Friday, February 22, 2008

Politics and Economics in Latin America:The 2000 years experience (I)

Where Latin America economies are headed to these days ?.This question seems quite relevant after the adjustment process following the eighties lost decade, and the subsequent “Washington Consensus Policies” in the nineties. It looked like the “new economy” finally arrived to Latin America, so it was the expectations with Argentina, Brazil even Venezuela after its own experience with the effect of expansive fiscal policies following oil export income increases, in the seventies. Thus, with the first decade of the XXI century closer to the end , and beyond the favorable current situation with higher commodities prices, economic analyst, business man and politic leaders, start to wonder what is it next for these economies?.Chile was for quite a while, the reference to work out the new path. Market orientated economic policies, complementary role of the State , flexible regulatory framework, and stable macroeconomic policies and reliable institutions, seemed to be the first best approach. Unfortunately, there has not been that much sense of a leadership purpose ,in this successful experience. In fact, actually ,Chile looks somehow isolated within Latin America, trying its own economic path, which by the way, is the one (supported with further microeconomic reforms),upon which sustainable welfare levels increases are feasible .
However ,the fact of the matter is that most of the key Latin American economies, still rely on the State to pursue economic development. Argentina and its new Government first 100 days, seems to validate the traditional State intervention paradigm. Private sector depends on the state policies for transport infrastructure, urban development, macroeconomic policies design(inflation is controlled throughout special agreement with private sector).Refreshing views about either a modern more efficient State, or stronger private sector role in the economy, are out of the daily debate. So it is in Brazil, and Venezuela, although with different degrees. Brazilians authorities, have been far more pragmatic, than their ideological counterparts. They have followed a moderate approach, and as a result President Lula ´s support, is among the highest in the region,because of the results in terms of growth and poverty reduction.