2004/05/01 by José Antonio Ocampo
Economics, Econometrics and Finance · #Economic Theory and Policy #Fiscal Policy and Economic Growth #Global Financial Crisis and Policies
paper · doi:10.1257/0895330041371349
openalex publication_date 2004/05/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/29
This paper argues that Latin America's market-oriented reforms, together with increased monetary and fiscal discipline, were successful in bringing down inflation, inducing export growth and diversification, and attracting foreign direct investment. Nonetheless, economic growth was frustratingly slow. Pro-cyclical macroeconomic policies generated, in turn, strong business cycles in the face of unstable access to international capital markets. Higher productivity in leading firms and sectors failed to spread throughout the economy and led to increasing productive sector dualism. Furthermore, despite the democratic dividend reflected in increased social spending and coverage of social services, weak economic performance and additional distributive tensions led to disappointing results in terms of employment generation and poverty reduction. Overcoming these frustrating outcomes would require counter-cyclical macroeconomic policies, open-economy productive development strategies and mainstreaming social objectives into economic policies.