Globalization and its impact on Latin American development

ORLANDO JUSTO Y JUAN E. SANTARCANGELO

SUNY Cortland, Nueva York

Congreso; Globalization and its discontents; 2007

SUNY Cortland and Izmir Economics University

Capitalism, since its emergence and more than any other system, has operated in the global economy beyond the domestic frontiers of the countries.  But in the past two decades we have witnessed an accelerated process of international integration of the world’s nations. The neo-liberal policies applied by most of the Latin American governments in the 1980’s and 1990’s ended a period of inward development, with a leading role of the state in the implementation of economic measures oriented toward an import-substitution strategy and industrialization.  The new reforms reduced considerably the participation of the state in the economy, and countries moved into a phase of liberalization, giving priority to firms and market actors as the key forces to provide the welfare and economic growth needed.  The logic behind this policy is that it enhances more efficiency and productivity, which in the long run will provide more access to technology, capital, and know-how, contributing to the economic stability of the society and the reduction of poverty. In sum, it will help the countries to trigger rapid growth and economic development. In this context, the present paper has two main goals. First, to review the theoretical foundation of globalization and the policies it embraces, and to review the current literature on how globalization affects economic development. Second, we select a group of Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico and Uruguay), in order to establish how globalization has affected the development path of the countries. With these goals, the paper is divided in three sections. In the first one, we review globalizations main concepts and its theoretical foundations; while in the second one, we review the current literature on how globalization affects economic development. In the third section we analyze the economic and social effects of the interaction of the policies applied, trying to answer if globalization did help these countries with their economic development. We closed our paper by drawing our main findings.             The data to do the analysis is coming mainly from three sources: World Development Indicators (United Nations), ECLAC (United Nations), and the IMF Balance of Payments statistics.