Summary
Latin America had positive projections following the end of World War II as the development of a stable economic environment was set in place. However, the ensuing creation of a very rigid economic structure, increased inequality, dependence on inflationary financing and poor export markets disrupted economic development. Thus, proper economic reforms are expected to be the primary challenge that Latin American countries have to manage for the future.
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Extract
Economic reform and modernization in Latin America.
Latin America entered the era following World War II with great optimism. International reserves were at record levels, an incipient manufacturing sector was beginning to develop vigorously, and there was an almost unlimited faith in the ability of government policies to secure growth and cure social ills. The creation of the Bretton Woods institutions generated expectations of a stable international economic environment, free of the financial and payments crises that had afflicted the region for many decades. Starting in the mid-1940s, most Latin American countries followed a development strategy based on a high degree of protectionism, government-led industrialization, and a broad involvement of the state in economic activities. For some time, it seemed that this approach was working, and that early promises of growth and prosperity would materialize, allowing the Latin American countries to gradually move into the ranks of the more advanced nations.(1)
Between 1950 and 1980, Latin America grew at an annual average rate of almost 6 percent per annum, significantly faster than the industrial nations, and only marginally slower than the East Asian countries.(2) However, a number of disturbing developments seriously and steadily undermined the long-term sustainability of the regional strategy. First, excessive protectionism and generalized g...See the full content of this document
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