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132. Whither Neoliberalism? Latin American Politics in the Twenty-first Century
- Author:
- Jewellord (Jojo) Nem Singh
- Publication Date:
- 04-2011
- Content Type:
- Working Paper
- Institution:
- Centre for Strategic Research and Analysis (CESRAN)
- Abstract:
- In the most recent attempt of Latin America's primary intellectual hub to res-pond to the world-wide financial crisis, the Economic Commission for Latin America and the Caribbean (CEPAL) argued for the need to tackle 'growth with equity' as an organising principle of development strategies in the Americas. Crucially, this opens up two main discussions. Firstly, neoliberal economics, though a complex political project aimed at controlling inflation, curbing state inefficiency and addressing debt management via fiscal discipline, has failed to deliver its promise of economic development through unfettered market opening. After twenty years of reforms, uneven patterns of economic growth, sustained inequality, and environmental exploitation have been its key consequences for Latin American countries (CEPAL 2010: 17, 20, 53). Having said this, macroeconomic stabilisation policy has been widely adopted since the debt crisis, which successfully addressed fiscal disequilibria and is now considered a pillar of sound policymaking in the region and elsewhere. But as neoliberal reforms induced the eclipse of state activism, social inequality remains unaddressed, even in cases where sustained economic growth was occurring, specifically Chile whose growth hardly came together with social equality despite the rhetoric of its left-centre La Concertación governments. Equality, whether in terms of access to the market or to decision-making, does not come naturally with economic growth.
- Topic:
- Economics and Politics
- Political Geography:
- Latin America and Caribbean
133. Financial Integration and Foreign Banks in Latin America: Do They Amplify External Financial Shocks?
- Author:
- Liliana Rojas-Suarez, Arturo J. Galindo, and Alejandro Izquierdo
- Publication Date:
- 02-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- This paper explores the impact of international financial integration on credit markets in Latin America. Using a cross-country dataset covering 17 Latin American countries between 1996 and 2008, the authors find that financial integration amplifies the impact of international financial shocks on aggregate credit and interestrate fluctuations. Despite this pernicious effect, the net impact of integration on deepening credit markets is positive and dominates for the large majority of states of nature. The paper also uses a detailed bank-level dataset covering more than 500 banks in Latin America for a similar time period to explore the role of financial integration—captured through the participation of foreign banks—in propagating external shocks. The authors find that interest rates charged and loans supplied by foreign-owned banks respond more to external financial shocks than those supplied by domestically owned banks. However, this result does not hold for all foreign banks: Spanish banks in the sample behave more like domestic banks and do not amplify the impact of foreign shocks on credit and interest rates. Important policy recommendations to avoid foreign banks' amplification of external financial shocks include the establishment of ring-fencing mechanisms, the development of early-warning systems, and the incorporation for agreements between domestic and foreign supervisors.
- Topic:
- Economics and Markets
- Political Geography:
- Latin America and Spain
134. The International Financial Crisis: Eight Lessons for and from Latin America
- Author:
- Liliana Rojas-Suarez
- Publication Date:
- 01-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- The international financial crisis of 2008–09 exposed the strengths and weaknesses of the current paradigm of development in Latin America, a paradigm based on liberalized capital accounts and significantly improved macroeconomic conditions. This paper presents lessons derived from the crisis, not only for the region itself, but also for other developing countries that might seek economic growth in the context of greater integration to the international capital markets. Some of the lessons are not new but have been reinforced by the crisis, such as Latin America's imperative need for export diversification (not only in products but in partners). Other lessons break with longstanding myths about the region, such as its inability to undertake counter-cyclical policies—at least on the monetary side. Yet other lessons reflect new developments in the current growth paradigm, such as a renewed assessment of (1) the relative roles of foreign and domestic banks in shielding the financial system against external shocks and (2) the potential costs of adopting blanket international financial regulations that do not account for a country's degree of development. Taken together, the lessons in this paper bring a new sense of optimism for growth in Latin America.
- Topic:
- Economics, International Trade and Finance, and Financial Crisis
- Political Geography:
- Latin America
135. ¿Es el crecimiento económico suficiente para apoyar la democracia? Lecciones del caso chileno
- Author:
- Pedro Aravena Lavin
- Publication Date:
- 08-2010
- Content Type:
- Working Paper
- Institution:
- German Institute of Global and Area Studies
- Abstract:
- This article analyzes the support for democracy in Chile from an economic, institutional and political perspective. It uses data from Latinobarómetro for the period 1996–2007 and a statistical method of estimation, “ordered logit,” in order to answer the question of why support for Chilean democracy is not connected with economic growth. The analysis generates three key results of interest. First, regardless of the fact that GDP per capita does not have any effect on the level of support for democracy, it does affect individuals' perceptions of economic performance, since the variable “economic situation” is one of the most explanatory variable of the model. Second, the analysis demonstrates the importance of the degree of confidence in the Congress at the moment that perceptions of democracy are evaluated. Third, “political ideology” is the most useful variable in explaining support for democracy, a fact which suggests that the adherents of the right wing do not support the democratic system. This is the most reliable reason for the moderate level of support for democracy in Chile.
- Topic:
- Democratization, Economics, International Trade and Finance, and Politics
- Political Geography:
- Latin America and Chile
136. On the Economics of Regional Powers: Comparing China, India, Brazil, and South Africa
- Author:
- Robert Kappel
- Publication Date:
- 09-2010
- Content Type:
- Working Paper
- Institution:
- German Institute of Global and Area Studies
- Abstract:
- As the conception of and debates on regional powers have been led by political science, this paper aims to contribute to the discussion from an economics perspective. Based on the discussion of different concepts of economic power—such as those of Schumpeter, Perroux, Predöhl, or Kindleberger—concepts of technological leadership, and the global value chain approaches, the paper develops a research framework for the economics of regional powers. This framework is then tested using descriptive statistics as well as regressions analysis, with a focus on the four regional powers Brazil, China, India, and South Africa. As economic power is relational, the relationship of regional powers to other nations in the region is analyzed.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Africa, China, India, South Africa, Brazil, and Latin America
137. Mining for facts: PacRim Cayman LLC v. El Salvador
- Author:
- Alexandre de Gramont
- Publication Date:
- 09-2010
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In his recent article, “Thinking twice about a gold rush: Pacific Rim v. El Salvador” (Columbia FDI Perspectives, No. 23, May 24, 2010), Professor Gus Van Harten uses the PacRim v. El Salvador arbitration, pending at the International Centre for Settlement of Investment Disputes (ICSID), as the basis for asserting a number of criticisms against the overall system of arbitration under investment treaties.
- Topic:
- Economics, International Trade and Finance, and Treaties and Agreements
- Political Geography:
- Latin America
138. Thinking twice about a gold rush: Pacific Rim v El Salvador
- Author:
- Gus Van Harten
- Publication Date:
- 05-2010
- Content Type:
- Policy Brief
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Whether it concerns oil drilling or gold mining, sometimes a government, facing new circumstances, must change its mind.
- Topic:
- Economics, International Trade and Finance, and Foreign Direct Investment
- Political Geography:
- Latin America
139. Inward FDI in Colombia and its policy context
- Author:
- Miguel Posada Betancourt
- Publication Date:
- 09-2010
- Content Type:
- Working Paper
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Colombia used to be a synonym for violence and drugs, but not anymore. Today, the country has one of the best performing economies in Latin America, and violence levels have been dramatically reduced. The outgoing administration made improving investor confidence and the business environment one of the pillars of its policy. As a result of important reforms and aggressive campaigns to promote the country as an attractive location, inward foreign direct investment (IFDI) has risen to unprecedented levels. Due to these positive changes, Colombia has been designated a “top reformer” for the past four years in the World Bank's Doing Business reports, and the new Government has promised to maintain and reinforce efforts to attract foreign investment. Even though IFDI flows decreased in the past two years as a consequence of the economic and financial crisis, many foreign affiliates in Colombia achieved positive profits. A country that a decade ago was avoided is now in many investors' plans.
- Topic:
- Development, Economics, War on Drugs, and Foreign Direct Investment
- Political Geography:
- Colombia and Latin America
140. Inward FDI in Peru and its policy context
- Author:
- Benjamin Chavez and Jaime Dupuy
- Publication Date:
- 08-2010
- Content Type:
- Working Paper
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- Peru has shifted from being a small FDI player in the Latin America and Caribbean region in the 1990s to being the sixth largest FDI host country in 2008. With inflows of US$ 6.9 and US$ 4.8 billions in 2008 and 2009, respectively, Peru has managed to contain the impact of the financial crisis on inward FDI (IFDI). The main determinants of the improved FDI performance were: a stable economic and FDI policy since 1992;) vast natural resources; strong gross domestic product (GDP) and market growth; and an export-oriented economy, especially during the past decade. In recent years, Peru has become one of the fastest growing economies in Latin America and a diversified commercial hub for IFDI in the region.
- Topic:
- Economics, Monetary Policy, and Foreign Direct Investment
- Political Geography:
- Latin America, Caribbean, and Peru