“Reasons for the success or failure of structural reforms: Argentina and Chile’s contrasting experiences revisited”

GUILLERMO ROZENWURCEL

El Cairo

Conferencia; Second Conference on Globalisation and Economic Success: Policy Options for Africa; 2006

The Brenthurst Foundation (South Africa), the Konrad Adenauer Foundation (Germany) and the Ministry of Investment (Egypt).

Starting around the mid’ eighties many developing countries from Latin America and elsewhere embarked on ambitious attempts at widespread structural reforms. Most of them tried to follow the market-friendly prescriptions of the so-called Washington Consensus. Only a few, however, were really successful, while in the vast majority of cases the attempts fell quite short of initial optimistic expectations. By comparing two extreme cases in Latin America, the successful Chile and the sorrowful Argentina, the paper tries to identify some of the reasons why two countries that share so many features in common and, roughly at the same time, adopted rather similar approaches to economic reform, could have followed such a divergent growth path. In order to fulfill this task, the paper is organized as follows. The first section briefly traces the dismal economic performance of Latin America since the early 1930s, pointing to the common weaknesses displayed by both the Import Substitution and the Washington Consensus development strategies and showing that the Chilean experience of the last twenty years or so is clearly a regional outlier. The second one performs an analytical narrative exercise to highlight the different specific features of Argentina and Chile which are crucial to understand why similar reform packages led to so different outcomes. The last section try to draw some conclusions from the previous discussion, focusing first on the lessons that can be learnt from the failure of Convertibility in Argentina and afterwards on the comparative assessment of the two experiences.