Economy of Latin America - Essay Example

Annotated Bibliography: Economy of Latin America Brazil Saad-Filho, Alfredo & Mollo, Maria de Lourdes R. “Inflation and Stabilization in Brazil: A Political Economy Analysis”. 2002. Review of radical political economics. 34(2002). 109-135 This articles analyses Brazilian economic developments in the past few decades. Brazil is one among the top ten economies in the world at present and they are the largest economy in Latin America. It gives us a clear picture about the waxing and waning of Brazilian economy from 1950 onwards. It should be noted that Brazil faced problems related to high inflation rates between the periods of 1970 and 1990. The authors of this article argue that the stabilization program implemented in Brazil in 1994 helped Brazil to control growing inflation rates. This article analyses the theoretical aspects of Brazilian inflation. The authors argue that the distributive conflicts are the major reason for Brazilian inflation. In their opinion, social groups such as unionized workers, rentiers and monopoly capitalists have monopoly power and can determine the prices of their goods or services strategically. When some of these groups use their market power to increase their share of national income, other groups also react with the same weapons and subsequently conflict inflation may arises. Another reason mentioned in the article for Brazilian inflation is the monetary crisis. The deterioration of Brazilian currency is related to the problems in the supply of money. The authors refereed this type of inflation as the extra money inflation. In their opinion, extra money can be created both privately and by the public sector. They argued that extra money increases the nominal national income. If extra money increases demand in those sectors which are operating in full strength, prices will increase if imports of are inadequate. Thus extra money produces inflation. In short, the authors believe that high inflation, high interest rates, balance of payment vulnerability and the government’s inability to maintain low inflation rates and exchange rate stability are the major obstacles in front of Brazil in attaining proper economic growth. Colombia Rettberg, Angelika. “Global Markets, Local Conflict Violence in the Colombian Coffee Region after the Breakdown of the International Coffee Agreement”. 2010. LATIN AMERICAN PERSPECTIVES, Issue 171, Vol. 37 No. 2, March 2010 111-132. DOI: 10.1177/0094582X09356961 The author of this article argues that Colombian economic growth is directly related to the armed conflicts existing in that country. Coffee is one of the major revenue sources for Colombia; however, coffee prices dipped a lot in the recent past which affected Colombian economy drastically. Economic decline brought poverty and unemployment in Columbia for the past few decades. The author argues that pathetic living conditions made Colombian soil fe3rtile for antisocial activities like armed violence. Colombian administration is not getting enough time to concentrate more on the problems in agricultural sector because of the increasing internal violence. It should be noted that agriculture is the major revenue source for Colombia. Since coffee is the major crop in Columbia, armed violence in this sector is growing day by day. The author says that the violence in coffee sector has been tripled over a period from1990 to 2000. The author argues that the current crisis in Colombia is rooted in the decline of international coffee prices as a result of the breakdown of the International Coffee Agreement in 1989. Colombia is infamous for drug trafficking. In fact many of the global drug mafia is operating from Colombia’s soil because of the poor governance prevailing in Colombia. Coca production has been increased a lot in recent times in Columbia; however because of declining prices of coffee and Coca, poverty is increasing day by day. In short, the author argues that growing violence in Colombia has definite connections with the declining prices of its agricultural crops in international market. Poverty and unemployment are growing gradually which helped antisocial elements to establish their strongholds in Colombia. Argentina Carranza, Mario E. “Imperialist Globalization? Explaining Argentina’s December 2001 Political Crisis and Economic Collapse”. LATIN AMERICAN PERSPECTIVES, Issue 145, Vol. 32 No. 6, November 2005 65-89. DOI: 10.1177/0094582X05281114 The author of this article compares the economic situations in Argentina before 1990 and after 2000. He says that before 1990, Argentina was often cited as the role model to study the principles of globalization. However the scenario has changed a lot in the recent past. He has pointed out that two administrations were already expelled from power after 2000, because of poor economic policy managements. America like prominent countries in the American continent is showing little interests in Argentina’s crisis. They are not extending any support to Argentina and as a result of that economic crisis are getting deepened as time goes on. The author pointed out that from 1998 to 2002 the Argentine economy shrank by 20 percent. The author identifies many reasons such as Carlos Menem’s “neoconservative revolution” of 1989–1999, the economic and political crisis of 1999–2001, alternative explanations of Argentina’s meltdown, and postcrisis scenarios after the September 2003 agreement between Argentina and the International Monetary Fund (IMF) etc as the major reasons for Argentina’s downfall. The author says that Menem cannot stay away from the moral responsibilities of destroying Argentinian economy. In his opinion, Market-oriented neoliberal reforms under Menem regime eliminated state institutions that had long insulated Argentine workers and local firms from the shocks of the global economy. Thus, Argentina also started to react in accordance with the fluctuations in global economy. The author argues that the De La Rua administration which came into power after the collapse of Menem administration did nothing meaningfully to stimulate Argentinian economy. The De La Rua government did not change the macroeconomic policies inherited from the Menem administration, and its austerity measures only aggravated the economic and social crisis that was already ravaging the country. The fixed exchange rate policy adopted by Argentina brought more harm than good. It was evident to the IMF officials that one – peso- one -dollar policy may not help Argentina in the long run because of the huge fluctuations in global economy. However, IMF officials never asked Argentina to change their exchange rate polices. In short, the author argues that poor administration and lack of visionary leadership were the major reasons for Argentina’s downfall. Chile Taylor, Mathew E. ‘Economic Development and environment in Chile”. Journal of Environment & Development, Vol. 7, No. 4, December 1998 422-436 Chile is often taken as the example by economists for explaining various economic models of progress; however, environmentalists often criticize the wisdom of Chilean administrators in sacrificing the interests of the environment for economic development. In this article, the author stresses the importance of environmental protection for sustainable economic developments in Chile. The author says that Chile started to progress rapidly from the 1973 Pinochet regime onwards. Pinochet regime implemented economic reformation policies such as free access to foreign capital, lowering of trade barriers, deregulation of labor market, reduction of public spending, and a remarkable degree of privatization. However, Pinochet was not much bothered about the protection of the environment. As a result of that, Chile started to experience the environmental strains from the latter periods of 80’s onwards. High rate of domestic savings, private pension plans and increased foreign investments were the major reasons for Chile’s rapid economic progress. Visionary banking policies also helped Chile a lot in attaining steady economic progress. Agriculture, shipping, tourism, transportation, and communication industries, commodity exports etc also contributed heavily to Chile’s economic progress. Above all these things, the most important contributing factor for Chile’s economic progress was revenues from natural resources such as copper, lumber and fish products. The author of this article argues that most of the economic developmental policies implemented in Chile were affecting the environment in one way or other. In other words, sustainable development was not an important topic in Chile until the beginning of 1990. However, growing concerns about environmental problems, forced Chile to establish some agencies such as National Commission for the Protection of the Environment (CONAMA), and Environmental Commissions (COREMAs), in 1990’s. This article gives more insights into the necessities of sustainable development instead of development at any cost. It stresses that any progress against the will of nature cannot last long. Venezuela DI JOHN, JONATHAN. “Economic Liberalization, Political Instability, and State Capacity in Venezuela”. 2005. International Political Science Review (2005), Vol 26, No. 1, 107–124 DOI: 10.1177/0192512105047899 This article examines the mechanisms through which economic liberalization policies contributed to increasing political instability and declines in Venezuela. Author argues that income inequality is a major obstacle in front of Venezuela’s economic progress. In his opinions, many of Venezuela’s economic policies are highly questionable, especially in a heavily globalized world. Even though democracy is prevailing for a longer period, political instability is one of the major reasons for poor economic growth in Venezuela. Venezuela’s politicians are not showing many interests in safeguarding the interests of the country; they are particular in safeguarding their own interests. The author says that the proven economic policies in Asia cannot be implemented in Venezuela like Latin American countries because of poor governance. He has pointed out that state created rents and rent-management systems, such as in industrial policy, may have worked in Asian countries; however, it may not work in Latin American economies since the administrative capacity to administer effectively subsidies, export “contests,” and investment coordination is generally lacking. Even though Venezuela implemented many trade liberalization polices in the 1990’s, none of these polices brought desired results. In fact per capita GDP declined 2.7 percent in the liberalization period (1990–98). Moreover, manufacturing growth, declined from an annual average of 4.3 percent in the period 1980–90 to 1.5 percent in the reform era of 1990–98. One of the major reasons for the failure of liberalization polices in Venezuela is the instable politics and growing corruption cases. Only the business groups reaped profits from the trade liberalization policies and ordinary people got nothing from it. Thus the gap between the rich and poor is growing day by day in Venezuela. In short, the author cites poor governance, corruption and income inequality as the major reasons for Venezuela’s economic problems. Read More