A Post-Keynesian Approach
- New Directions in Modern Economics series
Edited by Claude Gnos, Louis-Philippe Rochon and Domenica Tropeano
Chapter 9: A Keynesian–Structuralist Growth Strategy for Latin America
* Julio Lopez and Fernando J. Cardim de Carvalho1 1. INTRODUCTION The liberal reforms introduced in practically all Latin American countries in the 1980s2 did not meet the expectations of their proponents and supporters. Of all the macroeconomic gains expected to follow the policies of the period, only one, although very important, the control of inflation, was actually achieved.3 Liberal opinion explains the failure to resume economic growth in the region by the inability or unwillingness of governments to really commit to a liberal revolution. Half-hearted reforms, it is argued, could not lead to sustained growth because they were not enough to change the incentive structure of the economy that promoted rent-seeking behavior instead of the entrepreneurial spirit. The opposite view, to which the authors of this chapter largely subscribe, maintains that it was rather the paralysis of the state generated by the crises of the 1970s and 1980s that deprived the economies of the region of an important lever to resume and sustain growth. In practically all Latin American nations economic performance deteriorated drastically in the liberal era, in comparison with the rates witnessed from 1945 to the 1970s, or even the 1980s;4 or in contrast with East Asian economies where the state did intervene extensively in economic affairs. If this hypothesis is correct, then, to overcome stagnation it will be necessary to reconstruct the state’s capacity to implement pro-growth policies. Surprisingly, most critics of the liberal view have tended to assume one of two positions. Some believe that...
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