Chapter

External Liberalization, Economic Performance, and Distribution in Latin America and Elsewhere

Lance Taylor

in Inequality Growth and Poverty in an Era of Liberalization and Globalization

Published in print March 2004 | ISBN: 9780199271412
Published online August 2004 | e-ISBN: 9780191601255 | DOI: http://dx.doi.org/10.1093/0199271410.003.0007

Series: WIDER Studies in Development Economics

 External Liberalization, Economic Performance, and Distribution in Latin America and Elsewhere

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Economic policy in developing and post‐socialist economies during the last 10–15 years of the 20th century had one dominating theme: packages aimed at liberalizing the balance of payments, on both current and capital accounts. Together with large but highly volatile foreign capital movements, this wave of external deregulation was the central feature of globalization for the nonindustrialized world. In two recent research projects, the implications of external liberalization have been investigated through the use of quantified narrative histories for a number of countries, based on a methodology developed by the author to decompose and analyse changes in effective demand, productivity growth, employment, and the sectoral/functional income distribution over time; one of these studies concentrates on countries in Latin America and the Caribbean, while the other includes Argentina, Colombia, Cuba, India, South Korea, Mexico, Russia, Turkey, and Zimbabwe. After a summary of the results of the studies, with possible interpretations, the chapter develops a model of the likely effects of liberalization. The decomposition methodologies are then presented, and used to check the outcomes that the model generates; a substantial overlap is shown between observed phenomena and the model projections, and this discussion leads naturally to policy alternatives and suggestions about the future course of the liberalization process.

Keywords: balance of payments; capital accounts; Caribbean; current accounts; decomposition methodology; deregulation; economic models; economic performance; Economic policy; effective demand; employment; external deregulation; external liberalization; globalization; income distribution; India; Latin America; liberalization; liberalization models; methodology; Mexico; productivity growth; research projects; Russia; South Korea; Turkey; Zimbabwe

Chapter.  13269 words.  Illustrated.

Subjects: Economic Development and Growth

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