Skip to main content

Mark Weisbrot on Latin American Growth

This was one of the several presentations at the Eastern Economic Association meetings. Mark suggested that the the period of high growth from 2003 to around 2008, was not related essentially to the commodity boom, although "commodity exports did not lead growth but helped avoid balance of payments problems."* He argued that the IMF's loss of influence was also important. This point, which I think is essentially correct for many left of center governments, was discussed later over lunch. I argued, and I guess so did Esteban Pérez and Ricardo Summa, that the IMF still does have influence indirectly, now internalized in the training of several of the local bureaucrats that are for devaluation and fiscal austerity as a solution for, real or imaginary, external crises and inflationary pressures.

Two important caveats to the good news of growth, better income distribution and lower poverty that he discussed. We are "still long way from achieving pre-1980 growth rates, when industrial and development policies were common [and] exchange rate problems can still cause trouble." On the latter, in particular, the Argentinean and Venezuelan stories, with negative real rates of interest, and a large gap between official and black market exchanges was emphasized. Not sure what he would say, but I think he would agree that if growth remains lackluster in the near future for the region, then it would have more to do with the domestic policy choices that with an overwhelming need for adjustment.

* His paper on that with David Rosnik here.

Comments

Popular posts from this blog

What is the 'Classical Dichotomy'?

A few brief comments on Brexit and the postmortem of the European Union

Another end of the world is possible
There will be a lot of postmortems for the European Union (EU) after Brexit. Many will suggest that this was a victory against the neoliberal policies of the European Union. See, for example, the first three paragraphs of Paul Mason's column here. And it is true, large contingents of working class people, that have suffered with 'free-market' economics, voted for leaving the union. The union, rightly or wrongly, has been seen as undemocratic and responsible for the economics woes of Europe.

The problem is that while it is true that the EU leaders have been part of the problem and have pursued the neoliberal policies within the framework of the union, sometimes with treaties like the Fiscal Compact, it is far from clear that Brexit and the possible demise of the union, if the fever spreads to France, Germany and other countries with their populations demanding their own referenda, will lead to the abandonment of neoliberal policies. Aust…

A brief note on Venezuela and the turn to the right in Latin America

So besides the coup in Brazil (which was all but confirmed by the last revelations, if you had any doubts), and the electoral victory of Macri in Argentina, the crisis in Venezuela is reaching a critical level, and it would not be surprising if the Maduro administration is recalled, even though right now the referendum is not scheduled yet.

The economy in Venezuela has collapsed (GDP has fallen by about 14% or so in the last two years), inflation has accelerated (to three digit levels; 450% or so according to the IMF), there are shortages of essential goods, recurrent energy blackouts, and all of these aggravated by persistent violence. Contrary to what the press suggests, these events are not new or specific to left of center governments. Similar events occurred in the late 1980s, in the infamous Caracazo, when the fall in oil prices caused an external crisis, inflation, and food shortages, which eventually, after the announcement of a neoliberal economic package that included the i…