Abstract
The 1980s became known as ‘the lost decade’ in Latin America. For the region as a whole, GDP grew little more than 1 per cent per year compared with 6 per cent in the previous decade. As a result, per capita GDP fell by more than 10 per cent in the 1980s. There were few exceptions — Chile and Colombia among them — to this declining trend in real income. The recession of 1981–2 in the industrial countries and the debt crisis that erupted in the summer of 1982 had much to do with the sharp turnaround in the economic well-being of Latin America in the 1980s. But the 1990s saw substantial improvement as economic reforms were adopted, some debt relief was obtained and capital inflows increased greatly. The Mexican crisis of 1994–5 had a ‘tequila effect’ on a number of countries in the hemisphere. In 1997 and 1998, some nations in Latin America felt the effects of the ‘Asian flu’ — the financial and economic crisis in the East Asian countries — as capital inflows slackened. They tightened their monetary policies, thereby slowing their economies somewhat. Nevertheless, 1997 and the first half of 1998 saw the most favourable combination of relatively high growth and low inflation in many years.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Notes
R. Solomon, ‘The Debt of Developing Countries: Another Look’, Brookings Papers on Economic Activity 2 (1981) pp. 602, 605.
The details of the Mexican crisis and how it was handled are graphically set forth in J. Kraft, The Mexican Rescue (New York: Group of Thirty, 1984).
R. Solomon, ‘An Overview of the International Debt Crisis’, in H. Scholl (ed.), International Finance and Financial Policy (Westport, Conn.: Quorum Books, 1990) p. 136.
N. Lustig, Mexico: The Remaking of an Economy (Washington: The Brookings Institution, 1992) p. 46.
W. R. Cline, International Debt Reexamined (Washington: Institute for International Economics, February 1995) pp. 209–10.
B. Larre, ‘Mexico’, The OECD Observer, 178 (November 1992) p. 40.
M. J. Francis, ‘Dependency: Ideology, Fad, and Fact’, in M. Novak and M. P. Jackson (eds), Latin America: Dependency or Interdependence? (Washington: American Enterprise Institute for Public Policy Research, 1985) pp. 88–105.
P. Aspe, Economic Transformation: The Mexican Way (Cambridge: MIT Press, 1993) p. 224.
C. Loser and E. Kalter (eds), Mexico: The Strategy to Achieve Sustained Economic Growth, Occasional Paper 99 (International Monetary Fund, September 1992) p. 7.
P. Aspe, ‘The Recent Experience of the Mexican Policymakers’, in Sea Changes in Latin America (Washington: Group of Thirty, 1992) p. 5.
N. N. Auerbach, ‘The Mexican Peso Crisis: Constituent Pressure and Exchange Rate Policy’, Claremont Policy Briefs (Claremont, CA: Claremont Institute for Economic Policy Studies, December 1997) pp. 2, 3.
J. A. Frankel and S. L. Schmukler, ‘Country Fund Discounts and the Mexican Crisis of December 1994: Did Local Residents Turn Pessimistic Before International Investors?’, International Finance Discussion Papers, no. 563 (Washington: Board of Governors of the Federal Reserve System, September 1996) pp. 2–4.
S. Edwards, ‘The Mexican Peso Crisis: How Much Did We Know? When Did We Know It?’, National Bureau of Economic Research Working Paper Series, Working Paper no. 6334 (December 1997) p. 25.
A. Maddison, The World Economy in the 20th Century (Paris: OECD, 1989) p. 19.
J. Williamson, What Role for Currency Boards? (Washington: Institute for International Economics, September 1995) pp. 9–10.
P. Meller, ‘Chile’, in J. Williamson (ed.), Latin American Adjustment: How Much Has Happened? (Washington: Institute for International Economics, April 1990) p. 54.
J. Williamson, The Progress of Policy Reform in Latin America (Washington: Institute for International Economics, January 1990) p. 37.
A. Bianchi, ‘Chile: Economic Policies and Ideology during the Transition to Democracy’, in Sea Changes in Latin America (Washington: Group of Thirty, 1992) p. 19.
For these and other aspects of developments in Brazil up to early 1997, see R. Dornbusch, ‘Brazil’s Incomplete Stabilization and Reform’, Brookings Papers on Economic Activity, 1 (1997) pp. 367–401.
Copyright information
© 1999 Robert Solomon
About this chapter
Cite this chapter
Solomon, R. (1999). Democratisation and Reform in Latin America. In: The Transformation of the World Economy. Palgrave Macmillan, London. https://doi.org/10.1057/9780333983492_12
Download citation
DOI: https://doi.org/10.1057/9780333983492_12
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-73482-7
Online ISBN: 978-0-333-98349-2
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)