Structural Reforms in Latin America: What Has Been Reformed and How to Measure it (Updated Version)

Abstract

This paper discusses the major changes that took place in the key areas of structural economic policy in Latin America between 1985 and 2009 and presents a set of indexes that attempt to measure how favorable trade, financial, tax, privatization and labor policies are for the free working of markets. On a scale from 0 to 1, the average index for all the countries and all the structural policy areas increased from 0. 39 in 1985 to 0. 6 at the end of the 1990s, and to 0. 65 at the end of the 2000s. The structural reforms have been far-reaching, especially in the trade and financial areas, and to a lesser extent in the areas of taxation and of infrastructure privatization. The indexes can be used to make comparisons over time between areas and between countries. However, they are not adequate for measuring structural policies in Argentina and Venezuela in the 2000s, since some of the heterodox policies that these countries have adopted are not covered by the indexes.