The Contradictions of Latin American Export Promotion: The Growth of Manufactured Exports, Debt, and Deindustrialized Labor

Abstract

The current emphasis on export promotion (EP) in Latin America has formed the basis of a strategy that sought to establish structural reforms and stabilization policies that would overcome economic volatility and destabilizing debt (InterAmerican Development Bank [IDB] 1997). Central components of the package of neoliberal policies involved trade and capital market liberalization that brought down barriers to flows of goods and capital. The privatization of state enterprises and the acquisition of private firms, both under foreign ownership, expanded (Economic Commission for Latin America and the Caribbean [CEPAL] 2003a). Labor market reforms dismantled work contract rules and made the employment decision more flexible (IDB 2004; Weiler 2001). Macro stabilization pushed by international financial institutions promoted tight monetary and fiscal policies with the objectives of containing inflation and government deficits, thereby reassuring foreign creditors that debt was manageable. Less comprehensive efforts at market liberalization had occurred in earlier decades for particular countries. What distinguished the present wave of neoliberal reform after the mid-1980s from earlier country-specific liberalizations was the apparent willingness of many governments under pressure by international financial institutions to make comprehensive and concurrent reforms that affected markets for both tradeable final goods and productive factors.1 One of the immediate impacts of the reform era was to induce a large shift toward manufactured and processed exports that substituted for traditional, primary commodity exports. The resulting shift away from the historic overreliance