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Question

What is the evidence for Taylor's claims on LAmerican Dev. in the 19th Cent.

Answer 1

Migration contributed to nearly half of the net increase in population - wage premiium over 100% 1890-1939 comp. to Italy + Spaian Argentina heavily relied on foreign capital with foreigners owning 48% of its capital stock in 1913 compared to Australia's 20% Prior to the war capital intensity at a rate of 1.4% per annum from 1900-13 (capital deepening) --> after the war Argentina capital widening 0.6% per annum from 1913-1939 Argentina had a savings rate of 5% whereas Australia and Canada had around 15% A hueristic link between the savings rate gap and depnedncy shows that Argentina had a dep. 5% higher than the Australia-Canada avg. + savings rate of 11% lower 2/3 of the slow down of the Argentinian economy would have been eliminated if they had a higher savings rate --> sustaining capital deepening as the accumulation rate would've fallen to 4% which is above the populationr ate of 2.8%

Answer 2

Postcolonial shocks explain the different inequality trajectories in Latin America. Intial conditions only mattered little

Answer 3

Higher population --> more inequality Better terms of trade ---> more inequality External market conditions paired with particular factor endowments were decisive for inequality. Migration and annexation of land led to sizeable fluctuations. As countries increased their participation in world trade, the income distribution responded to changes in the country terms of trade The **rise in inequality** in Argentina and Urruguay is explained by the impact of **favourable terms of trade** and **international migration**. **Decline in inequality** in Mexico and Venezuela, explained by the imapct of **decreasing terms of trade** amplified by the **expansion of avaliable arable land**

Answer 4

Consistent with Uruguay rent-wage ratio measure of inequaltiy rises from around 1 in 1850 to 6 by 1900. By 1880 one of 3 inhabitants of the country was foreign * Livestock by products accounted for almost 90% of total exports in Uruguay * Total exports increased seven-fold from the late 1860s until 1913 * IN argentina exports shifted from silver to animal with 98.6% of exports being of animal origin by the mid 19th century Argentina inequality ratio reached near 12 in the 1850s compared to 3 in 1830 * If terms of trade decline, inequality wouldve been 41.5% lower When there is no migration inequality would've decline only 34.7%

Answer 5

* Key differences in LA and EAsia was that interventions in EAsia were not price distorting and left incentives intact. * Latin American conditions seemed to reflect a desire to insulate domestic from market forces. * Poor performers '*confused support for industrialisation with support for industrialists*' and created distortions that raised capital prices and reduced quantities invested for the long run. * * East Asian miracles (Krugman) was epitomised from mustering impressively high investment rates and experiencing dramatic capital deepening * Institutional structure of America took the region down a low investment path in much of the postwar period.

Answer 6

* Capital accumulation most imp. for LA growth, hindered by distrotions created by ISI * Structuralist school w micromanegment, regulatory appartus and variiegated nominal protection created even more intermediate price twists. * Great Depression exp encouraged ISI --> retreat from global economy --> LA share of trade secular decline * Combined with distortions, led to retardation and divvergence * Political conditions in the Asia-Pacific Region differed from America which had popular enfranchisement of competition interest groups lobbying for protection. Openness in Asia led to low black market premia, low tariffs, small capital price distortions and exchange rate stability. Latin America opposite, high black market premia (26%) tariffs (22%) capital price distortions (27%) and rates of depreciation (37% per annum).

Answer 7

* Tariffs averaged over 100% were the norm by the end of the 1950s Brazil 1966 nominal 154% tariff on consumer durables that was effectively 285% * Asia pacific group reached 3.4% growth. Latin have 0.6% growth, five times slower. Policies that supress openness - reduce growth 2% Relative price of capital associated with presence of distortions at various points in the economy about 1/4 of any tariff-rate changes passes through into capital price. Latin America grow 1.5% slower due to the lower investment rates

Answer 8

Immensely important, developed under late development constraints. Crucially, infant industry needed a well integrated export strategy East Asian model policies: 1. Pro-investment rather than anti-inflation 2. Control on luxury consumption 3. Strict control on FDI 4. Integrated pursuit of infant-industry and export-promotion 5. Use of exports to exploit scale economy 6. Productivity orientated view of competition Troubles in some East ASian countries come from departures from the tradional models.

Answer 9

* Cultural arguments attribute recent phenomena to millenium old causes * Maintaing high investment at the cost of moderate inflation * Maintained strict capital control (lack of FDI reliance) * Banning of importing luxury products --> national community and low expenditure * Export integrated infant industry * Create oligopolistic structure --> domestic firm to world class capacity, maximising EoS to then open up. (productivity>competition) * Regulated TNC investment

Answer 10

* Inflation Korea 17.4% in 1960s * Death sentences in Korea for major capital flight - during 1980s debt crisis none. * Korea & Japan had 2 lowest number of cars per capita comp. to any other developing country * Helped by undervalued currency for export success vs over-valued LAmerica * Korea no anti-trust until 1981, allowed collusive behaviour in 'promising industries' * TNC technology had to be screened and check for royalties or obsolete nature * Promotion of R&D in targeted areas

Answer 11

Need export promotion strategy, emphasis by Prebisch Ignored for political reasons Development of industry w exports to acque cash to buy new tech. Stable supply of FX + tech allows for innovation.

Answer 12

1. Organising mergers and market segmentation 2. SUbsidisng capital equiment 3. Subsidising R&D/training.

Answer 13

Stablle incentive system + gov. focus on exports --> lower labour and capital regulation and bureaucratic control -->Lack of discminiation against exports --> rapid export growth in Far Eastern NICs

Answer 14

* fastest rates of export expansion --> fastest GDP growth --> inc capital:output --> highest savings rate * Growth of TFP +ve correlation w export expansion, -ve correlation with ISI * Choice of EAsia to export nondurable consumer goods while LAmerica focused on producing consumer durables which requires sophisticaed industry and a large domestic market (higher costs and tariffs) * EAsian Gov provided a modern infra, stable incentives and gov. bureaucracy that helps exports

Answer 15

* Korea share in nonfuel exports of the 12 counttries 0.9% to 17.3% (1963-84) while India's fell. * 1960 period Japanse TFP growth 4.5% compared to Argentinian 0.7% * Korean savings rate 32.5% 1973-84 * Barzilian market for manufactured goods was 1/6 of Germany's. * 1970 President park of Korea compelled investmetns in heavy engineering and chemicals --> 5% decline in GDP. * Public expenditure as a % of GDP is 4% in Korea vs 26% in Mexico

Answer 16

Tillys war - tax relationship doesnt hold in LA LA financed wars through loans, commodity sales and custom duties NEw states lacked muscle to collect tax Central Gov failed to have a rs with parts of soceity that would support tax like with English Fuedalism

Answer 17

British observer 'Peruvians treated Guano boom as if it would last forever; spending wildly and removing other taxes' Ecuador didn't develop double entry book keeping until mid 19th century Brazil ahd sig. opposition to census and elected official avoided fazenderio (area of large alndholders) Mexico Lorenzo Zavala overthrown for trying to put a direct tax

Answer 18

Formation hinged on: 1. Economic Geography; physical terrain, avaliable resources, 2. Political geography; helped or hindered political control 3. Economic and Fiscal strength; reveneu generating capacity 4. Acceptance of political systems by public 5. Civil control of military 6. Role of church (political or ally) 7. Relative vulnerability of national to external power and attacks

Answer 19

Economic Geography; unified in central valley. Long coastline for trade. Rich in resources. Invested in infastructure (Santiago to Velporaizo in 1853 railway) Political and Fiscal; unified political space. Fiscally strong from metal exports (half of gov. revenues), top per capita exporters, fiscally able to make state. Also constitution of 1840; powerful centralised president to maintain order and stability. Liberals still kept similat structure, lasted constitution till 1925 Military and Church: military under control. Civic guard prevented coups. Won war against peru in late 1830s. Church avoided state conflicts unlike in Mexico and Columbia But limited reach in south and west. Centralised gov --> resource wealth --> funds state apparatus Exports --> wealth --> powerful state

Answer 20

Economic Geography: Independence broke colonial ties to silver mines to upper Peru. Buenos Aires focused on salted beef, hides, wool. Buenos Aires and provinces diverged as interior provinces suffered from no silver trade. Buenos Aires monopolised that trade and port; wouldn't trade wealth. Political and Fiscal: Huge political imbalance between buenos Aires and interior provinces. Hindered national unity and fiscal integration; Buenos Aires disproportionate power. Juan Mandel de Rosas governor of Buenos Aires 1835-52; opposed national constitution, delay in consolidating national state. Created well funded military for Buenos Aires, stability limited to Buenos. Colonial trade disruption --> Buenos Aires Economic Dominance--> reluctance to unity --> delayed national unity Refusal of bueons aires to ratify 1853 constitution. Shift. Uruguary and brazil overthrow rosas.

Answer 21

Geography: Bad Andes terrain --> huge transport cost --> weakened unity and central gov. authority Political: Made it hard for Bogata to rule, esp as british imports undercut local produce. Gold exports but didn’t make much money for state --> state short on cash and relied on bad taxes Liberal and Conservative church split similar to Mexico from the attempt of centralised constitution by Bolivar in 1820s Military wasn't predatory or interventionist. Civil Wars mainly with Church (1876 Civil War over education) Profound persistence of the terrain.

Answer 22

US colonies in 1700; tradition of local say in governance, clearer property rights, experience with representative assemblies --> formed federal structure with checks and balances for credible commitments Limit rent seeking - manipulating political system for advantages Spanish Colonies: centralised extractive colonial systems; less secure property rights, unsmooth transition, serious instability and strongmen with no consistent credible commitments. Arg 3: secure political order allowed for economic growth.

Answer 23

Lost Decades of Post-Indepence (1820s - 70s): lack of clear borders and huge military spending (77% of budgets). 1. Caudillismo (strongman rule) 2. Capital Flight 3. Fragmentation - Bulk Spanish colonies broke up into countries, hindering EoS and productivity. - Protectionism became the norm; LA had highest tariffs globally. LA no social group pushing for growth, wars weakened emerging buisness class. Stalemate. LA 1860s; liberals won. Decisive break, land reforms, church and state separation, breaking state monopolies. Achieving political stability through compromising with economci groups. Modern legal codes, reform, banking codes, tariffs. Growth followed 1.8% from 1870 - 1913. Fuelled by FDI. But came with exclusion of indigenous and poor; lacking universal suffrage.

Answer 24

Huntington (1968), over 70 coups occurred between 1820–1920 in Latin America. LAPOP (Latin American Public Opinion Project) data shows that countries with 19th-century caudillo legacies (e.g., Venezuela, Paraguay) have lower trust in political parties and higher support for military intervention even today LA had 0 capita growth from 1820 -70. Wages rose more sloly than GDP per capita in 1870s growth

Answer 25

Comparing LA to other global companies builds case of idea of lost decades not being so true. Implied average annual growth rate of 0.5% from 1820 - 1870. ; not really a lost decade. Chile , Uruguary acc compared well to US growth. But comparison is unfair due to different economic places. Should compare to other similar places. Kept pace with european periphery, faster than asia and africa

Answer 26

Consistently high tariffs for whole century Initially from need for cash then for Belle Epoque maintained then argued it was a retaliatory measure and then deliberate ISI Low colonial tariffs --> independence --> weak administration and wars --> tariffs for easy revenue Export economies --> urban interests gain influence --> tariffs remain

Answer 27

Mexico in 1890s under Lamon Lore tweaked tariffs to help texitles tobacco and improve new industry such as steel and machinery Chile passed a tariff law to pursure industry.

Answer 28

Low tax revenue from administrative capacity Large informal sector; clear pattern from keane that informality means lower % of income tax as tax Reliance on foreign aid or primary resources 2. Gov. action needed for tax (improving tax base etc.) POlitical insts often have low contestability of power (conc. poltiical control), weak checks and balances, culture, staet buiilding, and a weak state LA: export dependence (customs easy), large informal sector, colonial legacy, caudilllismo tradition, lack of checks and baalances, social divisions, historic experiences of inflation and crises

Answer 29

Jenson's research says countries with high natural resource wealth mean tax capacity is much lower; same may occur for aid India income tax didn’t keep up with growth (piketty) reducing revenue. World Bank documented how China increased tax base by increasing levels Where political control is concentrated --> no progressive taxation or public services. Expect opposite in democratic powers (AJR) Swedishh 1500s example? Mapping land properly Peformance based pay for tax collectors in Pakistan?

Answer 30

Fiscal Capacity stunted by elites LA underdeveloped even comapred to EAsia. elites stop tax and spending to maintain status quo --> political participation much lower in LA. Democracy exists but didn’t change de facto power Democracy correlation with tax significantly weaker with v high income inequality

Answer 31

Engermann & Zolt: much longer for land wealth tax in LA than USA World Bank Report: Authoritarian took much longer to do spending as it could empower rivals LA to rest of world --> underdeveloped. 8.3% less of their GDP in total taxes, 6.5% in income. Also a large gap with East Asia

Answer 32

Liberalism was a face; lacked power to challenge oligarchs Brown Areas: Central Authority weak, lots of people in LA Lack of external wars like in EU. Mismatch between expectations and weak initial capacity. 4 Dimensions of State Strength: 1. Territory Allocation; can state control land 2. Economic Prosperity; can state effectively tax 3. Infrastructure Power: does state have organisational capacity to regulate and build Symbolic Power: respect and loyalty LA lacked all Chaos post independence --> survival and world economy for revenue --> compromises with local elite --> state lacked muscle and infrastructural power --> no shared citizenship and national identity.

Answer 33

1. Territory Post independence had ttons of internal conflicts (spain threats and internal competition, caudillas) 1860s managed to a degree, 1900s had nominal control but administrative reach weak 2. Ecnomic Capacity Indp. Wars costly and ruined trade routes, followed by civil wars Slow rail road development in spain and LA; transport sttill weak; thus abililty to tax was worse. 3. Infrastructure Power Gaining territory by compromises made building real infrastructure much harder; gov. jobs done through cliientism. Huge resistance in effective bureaucracy 4. Symbolic Power Lacked shared unity; encipient nationalism devoid of social content --> 'fictious liberalism' big gap between ideals and realities. Failure to bridge gap meant state wasn’t liked by many

Answer 34

Maintained high tariffs, had a varying impact dependent on area - Zones benefitted differently Temperate Lowlands: Land intensive exports --> drove up land values --> land owners win. However European immigrants meant labour wages suppressed --> globalisation worsened existing inequalities in the temperate low lands Tropical Lowlands; worse terms of trade --> small elite reinforced Highlands. Mixed Picture; areas w high endowments saw FDI with unequal growth. Areas lacking saw no FDI

Answer 35

- Early 1800s shipping a ton of goods England to keto (landlocked, in Andes) could cost 21 pounds, only 2 pounds to Buenos Aires Experienced significant boom in 1820-90: 2x terms of traded, yet maintained high tariffs

Answer 36

Cycle is More money gov had --> more railways --> more money gov. has Late 1880s Argentina Brazil had large railway. Geography represented barrier. Institutional stability needed for huge long-term investment and market couldn't coordinate this --> gov had to provide big push. Other side is big grab where funds for this went to rent seeking. Study suggests that both big push and grab happened. Was gov funding a benefit? Vital due to market failure. Big grab, but benefits so important Short-term shocks could have very long shadows disrupting the cycle

Answer 37

Numbers found that two way relationship did exist. Limited initial revenue was a very strong barrier to this. Short term shocks damaged this. Could derail railway expansion for a long time. Brazil's guaranteed dividend policy, but very high social rate of returns so high By ww1, often LA countries got 70% of revenue from export import Ecuador railway development after cocoa rose. Peru railway development fell after guano reserves fell. Small but sustained improvements better. Columbia 3% increase in capacity for revenue could've reached Argentina railway density.

Answer 38

Roots of high inequality come from colonial legacy; authoriatian states, no public goods, elitist extraction Distinction between settler (argentina, uruguay) and lsave economies (brazil), settler saw initial less inequality. Southern Cone grew through extraction of resources unlike technological change Railroads --> cheaper shipping --> global demand for land intensive products --> land rents rose faster than wages Resource basesd systtems --> commodity lottery -> depends on demand for products e.g. Argentinian meat, brazillian coffee, chilean nitrates --> globalisation potential to reinforce rather than reduce inequality

Answer 39

Consistnetly showed increase in Gini coefficient in southern cone from 1870-1910 Gaps between top and bottom 10% also showed widening Southern Cone economies grew sig. but varied a lot; Argentina faster than EU, US even faster. Inequality also rising Brazil census data shows population and economic activity towards dynamic south and south east with coffee IPF analysis shows inequality had a capacity for even higher than 1870

Answer 40

2 main stages WW2 and after the war up till 1980; high growth period and average annual GDP of about 5%. Biggest jumps in productivity Huge social shifts: population tripled, and urban share went up to 2/3 Industrialisation Periods: 1. Pragmatic ISI Post WW2 2. Classical up to Mid 60s; consicouns planniing but fx struggles 3. Mature mid 60s up to 80s. Strategies ddiverge around export or import focus ECLAC provide intellectual firepower for this idea; gave ISI a strong rationale. Legally involved in policy and integration --> led to Latiin Ameriica Free Trade Association inequality stayed stubbornly high Big Downside: LA share of global trade fell sig. BoP crisis and a laack of Fx, inflation (brazil, southern cone linked ot budge deffiicitts espec after oil shocks in 70s LA tech gap maintained the same with little innovation esp comapred to SE

Answer 41

“The repeated boom-and-bust cycles of commodity exports created policy frameworks oriented around fire-fighting rather than pre-emptive institutional building.” — Bértola & Ocampo (2012) * Slow period in depression 0.6% annual * Then goes to 5% Population 100 - 349 million Urbanisation 32 --> 65% Textiles, food, cement, oil refineries ---> cars. Export as a % of GDP fel State development bank in Chile Columbia and mexico in 1830s LA manufactured exports grew as a share

Answer 42

Industrialisation by stages; ending with making consumer goods --> hopefully make backward linkages However EU, these linkages started before or during it.; LA was less dynamic Gerschenkron says Industrialisation in late times needed a big push. LA late late only focused on consumer goods, less capital and less institutional backing. Initial phase (exuberance) led to easy success and fuel unrealistic expectations Led to exhaustion, replacing easy goods is easy, but replacing intermediate and capital goods is harder.. Stuck with high cost consumer industries dependent on importing capital --> worsens BOP Barriers to backward linkages: Economical: - Industrialists worried about reliance, location and quality of local imports - No incentive to go after local as input imports have low tariffs - Technological strangeness; diff knowledge base, skills Politically: - Immediate interests may have been to status quo rather than industrialisation - Gov. planners (technicos) pushed harder for backwards linkages e.g. Brazil forced this compared to Mexico

Answer 43

Prebisch 1949 --> 60s talking about how LA had an industrial sector with no specialisation and super protected Brazil in 50s shows Gershenkron big push; big investment in steal and capital goods. Staged Sequential Industrialisation --> resistance to innovation, exporting and backward linkages Happened w/o social upheavel. New industrial class weaker --> hurt export promotion efforts and disappointment w outcome

Answer 44

Cycle of populism. High income inequality -- > intense political pressure --> improve working class income --> poor policy choices 'Populist policy cycle' which starts well and ends badly Urbanisation --> urban based political leaders (peron) --> appealed directly to urban class (ISI, industrilisation) --> urban centric populist redistribution Preferred distribution rather than true redistribution like land reform and taxes.

Answer 45

expansioanry fiscal policy --> boosts demand for no export sector --> pushes up nominall wages --> import the same so real wages increase as price of tradeables rise --> export sectors less valuabale --> exports fall and import demand rises --> trade deficits --> fx reserves drained --> BoP crisis and devaluation --> imports more expensive and hammers real wages --> new floating fx rate --> sustained high inflation --> financing through printing money and other extreme attempts

Answer 46

1. Argentina; 1940s under Juan Peron Expansionary polic, fixed fx, protectionism for urban workers -> urban wages up 62% in 3 years By 48 farm output falling, inflation and bad rate --> economy contracted Peron admitted to overspending

Answer 47

Strong urban support --> huge expansionary fiscal policy --> GNP grew 9% in 71, 17% increase in real wage in same year By 72 growth negative, inflation 152% and no reserves. By 72 inflation at 500% and amlitary cou

Answer 48

Suspended foreign debt payments, froze fx, increase urban wages --> 8% GDP growth in 86 , real wage increase 20% Trade defficit, no reserves --> hyperinflation riising 100% in one month Sept 1988

Answer 49

Delegative Democracies (DD) - meet basic checklist (elections, sufferage) but de facto power differs to representative democracies Difference comes from colonial legacy and socioeconomic problems that democracies inherit ; argentina, peru, Ecuador, Bolivia Delegative form is enduring and sticky; economic crises reinforce it

Answer 50

DD presidents try and change terms to allow for re election e.g. Garcia in Peru. DD success is about the person but the institution. Modern DD traced to old caudillismo, populism, strongmen rulers Conditions of democratisation much more different in post WW1 in Europe compared to LA in 1980s, transitioning in hyperinflation and stagnation. --> sense of urgency Long crises create a prisoners dilemma --> undermines societal trust as everyone looks out for each other

Answer 51

Language by presidential candidates; outsiders and saviours --> once elected --> ignore legislature and judiciary Argentina Peru show how economic expansion then harsh austerity Huge sweeping reform; crusado plan in Brazil Urgua and Chile; stronger institutions constraint presidents --> incremental policy (Uruguay President Sanguinetti pursued incremental economic policies, negotiated with congress, same with Chilke under President Alywin) Only Uruguay and Chile revived earlier political insitutions such as congress to give sonsitutional restrictions and create checks and baalnces. Even successful presidents like Sanguinettti and Alywin failed to promote constituional reform for relection. Incumbents never lasted past more than one cycle.

Answer 52

Initial shift to ISI was reactive to global depression. Economic outcomes in LA defined by the variation in political economy. Moving away from ISI pre-70s was tough for LA due to resistance from industrialists benefitting from ISI --> ECLAC, Growth of Industrialists, Urban Class growth all gave power to ISI Vested interests against EOI: ECLA interests, industrialists, politically easy to keep domestic consumption and jobs happy. Compared to East Asia (SK and Taiwan), colonialism and war weakened the dominant classes there -> led to autonomous powerful states --> could push EOI with less internal opposition --> symbiotic state and industrial rs East Asia greater reliance on US --> aligning with US open economy + received aid through Cold War Pressure Large doemstic markets --> less pressure to look outside for growth.

Answer 53

For 6 main countries, industrial output jumped but imports dropped as a % of GDP 1929 - 47 Political Coalitions shifted in response to fallout; not uniform. Highlights relations between industriialists, elite, new government Manufactured exports for agrentina and brazil succeeded in 1940 but didn't go into globla markets Compare share of manufuactured exports, lagged really behind SEA Argentina stog go cycle under Peron for ISI and failing ISI determined by political elites interaction

Answer 54

1. US actively promoted free market rules e.g Chile under authoritarian Pinochet Chicago Boys implementing Friedman monetary -- US support for regime and Friedman. --> Tied to Cold War and US fear of socialist regimes 2. Neoliberal reforms had -ve social and economic reforms e.g. deep recession, high unemployment in Chile under Chicago Boys --> worsening inequality and rising debt Dismantling of earlier dev. Models - rapidly tearing these down left them vulnerable (global market swings, capital flight) --> foreign investors prioritised US funding training of LA economists at Chicago. Influence of IMF and World Bank (conditions for structural adjustment programmes - fiscal austerity)

Answer 55

1. Security used as justification, but claims seem thin. 2. Money; protecting US companies, saving capitalism 3 of 41 linked to trade 3. Main driver: Domestic Politics Supply: How easy it is to intervene Demand: Domestic Politics, Global Strategy; US wanted to project power globally. Domestic political wins was easy. Cold War; wanted reliable allies instead of democratic. --> political priosners iin LA exceeded in Europe.

Answer 56

Political (Kahler's Hypothesis): 1. Ensuring Stability of System; powerful states leaning on borrowers, lenders of last resort 2. Regulation: supervising banks to protect savers 3. Adjustment: policy changes to service debt. Ability and willingness is also political. Hard Regimes; political muscle to push through austerity whereas soft regimes lack it. Points to domestic politics as resistance to fundamental reforms e.g. US only forced into action through threat to their own system, scope only limited to crisis management rather than fundamental reform. North tried to stop LA debtors forming a coalition

Answer 57

1898 - 1994 --> 41 successful governments in LA 1 governments every 2 years for 100 years Kennedy didn’t think missiles in Cuba didn’t effect the nuclear balance despite Khruschev. Castro regime better Reagan used soviet missiles and domino effects in Nicaragua. Most experts dismissed. Nicaraguan gov. even offered to sign treaty. Lyndon Johnson Dominican Republic; scared of republican criticism of losing it. 1920s; Nicaragua revolt was linkted to mexican soivet plot agaisnt the Panama canal; NYT wrote about Bolshevik wedge. But Russia lacked diplomatic relations. Chile 73' where US policies worsened economic problems to destabilise disliked gov.

Answer 58

Politics within debtors: Intense pressure from IMF vs domestic political collapse --> couldn’t have united front Mexico; established authoritarian system PRI and technocrats (hard) --> executed reforms Argentina: new democracy, huge pressure from unions, anger on public policy (soft) ---> resisted adjustments Peru banks tried to force adjustment on their own in the 70s but failed despite flashing warning signs. Soft authoritarian regimes used finance to buy social peace and avoid reforms Mexico 82 collapse led to FED bridge loans and CB, G5 emergency cash, IMF used structural adjustment and pressured involuntary lending to private banks.

Answer 59

Hypothesis: Some wins (lowered inflation, higher exports) economic growth was low and unstable --> social outcomes disappointing and even got worse Northern: Manufacturing for US, high import content Southern: Primary production, trade within LA Lacked stable FDI; boom and bust. Social spending rose 10 --> 14%. Modest improvements, continued too 80s. Access to education same, same with coverage Labour: rising unemployment. Big jump in informal sector employment --> worsened inequality Poverty rate higher than 1980s. Chile and Uruguay better at translating growth into poverty

Answer 60

Slump from 98 - 2002 ; per capita gdp shrank by 3.6%. Growth rate was half pre debt crisis overall xport volumes grew by 9% and FDI increased. But export sectors didn't have any backward linkages nor technological links. Labour productivity stagnant. Before debt was growing at 2.5% per year. Privatised gains didn't diffuse --> economic dualism. Labour: rising unemployment. Big jump in informal sector employment --> worsened inequality Poverty rate higher than 1980s

Answer 61

Fernando Fajnzylber called this the "modernization of backwardness" — modern industries emerging without transforming the broader economy. In Mexico, NAFTA liberalization led to the expansion of the maquiladora export sector, but domestic SMEs were crowded out, leading to a two-track economy.

Answer 62

In Bolivia, SAPs under the “shock therapy” model reduced inflation drastically, but malnutrition and unemployment among indigenous populations spiked.

Answer 63

Scholarly support: Miguel Centeno (1997) referred to this process as the "death of the state" in Latin America — states became administrators of austerity, not engines of development. R&D investment remained below 0.5% of GDP on average across Latin America, compared to over 2% in East Asia.

Answer 64

China isnt really challenging LA position as primary vs manufactured goods; but potential along the road. Not much sig. fdi because of China. Sometimes even positive link. But China is capturing more of the FDI, but attract different sources and no evidence of trade off. Mexico different as it is manufacturing based; commerical competiton and china takes up a large compeittion w FDI. Shifting from electrical FDI. China's rise is reinforcing trade deficits and primary specialisation Columbia China deficit 10x total deficit Mexico; chinese manufacturing exports faster than any other country

Answer 65

Rise in 80s and 90: External shocks + austerity--> regressive impact, sometimes oligarchs did even better Market orientated reforms: Reforms had small regressive impact (liberalisation, labour) 90s: Technological use made high skilled workers more in demand, reduce demand for less skilled labour --> worsening inequality. Less skilled workers also had less bargaining power. Fall in 2000s Decline across wide range of countries not just left leaning gov. or because of commodity boom Confluence: improved macroecnomic stability, improved growth and job creation, expansion of basic education from 80s and 90s, shocks of 90s subsided Policy: active labour market policies (improving minimum wages, labour unions), progressive social spending (Conditional Cash Transfer) CCT's provide direct cash payments dependent on sending kids to school, health checkups - very well targeted to poorest houses.

Answer 66

6 phaes of inequality: Opening up saw sig. inequality. 2001 crisis again Post 2002 inequality fell towards low intensive sectors, strengthening labour instituions, emergency programme spending

Answer 67

Didn't see ihigh inequality in 90s as tariffs alr low and labour insts. Consistent steady fall in gini coefficient, income of poorest 10% grew faster than top 10%. Narrowing of wage differentials across economic sectors and geographical Economic transfers and increasing coverage Minimum wage increases and CCTs. Earlie expansion of 80s paid off

Answer 68

Saw same inequality increase in 90s liberalisation (skill premium, labour structure) After Nafta, gini went to 1980 level Progressa; CCT programme. Happened w even slow growth. Income growth fasterst for bottom 10% Changes in hourly wages and more equal education distribution.

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