Lectures 7
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Lectures 7 Presentation Transcript

  • 1. A brief history of Latin American Economics
  • 2.
    • Latin American Development
      • Development?
      • Measurements
        • Poverty
        • Inequalities
        • Human Development Index (HDI)
        • Capabilities
      • Definitions
        • Rostow
        • International emphasis
        • Newer views
  • 3.  
  • 4.  
  • 5. Why is Latin America considered an LDC?
    • Economic factors of production
    • K – Capital
    • L – Labour
    • T – Land
    • E – Entrepreneurship
    • Lack of Investment? Insecure property? Protectionism or foreign influence? Low technology?
  • 6.
    • Colonial states:
      • Extractive states – Latin America funds counter-reformation
      • Anti-industrialization
      • Anti-trade
      • No system of checks and balances
      • Contrast to North American settlers
  • 7.
    • 16 th C
      • Mining
      • Looting to tribute
    • 17 th C
      • International competition
    • 18 th C
      • Bourbon/Pombal reforms – trade and industry
      • Costs of independence
  • 8.
    • Building national economies
      • Fights between conservatives and liberals
      • Neo-imperialism vs role of elites
      • Exporting primary goods
        • Backward bending supply curves
        • Market shifts
        • 1850-post WWII exports grow 4% per year.
          • Led by industrialization of the North
        • Regional inequalities
  • 9.
    • Great Depression
      • D commodities
      • foreign currency
      • St intervention – new deal, Keynes
      • Rural-urban migration
    • WWII
      • D raw materials
  • 10. ISI – Import Substitution Industrialization
      • Singer-Prebisch thesis
        • Deteriorating terms of trade
        • Zero-sum game
        • Autarky
        • Improve BoP
        • Easy to implement
      • Results
      • Problems
  • 11.
    • ISI problems:
      • Lack of strategic implementation
      • Rent seeking
      • Lack of progress into later stages
      • Worsened BoP
      • Overvalued exchange rate
      • Limited markets
    • International lending
    • Cold War
  • 12. The Oil Crises
    • 1973 – P due to OPEC embargo
      • Petrodollars – banks NEED to lend
      • Inflation v growth
    • 1979 – P as a result of the Iranian revolution
      • Vs inflation, increase interest rates
      • oil P (later)
      • D for Latin American products
  • 13. 1980s – The lost decade
    • Sudden stop to international lending
    • 1982 – Mexico cannot service its debt
    • Decade lost in re-scheduling debt
      • New loans to pay off interest on previous loans
      • No new investment in development
      • Cut back on social investment
      • $500 for every man, woman and child in Latin America
  • 14. Washington Consensus
    • Stabilization
      • IMF led
      • inflation, G, M
    • Structural adjustment – WB led
      • Open the economy
        • Trade
        • Financial markets
        • Labour?
    • Quick solution -- Privatization
  • 15.
    • Controversial
      • Kuznet’s inverted U
      • Liberalization leads to growth]
      • Order of liberalization – financial runs
      • China, Asian Tigers
    • ‘ Turn to the left’
      • Inequality
      • Limited internal industries
      • Short-lived, limited industries
  • 16.
    • Regional trade agreements
      • Mercosur
      • NAFTA
      • FTA
        • Promises
        • Problems