Chapter

Latin America

Claudio R. Frischtak

in Governments, Globalization, and International Business

Published in print July 1999 | ISBN: 9780198296058
Published online November 2003 | e-ISBN: 9780191596209 | DOI: http://dx.doi.org/10.1093/0198296053.003.0016
 Latin America

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The object of this case study is to discuss the response of Latin American governments to the forces of globalization and increasing competition. The first main section, Sect. 2, discusses the role of governments in industrializing and developing country contexts, and the next and largest, namely, Sect.3 attempts to assess the recent Latin American experience, arguing that the road to reform—in the sense of changes in the regulatory environment, trade regimes, and asset‐ownership structures—has advanced to the point of irreversibility. Latin economies have become relatively open and increasingly competitive, and to a large extent, the wedge of reform has been driven by the globalization process; there is now a much more hospitable environment to international business in most Latin American countries, particularly to MNEs (multinational enterprises) able to link countries effectively to trade, technology, and investment networks. However, the road to macroeconomic stability has been far more difficult, and there remain persistent problems of fiscal largesse, accommodating monetary policy, low savings (public and private) and excessive domestic absorption; combined, these have led to renewed balance‐of‐payment crises in several Latin American countries since short‐term capital, which would be helpful to make the transition to macro‐stability less painful, and which has been made abundant with globalization, has proved to be a poor basis to offset persistent current‐account deficits. Financial systems have also become fragile in some countries because of excessive and non‐sustainable public‐sector borrowing and a lack of confidence of private agents.

Keywords: asset ownership; balance‐of‐payments; case studies; developing countries; economic policy; economic reform; fiscal policy; globalization; government; government regulation; industrializing countries; investment; Latin America; macroeconomics; monetary policy; multinational enterprises; open economies; public sector borrowing; savings; technology; trade regimes

Chapter.  10614 words. 

Subjects: International Economics

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