alternate development paths in latin america society for international development 12.11.2008 arne...
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Alternate Development Paths
in Latin America
Society for International Development12.11.2008
Arne Ruckert, Centre for International Policy Studies (CIPS)
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Towards a Post-Neoliberal Development Path in Latin America?
• Introduction• The multiple failures of neoliberalism in LA• The emergence of post-neoliberal development
strategies (ideal-type)• Contradictions of and challenges to the post-
neoliberal turn• Conclusion
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Introduction
• Latin America laboratory for neoliberal development model• Neoliberalism initially implemented by authoritarian regimes
(e.g. Chile) and with elements of coercion (union busting and disappearance of union leaders)
• Because of its deep transformation, LA first continent to (as a whole) move beyond the neoliberal era (more left governments in power than ever before in its history)
• Countries with largest degree of neoliberalization more likely to remain wedded to neoliberal model (cultural entrenchment of neoliberalism and institutional path dependency)
• But post-neoliberal turn (to varying degrees) visible in almost all countries
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Economic Performance of LA under Neoliberal Policy Regime
Latin America's Per Capita GDP Growth
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
1960s 1970s 1980s 1990s
Latin America
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Social Failure of Neoliberalism
Latin America's Poverty Rate as % of National Population (World Bank 2006)
40.548.3
42.5 39.8
0
10
20
30
40
50
60
1980 1990 2000 2005
Latin America
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Growing Inequality in LA under Neoliberalism
1980 1985 1990 1995 2000
0.49
0.5
0.51
0.52
0.53
0.54
0.55
0.56
0.57
Inequality in Latin America as Measured by GiNI coefficient
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The Emergence of Post-Neoliberal Policy Alternatives
• While there are significant divergences between various New Left governments in Latin America, I propose the term post-neoliberalism to conceptually grasp the changes currently underway in the hemisphere (co-edited book: Post-Neoliberalism in the Americas, Palgrave/Macmillan)
• Post-neoliberalism should not be understood as the temporal transcendence of neoliberalism but rather signifies an experimentation with heterodox development policies, representing both significant continuity and discontinuity with the neoliberal era
• Post-neoliberalism a search for policy alternatives that is on-going and dynamic (no clearly identifiable model available yet)
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Continuity with Neoliberal Era
• Application of ‘sound macroeconomic policies’ in most Latin American countries
• Amassing of huge budget surpluses by some New Left governments (e.g. Bolivia)
• Improvements in external reserve positions • Markets acknowledged as most important resource
allocation devices (with the exception of Cuba and Venezuela)
• But, at the same time:
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Discontinuities and Progressive Policy Alternatives
• Willingness to use state power to stimulate the economy and correct for wide-spread market failures (market limitations)
• Use of state institutions to reduce social inequalities through redistributive measures and address poverty through consumption subsidies to the poor (Oportunidades and Bolsa Familia)
• Re-nationalization of parts of the economy, especially in the energy, minerals and service sectors (Venezuela, Bolivia, and Argentina)
• Commitment to substantially deepen democracy through engaging citizens more directly
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Discontinuities…
• Trade agreements that reflect a neostructuralist understanding of the economy and are critical of ‘free trade’ with developed countries (ALBA, Unasur = Mercosur+Andean Trade Pact) [but also simultaneous signing of BFTAs]
• Higher inflation rates tolerated if accompanied by higher economic growth (Argentina, Venezuela, Brazil)
• Achieve independence from international financial institutions (IFIs) by re-paying public foreign debt and installing the Bank of the South (Banco del Sur)
• Endogenous growth preferred over export-driven growth (backward linkages to economy if export driven development)
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Conclusions: Challenges and Contradictions of Post-Neoliberal Turn
• Decline in commodity prices and global financial crisis• US empire strikes back (Venezuelan coup attempt, US support
for secessionist right in Bolivia)• Democrats more likely to tolerate post-neoliberal policies in LA• Conflicts amongst New Left leaders (e.g. Brazil versus
Venezuela)• No new development model yet available (trial and error)
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What Should Post-Neoliberal Development Model for LA Look Like?
• Acknowledge idiosyncrasies of each country, no mono-economics a la Washington Consensus
• Allow state to play greater role in economy (infrastructure, education, resource sector, etc)
• Decommodify social services (stimulate human capital and reduce inequality)
• Avoid regressive taxation regimes • Protect industries that are not competitive yet but have potential to
become “winners” (infant industry argument)• Promote solidaristic South-South trade (free trade amongst equals not
necessarily bad)• Simultaneously integrate into and disassociate from world markets
(historically most successful development strategy)• Focus on demand-side of the economy (see workers as consumers not
just as a production cost, wage increases required)