Adjustment and Democracy in Latin America

Abstract

The U.N. Economic Commission for Latin America (CEPAL) has coined the phrase lost decade to capture the magnitude of the socioeconomic retreats suffered by the region during the 1980s. The significance of the setbacks becomes clear when comparisons are made both to the rates of growth, income, trade, and other indicators experienced by Caribbean and Latin American countries between 1960 and 1980, and to the performance of the economies of the industrialized nations of the Organization of Economic Cooperation and Development (OECD). The causes of the economic -- identified by CEPAL as the foreign debt crisis -- are multiple and reflect external conditions as much as internal and structural factors. With regard to the international arena, it is first worth noting that the recession in the industrialized economies in the early 1980s had a severe impact on the developing nations as of 1982. Subsequently, the gradual recovery of the core economies after 1983, together with the process of reordering the world economy, substantially altered the international context of the Latin American and Caribbean economies. Based on the scientific-technological revolution, a global productive restructuring has taken place in the past few years and has affirmed the supremacy of high-technology, scientifically advanced, industries in production. The economic paradigm emerging from the so-called Third Industrial Revolution implies drastic changes in the productive process: new ways of organizing production, the deployment of trendy and original processes (such as robotics and automation, or the emergence of new species linked to advances in genetic engineering and biotechnology, etc.), the development and use of new inputs (basic products) in the elaboration of modem industrial designs, and the increasing shift from labor- and material-intensive production to knowledge (skilled intelligence)-intensive production. The productive reorganization is connected in turn with a new international division of labor that corresponds to the requirements for production and circulation of goods and services generated in the industrialized economies based on technological modernization and innovation. Today, research and development for cutting-edge industries -- most notably, microelectronics, biotechnology, and the production of new materials -- are widely dispersed throughout the advanced countries. As a result, developing countries are faced with the challenge presented by such technological and productive changes to their internal processes of accumulation and reproduction. In the context of these accelerated changes, the economies of Latin America and the Caribbean have experienced a significant decline in their international productive competitiveness. Likewise, considering the development of new materials and inputs, the region has also suffered a relative devaluation of its traditional exports -- agricultural products and primary materials. Historically, our countries specialized in the export of goods which today, in the framework of world productive restructuring, are the least dynamic in international trade. CEPAL notes that, according to the medium- and long-term projections made by multilateral organizations, it is impossible to expect a significant rise in the prices of the majority of primary products, except for fuels. Between 1980 and 1989, for example, the real prices of the area's 27 basic export products -- fuels included -- declined by 25% (CEPAL, 1990: 24). Although the volume of primary exports from the region actually increased substantially in the 1980s, such increases did not compensate for the general decline in the value of exports. This problem was exacerbated by changes in consumption patterns in the industrialized nations and by the replacement of some traditional tropical food products by new products (such as the replacement of cane sugar by fructose extracted from corn and yucca). …