all three indicators. The improvements in the economy will

lead to improvements in these three areas but not necessarily to accepting our hypothesis. The

leftist reforms increased the GDP per capita in the region is the first hypothesis. The leftist

reforms lowered the unemployment is the second hypothesis. The leftist reforms lowered the

external debt is the last hypothesis.


4/24

3

The research is set up with the experimental design. We have an experimental group of

ten countries in Latin America that will receive a treatment which is in our case the

implementation of leftist policies. Our control group made up of ten economically similar world

countries will not receive the same treatment, in other words their policies remain the same. The

countries for the experimental group are in presented in the Map 1 and they are Argentina,

Venezuela, Chile, Brazil, Uruguay, Bolivia, Honduras, Peru, Ecuador and Nicaragua. We will

observe the economic data before the reforms and after the reforms. As we can see on the

timeline in the Graph 2 the leftist turn occurred in Latin America in a spread of 8 years. To get

the same type of data the pre-treatment period or pre-reform period consists of three years before

the reform, the post-reform period are the years after the reforms up until year 2009. Average of

the two periods is calculated for every variable. All the data comes from the World Bank

database.

Literature Review

The mix of cultural, political, social but most importantly economic causes triggered the

spread of socialism in Latin America in the 2000s. Since the 1998 Venezuelan election of Hugo

Chavez in the next ten years 12 out of 18 countries in the continent turned left. Leftist

governments rapidly spread across the region. The origins of the changes are complex but the

main spark was the failure of neo-liberal economic policies across the countries. Therefore, the

major motive for the leftist swing was to improve the economy. Latin American governments

have been unsuccessful in decreasing levels of poverty and lower the gap between rich and poor.


5/24

4

Being able to decrease this gap is one of the conditions of a successful economy as well as

increased GDP, import-export rates, inflow of funds, external debt and high unemployment.

The socialist reforms came after a failure of neo-liberal economic policies. These policies

have been implemented in Latin America since the 1980s. The neo-liberal economy builds on the

concept of free market and invisible hand by Alex Smith, which means that governments

shouldnt intervene into the economy and let it independently, take care of itself. This

dramatically affects the public spending that has been decreasing and the role of state was

reduced to minimum by privatizing the state-owned companies. As the trade grew the public

spending remained the same, below the 20% of the regions GDP. (Stokes, 2009) The neo-liberal

policies were attracting foreign investors but only to exploit the markets in Latin America

without any benefits for the countries. This caused a massive outflow of the capital out of Latin

America raised the real interest rates and devaluated the Latin Americas currencies. At the end

of this economical and social crisis the number of people living in poverty in South America

grew up to 240 million that was around 50% of its population. (Castaneda, 1993) The neo-liberal

policies were obviously unsuccessful in Latin America and the socialist reforms were bringing

hope for a change.

Leftist economies havent really had much success in the history but this could be due to

the fact everything leftist has been associated with communism and the Soviet Union which also

dictated current socialist policies. But after the fall of Soviet Union governments could

experiment with their own versions of socialism just like in Latin America. In order to be able to

examine effects of different socialist governments we have to understand what qualifies as a

leftist government and distinguish different groups of them; we have to understand the actors. An

established dichotomy divided left in Latin America into basic categories: populist and social


6/24

5

democratic. As Jorge Castaneda and many other political scientists argue populism was present

in Latin America for years by leaders like leaders like Juan Pern or Getlio Vargas. The main

characteristics of populism are anti-market liberal attitudes and policies while social democratic

policies respect the market and regulate it. (Cameron, 2009) However, there are many political

scientists and politicians that argue against this simple dichotomous categorizing. One of the

arguments is that this dichotomy is too simple and it lumps together too many disparate cases

under the populist concept. (Roberts, 2007, p. 5) The categories were created too quickly and all

the left governments are following one line. Another big factor is the leadership of Brazil, as the

lightest version of socialism, and Venezuela, as the most extreme version of socialism. Both

countries are very close and supportive of each other; they stand together on one side of the left

which allows us to put all the socialist governments into one group. (French, 2009) Lastly, I want

to mention how the leftist leaders themselves see the differences in left in Latin America. To

base the diversification of socialism in the region on the exact policies would be inaccurate.

Hugo Chvez cannot implement same policies in Venezuela like Fidel Castro in Cuba, just like

Brazilian president Lula couldnt implement the same policies like Chvez in Brazil. (Chvez,

2007) The situations are different, therefore different approaches are needed that might make the

types of governments seem discrepant. Therefore, I will not be dividing governments into

dichotomous categories.

Latin American governments have been following socialist policies since the beginning

of the 21st century. We can see some changes but it is relatively early to analyze the overall

success of these reforms. There have been some predictions about how successful leftism will be

in Latin America. For example it was argued that without material bases of support foundation of

socialism will vanish. However, Latin American countries were able to utilize their wealth,


7/24

6

limited outflow of capital and fueled their economies. (Schamis, 2006) And this is exactly what

happened. The rapid increase in the flow of funds into Latin America since the 2003 proves it.

The flow of capital into Latin America has been growing since the 1990 however, this is due to

the effects of globalization that increased international trade and expanded the international

market. But the increase of the inflow of money after the year 2003 (after Brazil, Venezuela,

Argentina and Chile elected leftist governments) gives an empirical evidence of the

improvements by social governments. (Quispe-Agnoli, 2007) The reason for that are the

increases in domestic financing and new monetary frameworks that caused decrease in inflation

and interest rates but also created a stable economic environment and improved exchange rates

of the Latin American currencies. All these economic changes were results by the new socialist

economic policies; the governments created more stable economies and very financially friendly

environment for foreign investors. The improvements were dramatic; the values of foreign direct

investments increased from $15 billion at the end of the year 2003 to $200 in the year 2006.

(Tomar & Quispe-Agnoli, 2008) The biggest inflow of fund was in the area of bonds, remittance

and portfolio equity. During the 2008 global financial crisis Latin America showed economic

stability and proved to be resilient toward the harsh conditions of the crisis, mainly thanks to the

successful debt management of the countries. The overall effect of the leftist economy can be

summed up in this citation: Prudent fiscal policies together with new debt management

practices aimed at improving debt profiles, have contributed toward reducing macroeconomics

vulnerabilities. (Tomar & Quispe-Agnoli, 2008, p. 9)

In a summary, the basics of the leftist policies was increasing inflow of capital by

increasing fiscal responsibility which means lowering debt, stabilizing the currency and the


8/24

7

interests rates, also increasing public spending to create governmental jobs and rise the GDP per

capita.

Univariate Analysis

The variety of the types of states is very high in this research topic. There are various

types of economies. We have big states rich on natural resources and with large labor capability

like for example Brazil, Argentina or Venezuela. Other countries are small economies from

Central America for example Honduras or Nicaragua. The population of the ten states examined

in this research fluctuates between 3 million in Uruguay to almost 200 million in Brazil.

Countries like Honduras or Venezuela rely purely on one type of industry; bananas for Honduras

and oil for Venezuela. On the other hand economies like Brazil, Argentina or Chile have strong

multi-industrial economies. The research focuses on three economic indicators: the gross

domestic product per capita (GDP), unemployment and external debt. Each indicator is measured

twice, the annual average in three years before the leftist reform and then the annual average

after the reforms up until the year 2009. We can see the descriptive statistical data for the pre-

reform period in the Table 1. All the descriptive data for post-reform period is in Table 2.

The average gross domestic product per capita (GDP) has two parts. First part is the

average annual GDP during 3 years before the leftist shift. It very widely dispersed and goes

from $831 in Nicaragua to $5,942 in Chile. The average for the pre-reform GDP is roughly

$3,000 with median being slightly below $3,000. The average difference between the countrys

GDPs is $1,827; therefore the dispersion is not very high. Strong economies like Argentina and


9/24

8

Chile are very close while the rest of the countries seem to have lot lower GDPs together with

Nicaragua and Bolivia at the very bottom far from the rest. Second measure of the GDP per

capita is the annual average in the years after the reforms up until the year 2009. The median and

mean are again very close, with the median being at $5,162 and mean at $5,125. The lowest

GDP is $1,036 in Nicaragua and the highest stays in economically powerful Chile with $12,867.

The wide range in the GDPs is due to the fact that some countries have developing or under-

developed economies compared to the advanced and strong economies like Chile. The standard

deviation for the annual average GDP since the reforms up until 2009 is $3,513; which is mainly

caused by the high numbers of Chilean GDP. The data of the annual average GDP after the

reforms shows Chiles GDP way ahead of the rest. After Chile the differences are not very big

with a strong group of Brazil, Argentina, Venezuela and Uruguay having very equal levels of

GDP. The data in this case is not very equally distributed. The data is widely distributed.

Another economic indicator used in the research is unemployment rates. The mean for

the unemployment rates before the leftist reforms is 10%. The mean of the GDP is 9.38%. The

majority of the rates are at 9% except the highest and the lowest three countries. The standard

deviation is 2.4% and the data is widely distributed. The rates of the lowest three countries vary

from 7.32% in Chile to 5.13% in Honduras, while the middle five rates stand solid at 9%. The

three highest unemployment rates cause the high dispersion going from 11.32% in Venezuela up

to 17.07% in Argentina. In the post-reform data the mean is 7.73% with median at 7.9%. The

data appears to be narrowly distributed despite the fact the standard deviation is 2.4%. The data

has lower dispersion with seven countries having unemployment levels between 6.58% in

Bolivia to 9.7% in Argentina. The variability is raised by the banana-oriented economy in


10/24

9

Honduras and Nicaragua that posses the lowest rates at 3.75% and 4.77%. The highest rate is

11.93% in Hugo Chavezs Venezuela.

Table 1

Descriptive data for the macroeconomic variables after the reforms

Mean Median Standard Deviation

GDP per capita $5,124.5 $5,162 $3,513.141

Unemployment 7.735% 7.9% 2.40533%

External Debt (million) $51,937.2 $22,326.5 $72,851.881

The third variable is the annual external debt. It is the sum of the all of the long-term debt,

use of IMF credit, and short-term debt. The median of $11,832 million is very distant from the

mean of the debt data which stands at $48,638 million. This is mainly caused by the large debt of

Brazil and Argentina that exponentially raises the mean from the median, these two countries

count for 70% of the total external debt in the experimental group. The distribution is very wide

as we can see in Graph 3; this is especially due to low fiscal responsibilities in Brazil and

Argentina. The standard deviation is $77,862 million. The dispersion of the external debt is very

uneven. The bottom half of the data varies between $3,608 million in Venezuela and $6,310

million in Bolivia, which is very narrow. However, the top half of the data is very widely

distributed and goes from $17,354 million in Ecuador all the way to $233,867 million in Brazil.

In the external debt measurement after the reforms we can see that the median and the mean are


11/24

10

closer, with the median being $22,326 million and the mean $51,937 million. In this case, the

dispersion is still wide but the distribution is more flat and continuous. The standard deviation is

$72,851 million. Brazils high debt still impacts heavily the median, mean and standard deviation.

The rest of the data is more equally distributed.

Table 2

Descriptive data of the macroeconomic variables after before the reforms

Mean Median Standard Deviation

GDP per capita $3,068.2 $2,909 $1,826.903

Unemployment 10.15% 9.385% 3.86%

External Debt (million) $48,638.4 $11,832 $77,862.32

Bivariate Analysis

The macroeconomic data is organized each in two groups, pre-reform annual average in

last three years before the leftist shift and post-reform annual average in the years after the

reform. This allows us to compare the pre and post reform data and detect some changes.

Comparing the means of each group will give us an understanding of the overall average change

in all the countries and based on that we can summarize the effects of the leftist shift in Latin

America.


12/24

11

Table 3

The change in macroeconomic indicators due to the leftist reforms

Pre-Reform Post-Reform Difference

GPD per capita (in $) 3068.2 5124.5 2056.3*

Unemployment 10.15% 7.735% 2.415%*

External debt (in million $) 48638.4 51937.2 3298.8

* P< .05

Based on the data in the Table 3 we can detect some changes. The overall GDP for the

countries increased. The increase was by $2,056.3 on average. However, increase this big means

a huge difference for small economies like Bolivia, Nicaragua or Honduras but in comparison

with biggereconomies like Argentina or Brazil a $2,000 change doesnt appear that big, yet very

positive and successful. Some countries experienced an enormous increase in their GDP per

capita, for example Chiles GDP more than doubled, going from just $5,942 to $12,867. The

smallest increase of GDP was in Argentina where the GDP per capita only grew by 4%. In the

rest of the countries the increase was near to a 100% increase. We also have to take into

consideration that the data for Venezuela is a ten year average which leaves more time for

improvements. But still, countries that experienced the shift latest like Ecuador, Nicaragua or

Peru have significantly increased their GDP per capita in just three years. The GDP per capita of


13/24

12

every country had increased after the leftist reforms so we can consider this area of economy

very successfully improved. The leftist governments put more money into the economy by

increasing spending which stimulated the economy and both the public sector and private sector

had more resources to grow and improve. We can see the magnitude of the change in the Graph

4. Based on this we accept the #1 research hypothesis. The GDP per capita increased after the

leftist reforms.

The other area of the economies is unemployment. In the Table 3 we can see that

unemployment decreased on average in every country. The decrease was significant by 2.415%.

However, the decrease didnt occur in every country. In Venezuela and Chile unemployment

rates increased but the increase wasnt very significant; in Venezuela by .61% and in Chile by

1.08%. Nevertheless, in Argentina unemployment had decreased by more than 50% going from

17.07% to 9.7%. The rest of the countries manage to lower the levels of unemployment as well,

leading with Honduras with only 3.75% of the working force unemployed. Considering that with

the exception of Chile and Venezuela the reforms created more jobs thanks do increased public

spending. We accept our second hypothesis, the unemployment decreased after the leftist shift.

The last indicator was the total external debt. The leftist governments were praised for

increasing fiscal responsibility and creating a friendly economic environment that directly

increased the foreign direct investment to historical levels. Decreasing the external debt is one of

the best signs of a healthy economy that improves the investment rankings and brings in

investors. The average external debt had not decreased; however, the overall average increase

was only $3,298.8 million per country. Only three countries had experienced an increase in

external debt, Chile, Venezuela and Uruguay. Other countries achieved some impressive results,

especially Brazil and Argentina; with economies of their magnitude it is very challenging to slim


14/24

13

down the expenses and slim the external debt down. While Chile and Venezuela failed to

improve the external debt they were extremely successful in increasing their GDP per capita

which was a higher priority for their government that a decrease in the external debt. Chile has a

very big export industry and they didnt have to worry about increasing the FDI levels;

Venezuela dependent on oil export has very strong ideological partners and FDI levels are not

among their biggest interests as well. The external debt in Venezuela and Chile did not increase

by a lot and the increase strongly slowed down which can be consider successful. Despite almost

doubling the levels of external levels in Uruguay, the government decreased the unemployment

levels by almost 6%. However, seven out of ten countries proved to successfully decrease the

external debt levels therefore, this area of economy was successful as well. But because of the

slim increase in the external debt after the reforms we have to reject the third hypothesis and

accept the null hypothesis. The leftist reforms did not decrease overall external debt. We

accepted two out of three hypotheses. Even thought the third hypothesis had to be rejected the

external debts were improved dramatically.

Multivariate Analysis

Bivariate analysis proved a changed in the economy after the leftist shift. The change was

significant and in all three of the macroeconomic indicator we studied. The multivariate analysis

will test any possible effects of a third variable. We know that the worlds economy grew in the

early 2000s; however, we also know the world was hit with the economic crisis of 2008. This

had a big impact on the unemployment, GDP per capita and the external debt. If the leftism in


15/24

14

Latin America truly improved the economy we should see a difference between the worlds

improvements and improvements in Latin America. A control group made up of ten countries

from five continents of similar economies and sizes was created. Countries in the control group

are Bulgaria, Egypt, Georgia, Jamaica, Malaysia, Morocco, Romania, Thailand, Ukraine and

Vietnam, they are presented on the Map 2. This classic experimental design will allows us to see

if the economical change in Latin America was due to overall world economical development or

the change to leftist policies.

Table 4

The change in macroeconomic indicators between years 2004-2006 and 2007-

2009 in the control group

2004-2006 2007-2009 Difference

GDP per capita $2,769 $4,194 $1,425

Unemployment 7.849% 7.441% .408%

External debt (million) $27,109 $43,929 $16,827

Based on the Table 4 the overall economy of the countries from the control group

experienced some overall improvements. The GDP per capita had increased in all the countries

and the overall increase was $1,425. In only two countries, Vietnam and Georgia, the

unemployment rates raised. Yet, the overall unemployment decreased by .408%. However, the

external debt was raised significantly. The average change was $16,827,000,000. That is a big


16/24

15

increase in the average external debt. To detect the possible similar economic growth between

our control group and the leftist Latin American countries we have to compare the changes

between two groups. The percentage change from the pre-reform economies to post-reform

economies will be compared with the percentage change between the years 2004-2006 and 2007-

2009 in the control group. That way we should be able to see what group improved better and

how successful the leftist reforms were comparing to the normal worlds development.

Table 5

The percentage change in macroeconomic indicators in leftist countries of Latin

America (group 1) and the control group

Experimental Group Control Group Difference

Change in GDP per capita 68% 51% 17%

Change in unemployment -24% - 5% -19%

Change in external debt 7% 62% 55%

Despite some improvements in the control groups macroeconomic indicators we can see

the different magnitude of development. The GDP per capita followed the trends of the worlds

economy and increased in both groups but based on the table two the GDP per capita grew 17%

higher in the group one than in the control groups economies. The leftist countries were not


17/24

16

significantly hurt by the economic crisis in 2008 and they were able to keep the GDP growth

positive unlike in the rest of the world where the crisis deeply hurt the economies and sent the

GDP growth rates into negative numbers. Year 2009 was economically so weak that it

significantly lowered the GDP rates but thanks to the stable leftist economies the economic

downturn of 2008 did not impact left Latin America in 2009 that dramatically.

Unemployment rates for the control group were lower than for the experimental group

both times. Still, the change indicated in the table two tells us that unemployment in leftist

countries in Latin America decreased by 24% which is by 19% more per cent than in the

countries of the control group. We can see an obvious difference and it tells us that the leftist

governments were really successful in creating jobs which was accomplished by boosting public

spending to increase the size of the public sector. The biggest difference between the groups can

be found in the increase of the external debt. While in the three leftist countries in Latin America

the debt had increased the external debt had decreased in the rest of the region, therefore the

overall increase in the debt of the group one is very slight, by 7%. The overall external debt in

economies of the control group rose by 55% and rose in every country of the group. This also

significantly brings down any overall improvements of the control group since the governments

only achieved the slight increase in the GDP per capita and decrease in unemployment thanks to

increasing the external debt. Romania is a great example; while their GDP per capita grew by 80%

from $4,578 in years 2004-2006 to $8,218 in 2007-2009 their external debt increased by 149%.

The growth of the GDP was fueled by the large growth of the external debt. The increased

spending in Latin America did not have negative effects and did not increase the debt which is a

very noteworthy economic triumph.


18/24

17

Based on the data from our control group we can say that the leftist governments

significantly improved their economies. The control group did not show dramatic developments

in all the economic areas. We can clearly see a large difference in the Graph 5. In addition, the

massive growth of the external debt for the control group has devalued any successful progress

in other economic areas. Developments were only due to an extensive debt growth. The worlds

economy grew but at a much slower pace than in Latin America. The third variable was present

but was not significant.

Conclusion

The empirical evidence is obvious. The left was successful in Latin America and

dramatically improved the economy. In the ideological war between the left and the right the left

won the battle of Latin America. The economical goals are still the same for the both side, it is

only the means that differ. The left in Latin America achieved improvements by controlling the

major enterprises, controlling the prices, increasing spending to create jobs, stabilizing the

currency and interest rates and regulating the trade in the countrys advantage. Latin America

accomplished a steady and healthy growth while lowering external debt; this was a very

remarkable achievement. The example of Latin America tells us that every region, every country

and every economy is unique and needs different policies. While neo-liberalism might work in

some Western countries it fails in countries with high fertility rates, low industrialism, lower

living standards and wide gaps between rich and poor. It is important to find a balance between

the left and right. The leftism in Latin America was not very radical, but rather liberal socialism.

The left still has its place in the worlds economy especially due to high instability of neo-

liberalism. And since the overall goal of every government is the well being of the constituents it

does not matter if you achieve it through liberal policies or major state interventions.


19/24

18

Appendix:

1.BibliographyCameron, M. A. (2009). Latin America's Left Turns: Beyond Good and Bad. Third World Quarterly, 331-

348.

Cannon, B. (2009). Hugo Chvez and the Bolivarian Revolution: Populism and Democracy in a Globalised

Age .Journal of Latin American Studies .

Castaneda, J. G. (1993). Utopia Unarmed: The Latin American Left After the Cold War. Alfred A. Knopf.

Chvez, H. (2007). Act for the peoples anti-imperialist struggle. VI World Social Forum. Caracas.

Evelyne Huber, T. M. (2009). Politics and Social Spending In Latin America. The Journal of Politics , 16.

French, J. D. (2009). Understanding the Politics of Latin America's Plural Lefts (Chavez/Lula): social

democracy, populism and convergence on the path to a post-neoliberal world. Third World Quarterly,

349-370.

Heath, R. M. (2007). Emerging Latin American Left: Inequality, Foreign Leftist Support, and Political

Discontent. Paper presented at the annual meeting of the Midwest Political Science Association, Palmer

House Hotel, Chicago, IL .

Leaman, D. (2004). Changing Faces of Populism in Latin America: Masks, Makeovers, and Enduring

Features. Latin American Research Review.

Przeworski, A. (1991). Democracy and the Market: Political and Economic Reforms In Eastern Europe and

Latin America. Cambridge: Cambridge University Press.

Quispe-Agnoli, M. (2007). The Flow of Funds Into Latin America. Economic Review.

Raby, D. (2006). Democracy and Revolutions: Latin America and Socialism Today. Toronto: Pluto Press.

Rios, S. C. (2009). Opinion Briefing: Latin Americas Leftists. In Gallup.

Roberts, K. (2007). Repoliticizing Latin America: The Revival of Populist and Leftist Alternatives.

Woodrow Wilson Center Update on the Americas (p. Pg. 5). Washington D.C.: Woodrow Wilson Center.

Schamis, H. E. (2006). Socialism, Populism and Democractic Institutions. Journal of Democracy, 20-34.

Starr, P. K. (2009). The Political Economy of Reform in Latin America. Latin American Research Review.

Stokes, S. (2009). Globalization and the Left in Latin America . New Haven: Yale University Press.

Tomar, C. E., & Quispe-Agnoli, M. (2008). New Financing Trends in Latin America: An Overview of

Selected Issues and Policy Challenges. Economic Review, 1-15.


20/24

19

2.Graphs

Graph 1

Gross domestic product per capita before the reforms

$0

$1,000

$2,000

$3,000

$4,000$5,000

$6,000

$7,000

GDP per capita in $

GDP per capita

Mean: 3068.2

Median: 2909

St. Deviation:

1826.903


21/24

20

Graph 2

Unemployment rates before the reforms

Graph 3

External debt distribution before the reforms

0 5 10 15 20

Nicaragua

EcuadorPeru

Bolivia

Uruguay

Argentina

Venezuela

Brazil

Chile

Honduras

% Unemployed

Mean: 10.15

Median: 9.385

St. Deviation:

3.86

28%

7%

7%

45%

1%1%

6%3% 1%

External DebtArgentina

Venezuela

Chile

Brazil

Uruguay

Bolivia

Honduras

Peru

Ecuador

Nicaragua


22/24

21

Graph 4

Improvements in GDP per capita in Latin America between pre-reform period and post-reform

period

Graph 5

Comparison of changes in macroeconomic indicators in percentage between the control and

experimental groups

0

2000

4000

6000

8000

10000

1200014000 Pre-Reform

Post Reform

68%

24%

7%

51%

5%

62%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Increase in GDP per

capita

Decrease in

unemployment

Increase in External

Debt

Experimental Group

Control Group


23/24

22

3.MapsMap 1

Latin American countries undergoing a leftist shift by 2006


24/24

23

Map 2

World countries in our control group

the leftist shift in latin america; the impact on the economy

Documents