LATIN
AMERICA STRUGGLING BEHIND THE VEIL
23 November 2003
The
Center for Economic and Policy Research has published
a study
of economic trends in Latin America during the
time of liberalized trade policy. Their research determined
that growth has been hampered by liberalized trade
policies which favor wealthy nations.
The
study stems from concerns that slow growth in the
first years of this century may mirror trends from
the 1980's, known to analysts of Latin American economics
as "the lost decade". Overall Latin American
economic growth in the 1980's languished at -0.3%,
marking a decline in prosperity and in GDP.
While
the report is not conclusive, it does argue that such
policies are tied to the economic crisis in Argentina
and that debt burden has escalated, hampering growth
significantly.
About
Argentina, CEPR says:
"For
example, even if the government's current offer
to pay 25 percent of the defaulted debt were accepted,
the country would still have an unsustainable debt
burden of over 90 percent of GDP."
In
this particular instance, it is clear that the massive
debt burden incurred by Latin American nations during
the period of transition to free trade policies has
interfered with the natural progression of a nation's
economy from agrarian to industrial output and trade-based
growth. Many of the wealthier nations of the world
expanded their economies and modernized during times
in which they either favored strong protectionist
policies or exploited global imperial territories.
CEPR
concludes that not enough attention has been paid
to the political and humanitarian ramifications of
this extended period of economic crisis, adding:
"This
is also true more generally of the sharp slowdown
in growth in the vast majority of developing countries
over the last two decades, as well as the reduction
in the rate of progress on the major social indicators
(life expectancy, infant mortality, literacy and
education)..."
About
the argument that eliminating trade barriers and tariffs
increases prosperity, the CEPR report indicates that
the majority of developing countries, despite aggressive
implementation of these policies in many cases, have
done worse in terms of economic growth during the
last 20-25 years. The report does not disqualify the
possibility that liberalization is useful or that
it might lead to enhanced growth and prosperity; it
does however indicate that the current means of implementation
of free trade policy appear to work against the desired
growth in such prosperity in the developing world.
Major
questions remain about the proper global ethics involved
in doing business with authoritarian regimes and whether
or not current trade policies do more to enhance the
power of such regimes or of their democratic opposition.
