Essays in Honor of Lance Taylor
Edited by Amitava Krishna Dutt
Chapter 11: The two waves of financial liberalization in Latin America
11. The two waves of ﬁnancial liberalization in Latin America Roberto Frenkel and Lucio Simpson* I INTRODUCTION The economic history of Latin America in the past three decades suggests that the most sensible approach to evaluating the regional processes of ﬁnancial liberalization, is not to see them as policy initiatives that can be isolated from their context, but rather as a set of experiences that share a set of common features. However, there are still enough noteworthy contrasts in policies and performance between the diﬀerent LA countries to be able to draw important lessons about the relative merit or lack of it of speciﬁc measures. The long-term trend towards ﬁnancial liberalization in LA has not been a continuous process but one with a marked break during the 1980s as a result of the crises brought about by the failure of the ‘ﬁrst wave’ of liberalization attempts. These were labeled the ‘Southern Cone liberalization experiments’, and we especially analyse the cases of Argentina and Chile. Though they were short-lived, these experiences are for our purposes closed episodes with well-deﬁned beginnings and ends.1 With respect to the 1990s our view is particularly inﬂuenced by ﬁve national cases: Argentina, Brazil, Colombia, Chile and Mexico. These are the biggest economies in the region. Together they represent more than three-quarters of the regional product and were the main recipients of the capital inﬂows. They also provide good examples of a variety of policies and economic performances. However, even though chronologically...
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