Trade liberalization in Latin America

Abstract

A major shift has been observed in the development strategies of most of the Latin American countries in recent years. One sign of this change has been that the countries have increased the neutrality of their trade policy incentives in an effort to give greater priority to the market as a resource-allocation mechanism; it is also hoped that this will result in a more export-oriented production apparatus. The authors review these changes and, in assessing the results to date and the consistency of these policy packages, contend that their impact in terms of economic growth and changing production patterns has thus far been unpromising. Indeed, generally speaking, the countries' performances as regards capital formation and overall productivity have not been satisfactory. A number of recommendations are also made regarding other measures that could complement existing policies aimed at opening up the region's economies in a way conducive both to changes in production patterns and to development.