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Global financial crisis and economy debt in the 1980s have encouraged global south governments to participate in economic openness that allow international investments, trade institutions and international free markets. Latin America faced economic catastrophe that disrupted regional economy and later caused serious troubles for governments. This paper examines the case of Latin America under the period of neoliberal and post-neoliberal.
The case of Latin American is significantly different from free markets and privatization in China and Vietnam. Latin America governments such as Brazil, Venezuela and Argentina sought constructive approach of Western economic models to improve home’s economy. Latin America governments adopted so-called “Washington Consensus” citing the US as the lead of global economy. The US economy policy includes the process of state’s democratization and variety policies from the privatization, import, export and more. in 1990s, post-neoliberalism era in Latin American showed noticeably change of economic trend as the global is coming closer to globalization. This would allow the free flow of capital movements, investments and many more until 1997 (Gwynne & Kay, 2000). At the end of 1997, major economic problem arose, leaving developing states and developed suffered economic downfall. For example, developing states were largely crashed by the financial crisis, resulting high rate of unemployment and poverty lines. Moreover, the issues also associated with domestic expenditure on global supplies. This created social challenge such as social inequality, high debt accumulation due to the indecent government policies such as spending on the markets. The economic trend of Latin Americas (except some country) is absolutely low in comparison with China and Vietnam. Ineffective governance and infeasible policy-markers from complex background brought negative consequences during the period of neoliberalism (Grugel & Riggirozzi, 2012).
Table 1. Poverty and extreme poverty in Latin America, 1980 - 1999
Table 1. Illustrates the number of population that live in the poverty and extreme poverty line in Latin America from 1980 to 1999. Explicitly speaking, the table demonstrates that from the 1980 to 1999, the number of people who were living under poverty line was increasing remarkably and it accounted 43.8% of total population. Moreover, the extreme poverty in Latin America slightly increased over the past 19 years. Having seen the table, the proportion of population of both poverty and extremely had contributed an average of more than 55% of total population.
Economic liberalization in Latin America seemed as a vital element to improve national income and standard of living by promoting social equality and the access to public assets. However, political insatiably, domestic violence and complex history hampers the process of free markets and privatizations. In addition to that, the government involvement in the economy is somehow unproductive and undesirable. Government’s roles are to regulate and monitor the status of economy and find better solution to cope with the existing problems; however, this is not the case. Weak macroeconomic management and misled by government officials caused unprocessed development growth and harmful toward social welfares (Banuri, 1991). Poor economic performance and high rate of inflation during the 1980s prompted the major macroeconomic reforms on economic policies.
The reforms allow the domestic institutions and the government policy-makers to play major role in economic activities. The structural change focuses on economic openness where trades and investments are unrestricted. The Latin America governments also conducted tax reform to restore fiscal order and to regulate the finance properly. The table 2. Bellows explains the post-neoliberal period of Washington Consensus. In the 1970s and the 1980s, the figures set to be at the minimal place. However, after the economic renovation, countries in Latin America’s GDP per capita rose gradually into positive numbers.
Table 2. GDP growth per capita in Latin America, 1970s – 1990s
The reformations had proven crucial impact on the economic growth and productivity. However, some of the development problems still exist where social inequality is left behind among people who live under poverty and non-poverty (see table 1.). The number of poverty is much higher than half of the population. Therefore, Latin American needs to seek for efficient policy to better support local people through investments and trades. The Investments and trades are able to offer great job opportunities for local people to participate and to resist the ongoing social income (Fraga, 2004).
References
Banuri, T. (1991). Economic liberalization: No panacea. The Experiences of Latin America And.
Fraga, A. (2004). Latin America since the 1990s: Rising from the Sickbed? The Journal of Economic Perspectives, 18(2), 89–106. JSTOR.
Grugel, J., & Riggirozzi, P. (2012). Post‐neoliberalism in Latin America: Rebuilding and reclaiming the State after crisis. Development and Change, 43(1), 1–21.
Gwynne, R. N., & Kay, C. (2000). Views from the periphery: Futures of neoliberalism in Latin America. Third World Quarterly, 21(1), 141–156. https://doi.org/10.1080/01436590013279