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Policies for Structural Change and the Role of Trade in Development: Recent Experiences in Latin America

By Gustavo Lugones and Diana Suarez

April 10, 2009

Introduction: The classical and neoclassical approaches of international trade are based on a hypothesis, which states that commerce can be a powerful tool to drive the economic growth and development. The commercial liberalization process that took place in Latin America (LA) during the last decades, and the consequent increase in regional integration to international commerce flows fed the optimism of international organizations (World Bank, IDB, IMF) respect to the possibility of empirically proving that hypothesis in the evolution of our economies. In previous decades, the majority of these economies followed the industrialization by import substitution (ISI) strategy based on the implementation of programs and instruments to foster the structural change. These policies have been defined by the mentioned organisms and by the Washington Consensus body ideas as examples of protectionist policies with excessive state intervention and as cause of an important bias against exports.

However, Latin America (perhaps the region that more firmly embraced the Washington Consensus since the 80s), has started to look again in the direction of active industrial policy instruments and to reconsider the potentialities of those policies as tools for structural change. The persistence (and even worsening) of its old structural problems (poverty, inequity, unemployment and external gap) tends to make of significant importance those governmental measures that tries to modify, in some specific sense and direction, the signals that the market provides to the economic agents with the objective of achieving a change in the firms’ trajectories towards those directions that confers better possibilities to overcome the mentioned structural problems.

Nevertheless, the countries of the region don’t stop implementing economic policy measures. These policies were presented, several times, as an attempt to foster the structural change, and different from what characterized the ISI, the horizontal instruments were preferred over the sectorial ones.

In this work some reflections referred to the analysis of the policies (commercial, industrial and technological ones) implemented in LA during the last decades will be presented. The policies that will be analyzed are those oriented to promote structural change, modification in the productive and commercial practices and a higher integration in the international commercial flows. In order to do so, the programs trajectories and the tools used in the region were studied and special attention was paid to four cases: Argentina, Brazil, Chile and Mexico.

Download: Policies for Structural Change and The Role of Trade in Development: Recent Experiences in Latin America (DOC, 262.00 K)

Read More: Development, Trade, Argentina, Brazil, Chile, Mexico, Americas

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