Latin America’s Economic Performance Under A Historical Lens: Free Sample Critical Thinking To Follow

A “stable” decline in economic growth and certain prospectus for a powerful rebound represent a certain challenge for the Latin American region with its significant resources and quite moderate growth rates limiting the possibilities of the continent for the flexible maneuvering on the volatile competitive market. From the class it has become obvious that Latin America’s reforms in social and administrative spheres have gained a poor reputation leading to inadequate functioning of market forces (transferring of enterprises in public ownership). Such reforms resulted in a substantial slowdown in productivity growth. The phenomenon of static efficiency vs dynamic efficiency or economy stagnation during the period of “quasi-reforms” at the end of the 20th century do not answer the question of why successful integration into the global economy is not followed by extensive economic growth on the continent (for such economies as Argentina, Panama and Brazil).
It has become obvious during the class that the mentioned paradox can be explained partially by the deceleration of external financial resources, shrinking investments, decreasing of commodity and oil prices (commodity price effect is strongly dominated by China) and pro-cyclical economy in Latin American countries. These factors have inevitably brought to limited production linkages and low employment growth rates, which could jeopardize the social benefits and provoke the middle-income trap problem (constraint development perspectives). Administrative changes and reforms promoted only microeconomic and static changes.
Therefore, in order to make the economy more efficient and dynamic, production cycles should be broadened, linkages created and capabilities expanded. Will it provide the dynamic growth in Latin America? The example of previous decades proved that significant poverty reduction (70 million people raised their GDP per capita) and income improvement was possible (50% or people moved into the middle-class layer). The information from the class revealed that education, infrastructure and healthcare sectors have become the part of the middle class’ social gains in the past decades in Latin America. At the same time, the global financial crisis affected the majority of Latin America’s population, especially the poorest while the fiscal, monetary and credit policies remained weak and volatile.
In order to achieve the sustained growth Latin America policies should cover the issues of external financing, achieve high commodity prices (eliminate China’s influence on commodity prices), provide high investment ratios, and beneficial social/demographic situation even within the recent economic slowdown. Besides, Latin American opportunities for growth rekindling will require a wise combination of monetary and fiscal policies. The governments have to revise the public sector spending as well as an adequate approach to the exchange rates considering the inflation options. Expansion of domestic markets, export diversification and implementation of new production practices combined with close cooperation with Asia (China) may shape a new strategy for the future Latin America economic development.