Is There a Post-Neoliberal Policy toward Foreign Direct Investment in Argentina and Chile?

Abstract

The armed takeover of foreign-owned natural gas plants ordered by Bolivian president Evo Morales on May 1, 2006, and Hugo Chávez’s forced renegotiation of Venezuelan oil exploration contracts were the first major nationalizations announced in Latin America since the economic crisis of the early 1980s. In a less dramatic fashion, post-neoliberal governments in Argentina and Chile also recently increased the fiscal pressure on foreign investors, the former through the renegotiation of public service contracts with private enterprise and the “renationalization” of several firms, and the latter through increased taxation of foreign mining firms. These manifestations of “back to the future” policies, until recently considered relics of the import substitution era, appear to be a direct challenge to the neoliberal policy consolidated throughout Latin America over the last 25 years. The encouragement of foreign direct investment (FDI) inflows, the liberalization of regulations for establishment and operation of foreign firms, and the explicit recognition by governments of investors’ rights to stability and predictability of the rules of the game were key pillars of John Williamson’s Washington Consensus policy prescriptions and broadly accepted practice throughout Latin America. Washington Consensus points (7), “liberalization of inward foreign direct investment,” (8), “privatization,” and (9), “deregulation,” all argued in favor of increasing the access, role, and liberty of transnational corporations (TNCs) in the economies of the region (Williamson 2002).