Download Déjà vue The Impact of the global Economic Crises on Latin

Déjà vue
The Impact of the global Economic Crises on Latin
American Economies
Alicia Puyana
FLACSO-MEXICO
Presented at the international conference on
“The Crisis of Neo-liberalism in India: Challenges and Alternatives”
Organised by Tata Institute of Social Sciences, Mumbai and
International Development Economics Associates (IDEAs)
– 13th to 15th of March 2009, Mumbai
1
Déjà vue
• This presentation follows the notes for the
conference. It is organized as follows:
• 1. Why the de-linking did not happen.
• 2. Some ideas about the objectives of the
structural reforms and its results.
• 3.Latin America growth patterns 1980-2008.
What the prognosis suggest. The margins to
confront the crisis.
• 4. The impact on employment, wages, and on
the agricultural sector during 1980-2007
2
1. What was expected.
• It was assumed that Latin America will not suffer the
impact of the crisis because of decoupling.
• The grounds for this assumption were:
1. The last four years Latin America enjoyed high
growth and low inflation
2. Since the reforms, the region has better
macroeconomic fundamentals:
3. Fiscal discipline → Reduced fiscal deficit→ lower
public debt→ No crowding-out
4. Lower direct taxation → higher savings → higher
investments
5. Fully liberalized foreign trade regime → High
external coefficient of GDP → higher productivity
→more exports →higher growth
3
1. What was expected.
6. Total liberalization of the capital account → higher
inflows of foreign capital: financial and FDI;
7. Independence of the central banks → sound monetary
policy;
8. High prices of export products: commodities:
increasing terms of trade
9. Creation of stabilization funds to save part of the
external bonanza,
10. Sound financial and efficient financial system →
easy financing for the productive sector.
11. Higher reserves
All shielded the economies from external shocks or
make it easier to respond to them.
4
2. Why de-linking did not happen.
•
•
•
•
•
•
•
•
•
•
•
•
Latin America is once again under severe stress by crisis:
1. Reduction of demand for its exports
2. Declining terms of trade
2. Contraction of credit
3. Reduction on the inflows of FDI
4. Contraction of remittances
5. Reduction of tourism
6. Latin American banks did not engage in mortgage activities
but they swap with banks in developed countries and
companies borrowed abroad: Comercial Mexicana, CEMEX,
All the above elevated the pressure upon prices
The demand for foreign resources induced devaluation.
6. To support the national currency central banks decided to
sacrifice reserves: Mexico has spent some 26 billion US$, that
is 26% of the reserves. The peso has devaluated by 50% since
September 2008.
5
Devaluation will not spur exports: there is not demand
2. In the fundamentals of new economic model lays the
explanation of why de-linking did not happen..
A rare coalition of:
a) business man (importers, land owners, multinational companies),
b) a elite of bureaucrats and politicians educated in the best USA
universities, fully committed to free trade and
c) technocrats of the multilateral organizations,
took advantage of the debt crisis to impose the structural reforms.
The main thrust of the reforms was to create the atmosphere to attract
investments: price stability and high stable rates of profits.
Fiscal, monetary and exchange policies all were directed to those aims.
Flexible exchange rates, fiscal discipline and restrictive monetary
policies guarantee to keep inflation under control.
Global markets and FDI were erected as motors of growth. But….
“Unlike national markets, … global markets are only "weakly
embedded." There is no global anti-trust authority, no global lender
of last resort, no global regulator, no global safety nets, and, of
course, no global democracy. In other words, global markets suffer
from weak governance, and therefore from weak popular legitimacy.
6
2. In the fundamentals of new economic model lays the
explanation of why de-linking did not happen..
The monetary authorities accepted that the only
effect of any fiscal expansion is to increase
interest rates, to stimulate the inflow of capital,
devaluation and trade deficit which will erase the
effects of fiscal expansion. Real economy uncha
On the other hand, it was assumed,an expansion
of the money supply will push down the interest
rates, stimulate the outflow of capital and the
devaluation. The pass through of devaluation
will inflate the IPC with no effect on production.
• Today they are dithering between reducing
interest rates and expanding fiscal expenditure.
• Only some countries have done so, but mildly 7
2. In the fundamentals of new economic model lays the
explanation of why de-linking did not happen..
• Price stability as the central element of the
economic policies has the effect of substituting
imported value added for national value added.
• The imported content of the GDP increased, in
some countries more intensively than in others,
aggravating the external constraints of the
economy
• The increase of the GDP elasticity of imports
• The reduction of the GDP elasticity of
employment.
• Even when the economies expanded neither
employment not salaries tend to growth at
comparable pace
8
2. In the fundamentals of new economic model lays the
explanation of why de-linking did not happen..
• The increased inflow of external resources do
not had big impact on growth and salaries:
• Foreign firms do have higher salaries than
domestic firms but,
• Their linkages with the economy are weak. They
do not act as a catalyser of economic growth
• They do not create a technological base
• Increases in FDI did not lead to increases in total
GKF.
• FDI crowded out national investments
• FDI did not create spillovers
9
3.The margins to confront the crisis.
• The capacity to react to the crisis and to protect the
economy varies from country to country and depends on
several factors:
• 1. Margin to change fiscal policies and to expand the
expenditure using fiscal income.
• 2. Possibilities to use foreign resources, which depends
on the quantity of external assets, mainly foreign
reserves,
• 3 the possibility to accede to foreign credit. Almost
exclusively from multilateral or regional institutions.
UNASUR.
• 4. The robustness of the national financial sector
• 5 The balance on the capital and current accounts.
10
3.Latin America growth patterns 1980-2008. What the
prognosis suggest.
INCOME PER CAPITA: AVERAGE GROWTH RATE,
1900-2005. In dollars PPP
Average Growth Rate
Country
Relative to USA Average Growth Rate
1900-1945
1945-1982
1982-2005
1900-2005
1900-1945
1945-1982
1982-2005
Argentina
0.7%
1.7%
0.9%
1.1%
0.85
0.89
0.47
0.56
Brazil
1.6%
3.4%
0.8%
2.4%
1.81
1.80
0.41
1.21
Chile
0.5%
1.3%
4.7%
1.3%
0.56
0.68
2.35
0.68
Colombia
1.4%
2.1%
1.1%
1.8%
1.64
1.08
0.57
0.91
Mexico
0.4%
3.0%
1.0%
1.8%
0.40
1.55
0.51
0.90
Peru
2.6%
2.3%
0.3%
1.7%
2.94
1.21
0.17
0.86
Uruguay
1.0%
1.1%
1.6%
1.1%
1.17
0.55
0.81
0.57
Venezuela
4.8%
2.2%
-0.4%
2.8%
5.45
1.12
0.22
1.42
Total 8 countries
1.2%
2.5%
1.0%
1.8%
1.40
1.30
0.49
0.90
United States
0.9%
1.9%
2.0%
2.0%
1.00
1.00
1.00
1.00
-
1900-2005
Source: Own elaboration based on Maddison, A. Historical Statistics for the World Economy, 1-2003 and 1950-2005
Consulted, february 1st 2009, in: http://www.ggdc.net
The fastest growth of Latin American economies took place during 1945-1982. They
converged with USA. This expansion was recovered only after 2006. In the last section we
11 will
illustrate the pattern of growth with examples on Mexico
3. Past and Future Growth Rates. The margins to confront
the crisis
Annual percentage changes of constant price GDP
World
L. Am.&
Carb.
Arg.
Brazil
Chile
Mexico
Venzla
Averg. 1980-84
2.50
1.62
-0.49
1.46
0.73
3.48
-1.19
Averg. 1985-89
2.64
3.73
4.50
6.41
1.24
1.50
1.50
Averg. 1990-94
2.36
3.32
6.31
1.42
7.33
3.86
4.04
Averg. 1995-99
3.43
2.55
2.25
2.01
5.53
2.91
0.89
Averg. 2000-03
3.34
1.87
-1.81
2.36
3.53
2.24
-2.38
2004
4.93
6.09
9.03
5.72
6.04
4.00
18.29
2005
4.45
4.73
9.18
3.16
5.55
3.13
10.32
2006
5.09
5.50
8.47
3.75
4.34
4.91
10.35
2007
4.99
5.64
8.65
5.42
5.10
3.20
8.40
2008
3.37
4.58
6.50
5.23
4.46
2.05
6.00
2009
0.49
3.19
3.60
3.50
3.80
1.80
2.00
2010
2.98
4.10
3.00
4.39
4.50
3.66
2.00
2011
4.78
4.25
3.00
4.01
4.70
4.68
2.00
2012
4.80
4.29
3.00
4.02
5.00
4.76
2.00
2013
4.71
4.18
3.00
4.02
5.02
4.37
2.00
Year
Source MIF, WEO 2009, consulted March 5 2009 in http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weoselgr.aspx
After three years of growth higher than in the two lost decades but lower than 1950-80,
Latin American Economies is expected to growth at a pace that will not allow to reduce
unemployment, informality and poverty. The crisis will push up poverty and income
12
concnetration, due to the character of the measures applied.
3. Current Account Balance as
percentage of GDP. 2000-2013
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2013
Latin
America &
Caribbean
-2.3
-2.7
-0.9
0.4
0.9
1.3
1.5
0.4
-0.8
-1.6
-1.9
United
States
Argentina
Brazil
Chile
Mexico
Venezuela
-4.3
-3.8
-4.4
-4.8
-5.3
-5.9
-6.0
-5.3
-4.6
-3.3
-2.8
-3.2
-1.4
8.9
6.3
2.1
2.0
2.6
1.7
0.8
-0.6
-0.8
-3.8
-4.2
-1.5
0.8
1.8
1.6
1.3
0.1
-1.8
-2.0
-1.7
-1.2
-1.6
-0.9
-1.1
2.2
1.2
4.7
4.4
-1.1
-0.9
-2.5
-3.0
-2.6
-2.0
-1.2
-0.9
-0.6
-0.2
-0.6
-1.4
-2.2
-2.8
10.1
1.6
8.2
14.1
13.8
17.7
14.7
8.8
8.5
3.4
-
Source MIF, WEO 2009, consulted March 5 2009 in http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weoselgr.aspx
13
3. Consumer Price Index 1990-2013
Promedio
1990-99
Emerging Econ. 51,3
A. L. $Carb.
98,4
Argentina
59,3
Brazil
325,4
Chile
11,5
Mexico
20,1
Venezuela
46,1
2000
8,5
8,3
-0,9
7,1
3,8
9,5
16,2
2001
7,7
6,5
-1,1
6,8
3,6
6,4
12,5
2002
6,8
8,7
25,9
8,4
2,5
5
22,4
2003
6,6
10,5
13,4
14,8
2,8
4,5
31,1
2004
5,9
6,6
4,4
6,6
1,1
4,7
21,7
2005
5,7
6,3
9,6
6,9
3,1
4
16
2006
5,4
5,3
10,9
4,2
3,4
3,6
13,7
2007
6,4
5,4
8,8
3,6
4,4
4
18,7
2008
9,4
7,9
9,1
5,7
8,9
4,9
27,2
2009
7,8
7,3
9,1
5,1
6,5
4,2
33,5
2013
4,8
5,6
9
4,5
3
3
30
2013
4,8
5,6
9
4,5
3
3
30
Source MIF, WEO 2009, consulted March 5 2009 in
http://www.imf.org/external/pubs/ft/weo/2008/02/weodata/weoselgr.aspx
The main objetctive of macroeconomic policy was to control inflation. That was achieved. But
it is not clear if the IMF prognosis is realistic. The IMF, also ECLAC advise prudence in
confronting the crisis. Both emphasize the need to maintain fiscal equilibrium and not to
expand fiscal expenditure “unwisely”. The advise is to reduced taxes to social groups with
higher capacity to expend.
14
3. Price propects for L.American main export
products
Commodities
Coffee, arabica, c/kg
Coffee, robusta, c/kg
Palm oil, $/mt
Soybeans, $/mt
Maize, $/mt
Wheat, US, HRW, $/mt
Bananas, US, $/mt
Beef, US, c/kg
Oranges, $/mt
Shrimp, Mexico, c/kg
Sugar, world, c/kg
Aluminum, $/mt
Copper, $/mt
Gold, $/toz
'07
231
162
661
325
139
216
572
220
810
855
19
2235
6030
590
'08
241
179
738
412
175
256
637
253
855
824
23
2059
5498
668
'09
206
152
533
297
126
194
571
206
719
780
21
1675
3654
571
'10
195
145
488
289
127
196
552
222
714
774
22
1728
3456
545
'15
186
132
643
278
127
197
519
248
694
840
25
1955
2978
490
'20
164
107
510
267
125
197
431
249
641
855
27
1996
2993
513
The prices of exports products will fall quite sharply even at nominal prices. The
Loses will be important especially for coffee, soy beans, copper, maize.
Consumers of imported cereals, maize, wheat etc, will not benefit of lower prices
Due to devaluation of currency.
15
Current US/B
20
06
20
03
20
00
19
97
19
94
19
91
19
88
19
85
19
82
19
79
19
76
19
73
100
90
80
70
60
50
40
30
20
10
0
19
70
Dollars per barrel
3. A Long term view of international oil prices
US $ 2007
Sourc: BP, Statistical Review of World Energy 2008, consulted March 6th 2009 in:
http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622
Nominal prices did grew. But at constant prices in 2007 were just above
the level of 1982. The expected fall will depress them near the very low
prices of 1986.
16
3. Latin America & Caribbe
Barter Terms of Trade. 1980-08
Index: 2000=100
Argentina
Bolivia
Brazil
Chile
Colombia
Costa Rica
Mexico
Venezuela
El Salvador
Guatemala
Honduras
Haití
1980
106,3
187,5
73,9
243,3
112,0
81,4
305,4
154,1
94,0
132,9
113,2
224,6
1985
94,1
184,4
62,1
185,7
103,9
84,0
173,9
143,1
64,8
93,5
96,0
203,9
1990
63,6
102,0
66,4
113,7
81,3
75,0
102,2
89,6
84,2
115,3
78,0
132,3
1995
91,6
89,4
110,4
135,6
86,8
104,6
92,5
63,4
121,1
117,9
96,3
113,2
2000
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
100,0
2005
106,8
111,8
99,2
139,8
110,9
88,3
103,6
154,5
96,7
91,3
87,2
92,4
2006
112,9
134,6
103,8
183,7
115,2
85,8
104,0
184,4
95,5
89,6
83,2
88,9
2007
118.0
139.0
106.7
190.7
124.2
84.9
105.1
NA
94.6
87.9
81.6
87.6
2008
123.4
147.1
110.3
177.0
140.7
81.7
108.0
260.0
90.0
87.1
79.4
66.7
Source: Own elaboration based on WB, WDI, 2008.
Positive and increasing terms of trade have only commoditiy exporters. Countries
Which export manufactures to “global value chain do Have decreasing terms of trade
and will have difficulties to adjust to the crisis. Amongst them are the C. American
countries and Mexico it’s index is lower than other oil exporting countries
17
3. LATIN AMERICAN & CARIBBEAN COUNTRIES.
EXTERNAL BALANCES
(Millons US$)
Trade Balance
Current Account Balance
Capital Account
2006
2007
2008 d
2006
2007
2008d
2006
2007
2008 d
L. Am.& Carb.
79068
47694
18644
49965
19281
-26933
11848
105523
81524
L. Am.& Carb.
73819
41948
14340
45569
14191
-31133
14945
108620
84227
Argentina
13427
12729
16616
7712
7113
10406
6800
4660
-10766
Brazil
36816
26975
7197
13643
1712
-27752
16927
85772
54752
Chile
21959
22491
8361
6838
7200
-5639
-4841
-10414
10839
Colombia
-1797
-3203
-1081
-2982
-5859
-6442
3005
10572
9053
Mexico
-11869
-16013
-21986
-2231
-5813
-15136
1228
16099
17636
ECLAC, 2008, Balance Preliminar de A. Latina, consulted Februray 28 in:
http://www.eclac.org/cgiin/getProd.asp?xml=/publicaciones/xml/5/34845/P34845.xml&xsl=/de/tpl/p9f.xsl&base=/tpl/topbottom.xslt
18
3. LATIN AMERICAN & CARIBBEAN COUNTRIES.
FOREIGN DIRECT INVESTMENT 2000-08
2000
2001
2002
2003
2004
2005
2006
2007
2008b
L. Am.& Carb.
72190
66564
50996
38414
48926
53710
30461
84601
81816
Argentina
9517
2005
2776
878
3449
3954
3100
4997
4900
Brazil
30498
24715
14108
9894
8339
12550
-9380
27518
20000
Chile
873
2590
2207
2701
5610
4801
4482
10627
11170
Colombia
2111
2526
1277
783
2873
5590
5558
8127
8645
Mexico
17789
23045
22158
15341
18451
14471
13573
16763
20100
Source: ECLAC, 2008, Balance Preliminar de A. Latina, consulted Februray 28 in:
http://www.eclac.org/cgiin/getProd.asp?xml=/publicaciones/xml/5/34845/P34845.xml&xsl=/de/tpl/p9f.xsl&base=/tpl/topbottom.xslt
The inflow of FDI has been quite unstable. Such volatility induces instability affecting
Growth and external balances, the exchange rate and capital accumulation. Not even
During 2003-2007 the inflow grew.
19
• 4. Some effects of the Latin American
pattern of growth on the:
• structure of GDP,
• employment,
• salaries and
• income concentration
• What happen to the mexican agriculture?
20
4. Structure of GDP 1980-2006
LACC
Argentina
Brazil
Chile
Col
Mexico
1980
1990
2006
1980
1990
2006
1980
1990
2006
1980
1990
2006
1980
1990
2006
1980
1990
2006
Manufacts
Agricul &
mining
Services
26,7
26,7
18,3
29,5
26,8
22,3
33,5
27.5
18,4
21,5
19,6
13,5
23,9
20,6
16,7
22,3
20,8
18,0
10,1
10,1
6,2
6,4
8,1
8,4
11,0
8,1
5,1
7,3
8,7
4,1
19,9
16,7
12,0
9,0
7,8
3,9
51,0
51,0
62,4
52,4
55,9
56,0
45,2
53,2
64,0
55,3
49,8
48,2
47,6
45,4
52,4
57,4
63,7
69,4
Source: WB WDI, 2008
The declining path of the contribution of tradable sectors to GDP is mirrored
by employment. Low productivity growth. Tradable sectors did not growth at the pace
Needed to incorparate labour. Productivity growth and low sectoral GDP growth
Lower job creation.
21
4. LATIN AMERICAN & CARIBBEAN COUNTRIES. URBAN OPEN
UNEMPLOYMENT
Average annual rates of change
2000
2001
2002
2003
2004
2005
2006
2007
2008a
L. Am.& Carb.
10.4
10.2
11.0
11.0
10.3
9.1
8.6
7.9
7.5
Argentina
15.1
17.4
19.7
17.3
13.6
11.6
10.2
8.5
8.0d
Brazil
7.1
6.2
11.7
12.3
11.5
9.8
10.0
9.3
7.9
Chile
9.7
9.9
9.8
9.5
10.0
9.2
7.7
7.1
7.7
Colombia
17.3
18.2
17.6
16.6
15.3
13.9
12.9
11.4
11.5
Mexico
3.4
3.6
3.9
4.6
5.3
4.7
4.6
4.8
4.9
ECLAC, 2008, Balance Preliminar de A. Latina, consulted Februray 28 in:
http://www.eclac.org/cgiin/getProd.asp?xml=/publicaciones/xml/5/34845/P34845.xml&xsl=/de/tpl/p9f.xsl&base=/tpl/top
-bottom.xslt
22
4. The evolution of real wages. 1980-2008
Year
1980
1990
2000
2005
2006
2007
2008
80-90*
91-00*
01-08*
80-08
Argentina
Brazil
Chile
Colombia
Mexico
MRW/a
ARS/b
MRW/a
ARS/b
MRW/a
ARS/b
MRW/a
ARS/b
MRW/a
ARS/b
131,7
28,3
100,0
171,1
136,7
145,6
155,3
-8,1
20,2
7,2
6,5
121,3
93,3
100,0
99,0
107,8
117,6
127,8
-1,8
0,7
3,3
0,7
135,1
73,8
100,0
128,5
139,2
148,1
157,8
-5,2
3,2
5,5
1,2
90,9
99,6
100,0
85,2
88,2
89,5
91,0
1,4
0,3
-1,1
0,2
66,0
57,7
100,0
113,4
111,8
115,8
113,4
-0,8
5,7
2,2
2,4
67,9
71,2
100,0
108,5
110,6
113,7
112,4
0,6
3,5
1,5
1,8
93,5
100,4
100,0
105,0
102,1
102,4
101,7
0,8
0,0
0,3
0,3
64,9
76,3
100,0
105,3
109,3
108,7
105,8
1,7
2,8
1,1
1,8
311,8
144,5
100,0
99,0
99,7
99,6
98,5
-7,3
-3,5
-0,1
-3,6
114,1
88,9
100,0
110,2
110,6
111,7
111,9
-2,1
1,4
1,9
0,4
a: MRW= Real Minimun Wage. B: ARS= Average Real Salary
Source: ECLAC: BADEINSO, BADEINSO, consulted March 6, at:http://www.eclac.org/estadisticas/bases/
Real wages did lost value after the debt crisis. The largest drops took place in Mexico
Which is the only country where minimum wages suffered larger loses than average
Wages. Other countries, specially Argentina and Chile protected minimun wages.
23
The result is the increase of capital share of GNI and the fall of labour share
Income concentration is higher than before the reforms
and even higher than in 2000.
1944
1960
1970
1980
1990
2000
2001
2002
2003
2004
2005
Argentina
32.6
36.86
38.65
41.27
44.4
50.4
52.2
53.3
52.85
50.8
50.2
Brasil
54.13
53.18
56.86
56
60.45
59.4
60
58.3
57.6
56.6
59.88
Chile
39.86
44.52
50.1
51.93
53.96
57.35
57.25
57.56
54.6
58.18
58.49
Colombia
50.66
58.5
51.91
51.55
53.99
56.68
54.8
54.88
54.95
55.75
55.1
México
51.9
51.98
49.1
52.08
52.14
53.95
52.19
51.03
52.2
49.9
52.21
USA
43.6
42.3
39.07
39.67
40.4
41.73
46.3
46.2
46.4
46.41
42.51
Transferences and phocalized anti- poverty programmes do not change the initial
Distribution of income. In Chile the GINI after transferences is only 0.08 % lower than
Before and in Mexico the change is only 0.004 %. Yet, multilateral organizations are
asking and advising governments not to expand fiscal expenditure and to maintain
24
fiscal discipline. Poverty will increase substantially
Prices of agricultural export products, 1990-2008.
In constant 1993 pesos
30000
25000
20000
15000
10000
5000
0
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
08
constant 1993 pesos/mt
35000
Fruits-vegtbls
Total (right)
25
Price of some agricultural products. 1998-2008
in constant 1993 pesos/MT
.
1900
3500
1700
3000
1500
2500
1300
2000
1100
1500
900
1000
700
500
500
0
300
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
4000
Beens
Corn (right)
Tomatoes (right)
26
Value of production of some of the most important
agricultural products. Constant 1993 pesos. 1990-08
1000
800
600
400
200
Pinapple
Rice
Oats
Melon
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0
Oranges
27
Price of agricultural products. 1980-2008.
Constant 1993 pesos/mt
5000
1800
4500
1600
4000
1400
3500
3000
1200
2500
1000
2000
800
1500
600
1000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2008
Garlic (left)
Green tomato
Tomato
Potatoes
28
Value of production of some of the most important
agricultural products. Constant 1993 pesos. 1990-08
4500
14000
4000
3500
12000
3000
10000
2500
8000
2000
6000
1500
4000
1000
2000
500
Beens
Sorgum
Wheat
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
0
1990
0
Corn (rightr)
29
4. Mexico:External supply of apparent
consumption*.1980-2008
90-94
20,3
48,4
47,1
0,8
15,6
5,4
10
45,4
71,1
19,5
94-03
40,9
45,6
61,4
0,2
22,6
6,7
19,7
39,4
95,1
42,6
03 -'08
Sesame
Cotton
Rice
Cardamomo
Barley
Beens
Corn
Sorgum
Soy beens
Wheat
80-90
36,1
16,8
29,4
0
18,9
26,8
26,4
36,9
58,9
18,2
Poultry
Beef
Eggs (Tons)
Mil (000 litrs)
Porc
2,9
2,1
0,3
12,1
8,3
8,1
10,3
0,8
20,6
21,7
10,4
15,5
0,7
16,9
23,9
16,1
29,0
0,7
18,3
39,3
Product
61,2
65,2
74,1
0,3
29,8
7,6
32,8
43,1
96,7
65,1
Source Secretaría de Agricultura, Ganadería, Desarrollo Rural, Pesca y Alimentación.
Consulted in: www.siap.sagarpa.gob.mx/AnxInfo/
* (Imports/Production-exports) 100
30
Policy measures addopted by L.A. governments up to 20
February 2009
MEASURE
COUNTRY
AR
BO
BR
CL
CO
CR
EC
GT
MX
NI
UY
JM
X
X
X
X
X
X
X
DM
Monetary and financial policy
Reduction or relaxation of reserve requirements
X
X
X
X
Provision of liquidity in national currency
X
X
X
X
Tax cuts or increassed subsides
X
X
X
X
Spending incressed or brought toward (infraestructure)
X
X
X
X
X
Provision of liqudity in foreign currency
X
X
X
X
X
Increassed trafiffs or import restrictions
X
X
Tariff cuts
X
X
Financing of exports
X
X
X
X
X
Fiscal plicy
X
X
X
X
X
X
X
Exchange-rate and external trade policy
X
X
X
X
X
X
Obtaining credit fron international financial bodies
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Sectoral policies
Housing
X
Small and medium-sized enterprises
X
Agriculture
X
X
X
X
X
X
Tourism
Manufacturing
X
X
X
X
X
X
X
X
X
Employment and social policies
Promoting job creation
Social programmes
X
X
X
X
X
X
X
X
X
X
X
X
X
X
Source: Taken from ECLAC: The reactions of Latin American and Caribbean governments
to the international crisis an overview of policy measures up to 20 February 2009. Consulted March 5 2009
on: http://www.eclac.org/cgi-bin/getProd.asp?xml=/prensa/noticias/comunicados/2/35182/P35182.xml&xsl=/prensa/tpl31
i/p6f.xsl&base=/tpl-i/top-bottom.xsl
Conclusions
• Despite all the effort to adjust the economy and to
instrument the structural reforms, Latin American
Countries suffering the effects of the global crisis.
• The neo-liberal model did not shield the economies
from external shocks. On the contrary it intensified
their vulnerability.
• The last 3 years (2005-07) L.A. countries grew faster
than during the two lost decades (1983-2004). That
expansion did not fully compensate the loses.
32
Conclusions
• The channels through which the crisis are transferred
are:
• 1. Contraction of external demand of LA exports,
both commodities and manufactures and tourism..
• 2. Reduction of external financial flows: FDI,
portfolio investments, remittances.
• 3. pressure upon the national currencies leading to
intensive devaluations
• 4. fiscal income will decrease as a result of declining
activity. Anti-cyclical
• 5. employment and real incomes will fall aggravating
income concentration and poverty
33
Conclusions
•
•
-
The intensity of the crisis varies from country to country.
The most severe impact will fall on countries:
more intensivelly link to the USA,
Exporters of maquila type manufactures and
Those that did totally liberalized the capital account
Those with mayor revaluation of the currency (Mexico and central
american countries).
Less acute impact will affect countries which have/are:
Fiscal margin of action
Commodity exporters (expected better terms of trade)
Sound banking system and preserved development financial institutions.
Created stabilization funds
Argentina, Brazil, Chile, Colombia, Venezuela.
34
Conclusions
• Red lights
• The resolve on the macroeconomic frame:
• 1. Prevalence of price stability over growth and
employment.
• 2. insistence on using the exchange rate to
control inflation, the denial of using it to
promote, and/or protect tradable sectors
• 3. The emphasis on fiscal discipline to maintain
surpluses on the fiscal account.
• 4. The preservation of the dogma of sectoral
neutrality and the consecration of the market as
the only tool to allocate factors of production.
35