General Comments:

The onset and aftermath of the debt crisis during the so-called "lost decade" of the eighties led many countries of the region to abandon the inward-oriented, state-led, development model that had been in place for the better part of four decades. In its place was substituted an outward-oriented model heavily reliant on market forces; it was heralded by the international financial and economic community as the "new" driving force behind economic growth and development in the region. This process of market-led growth and development has been implemented to the greatest extent in five major countries of Latin America: Argentina, Brazil, Chile, Mexico, and Peru. This course, therefore, gives a balanced presentation of the economic, social, and political impact of the market-oriented reforms being implemented in these strategically important countries of the region. The lessons learned from the relative successes and failures of the privatization and liberalization movement in these major economies of the region should prove to be invaluable for other countries that are in the process of adopting and implementing similar market-oriented reforms.

The course is divided into five sections. The first section examines the historical and institutional factors responsible for the extensive inequality and poverty in the region, as well as the rationale for state intervention. Section 2 discusses the strategy and economic impact of Import-Substitution Industrialization (ISI) in the aforementioned countries during the post World War II period. The third section examines how the economic and distributional imbalances generated by the pursuit of ISI led to the rise of populism in these countries during the seventies. Particular emphasis is placed on how populist policies affected the economic structure and social landscape of these countries, and what internal and external factors led to their ultimate demise. Section 4 turns to the 1980s debt crisis and its economic and social aftermath, particularly how IMF-sponsored stabilization and adjustment policies have affected key economic variables such as the rate of capital formation, real wages, the rate of inflation, and employment levels. The last section discusses the nature, sequencing, and political economy of market-oriented reforms such as trade liberalization, financial deregulation, and public sector reform. Various case studies and economic criteria are employed to assess concretely the economic and social impact of privatization and deregulation in key industries and sectors of these countries.

Course Requirements:

During the semester a mid-term and final examination will be given on dates announced below. Students will also be required to write short papers for class discussion on a regular basis (at most 4 papers, 3-6 typed pages each). In addition to these assignments,  problem sets will be given on a regular basis to determine whether students are able to apply economic concepts to the development p  Finally, each member of the class will be asked to write a typed  term paper of approximately 17-20 pages (excluding bibliography) on a set of economic problems and/or social issues directly related to the problem of economic stabilization and structural reform in the countries of Latin America.

The schedule of exams and papers, as well as the assignment and distribution of weights, is given on the following page:

Assignment            Weights (%)                   Dates

The "fudge" factor will be determined on the basis of class-participation and attendance. My office is located in WM 312 and I will be available for consultation on M: 10:00-11:15, W: 10:00-11:00, and by appt. I will not accept telephone messages unless they relate to missing a class, exam, or class assignment.

Texts: A set of Reading Materials (RM) (available in the Dept. of Economics for a cost of $15.0) has been prepared for this course. You are also strongly encouraged to purchase a paperback by Patrice Franko entitled,   The Puzzle of Latin American Economic Development   (New York: Rowman & Littlefield Publishers, Inc., 2003).

General Schedule

I. Inequality, Poverty, and the Origins of State Intervention (approx. 2 weeks).

.Suggested Readings:

Bulmer-Thomas, The Economic History of Latin America Since Independence. New York: Cambridge University Press, 1994, chps. 1-3.

Buvinic, M. and J.Mazza, Social Inclusion and Economic Development in Latin America. Washington, D.C.: IDB, 2004, Chps. 1-3.

Cardoso, Eliana and Ann Helwege, Latin America’s Economy. Cambridge, Mass.: The MIT Press, 1995, chps. 2 and 3.

Easterly, William, The Elusive Quest for Growth. Cambridge, Mass.: The MIT Press, 2002, chp. 1.

Hoffman, Andre A., The Economic Development of Latin America in the Twentieth Century. Northhampton, MA: Edward Elgar, 2000, chps. 1-3.

Randall, Laura., The Political Economy of Latin America in the PostWar Period. Austin, TX: The University of Texas Press, 1997, chps. 1 and 2.

Ramirez, Miguel D., Mexico's Economic Crisis. New York: Praeger Publishers, 1989, Chp. 2.

Skidmore, Thomas E., and Peter H. Smith, Modern Latin America, third ed. New York: Oxford University Press, 2005, Chps. 2 and 12.

II. ISI and the Drive Toward Industrialization (approx. 2 weeks).

Suggested Readings:

Bulmer- Thomas, op. cit., chp.

Cardoso, Eliana and Ann Helwege, Latin America’s Economy. Cambridge, Mass.: The MIT Press, 1995, chp. 4.

Easterly, op. cit., chp. 2-3.

Frieden, Jeffry et. al., Modern Political Economy and Latin America. Boulder: Westview Press, 2000, chps. 14, 15 and 16.

Green, Duncan, Silent Revolution: The Rise of Market Economics in Latin America.   New York: Monthly Review Press, 2003, chps. 1 and 3 

Ramirez, op. cit.: chp. 3.

Randall, op. cit., chps. 3 and 4.

Skidmore and Smith, chp. 3

Taylor, Alan M., "On the Costs of Inward-Looking Development: Price Distortions, Growth, and Divergence in Latin America, " The Journal of Economic History,

Vol. 58, No. 1., March 1998, pp. 1-28.

III. The Rise and Demise of the Economics of Populism (approx. 2 weeks).

Suggested Readings:

Bulmer-Thomas, The Economic History of Latin America Since Independence. New York: Cambridge University Press, 1994, chp. 10.

Cardoso, Eliana and Ann Helwege, Latin America’s Economy. Cambridge, Mass.: The MIT Press, 1995, chp. 8.

Fitzgerald, E.V.K., "The Financial Constraint on Relative Autonomy: the State and Capital Accumulation in Mexico, 1940-82," in Carlos Fortin, ed., The State and Capital Accumulation in Latin America. Pittsburgh, PA: The University of Pittsburgh Press, 1985.

Larrain, Felipe, and Patricio Meller, "The Socialist-Populist Chilean Experience: 1970-73," in Rudiger Dornbusch and Sebastian Edwards, eds., The Macroeconomics of Populism in Latin America. Chicago: The University of Chicago Press, 1991.

Lewis, Paul H., The Crisis of Argentine Capitalism. Chapel Hill: The University of North Carolina Press, 1990, chps. 7-9.

IV. The Debt Crisis, Economic Stabilization, and Austerity (approx. 2 weeks)

Suggested Readings:

Arellano, Jose P.,"Economic Growth, Fiscal Policy, and Social Impact in Chile,"in Andres Solimano et al., Distributive Justice and Economic Development: The Case of Chile and Developing Countries. Ann Arbor: The University of Michigan Press, 2001.

Diaz-Alejandro, Carlos, "Good-Bye Financial Repression, Hello Financial Crash," Journal of Development Economics, Vol. 19, No. 1-2, 1985, pp. 1-24.

Dietz, James L., "Debt and Development and the Future of Latin America," Journal of Economic Issues, Vol. 20, No. 4 (December 1986): 1029-1051.

Ffrench-Davis, Reforming the Reforms in Latin America. New York: St. Martin's Press, Inc., 2000, chp. 4.

Green, Duncan, Silent Revolution: The Rise of Market Economics in Latin America. New York: Monthly Review Press, 2003, chps. 2 and 3.

Petras, James and Morris Morley, Latin America in the Time of Cholera. New York: Routledge, 1992, chps. 1 and 2.

Ramirez, Miguel D., "Stabilization and Adjustment in Latin America: A Neostructuralist Perspective," Journal of Economic Issues, Vol. 27, No. 4 (December 1993): 1015-1040.

V. Structural Reform, Privatization and Foreign Capital (approx. 3 weeks).

Suggested Readings:

Agosin, Manuel R., "Trade and Growth in Chile," Cepal Review, No. 68, August 1999, pp.79-100.

Ayres, Ron, "The Economics of Privatization and Regulation: the Brazilian Experience 1990-94," Review of Political Economy, Vol.8, No.3, 1996, pp. 303-324.

Baer, Werner and Donald V. Coes., "Privatization, Regulation and Income Distribution in Brazil," The Quarterly Review of Economics and Finance, Vol. 41, No.5, 2001, pp. 609-620.

Birsch, Melissa and Jerry Haar, The Impact of Privatization in the Americas. Boulder: Published by the North-South Center Press at the University of Miami, 2000.

Ffrench-Davis, op.cit., chps. 2, 3 and 5.

Hanson, Gordon H., "Antitrust in Post-Privatization Latin America: An Analysis of the Mexican Airline Industry," The Quarterly Review of Economics and Finance, Vol. 34, Summer 1994, pp. 199-216.

Ocampo, Jose A., Beyond Reforms: Structural Dynamics and Macroeconomic Vulnerability. Palo Alto, CA: Stanford University Press, 2005, chps. 2 and 4.

Parker, David and David Saal, eds. International Handbook on Privatization. Northhampton, MA: Edward Elgar Publishing Limited, 2003, chps. 10, 11, and 13.

Ramirez, Miguel D.," Foreign Direct Investment in Mexico: A Cointegration Analysis," The Journal of Development Studies, Vol. 37, No. 1, October 2000, pp. 138-162.

Ramirez, Miguel D., "Economic and Institutional Determinants of Foreign Direct Investment in Chile: A Time-Series Analysis, 1960-2001," Contemporary Economic Policy, Vol. 24,

No. 3, July 2006, pp.459-471.

Rodrik, Dani, "Why is there so much economic insecurity in Latin America?" Cepal Review, Vol. 73, April 2001, pp. 7-30.

Rodrik, Dani, The New Global Economy and Developing Countries: Making Openness Work. Washington, D.C.: Overseas Development Council, 2000, chps. 2-4.

Stiglitz, Joseph E., "Whither Reform? Towards a New Agenda for Latin America," Cepal Review, Vol. 80, August 2003, pp. 7-38.

Taylor, Lance, After Neoliberalism: What Next for Latin America? Ann Arbor: The University of Michigan Press, 1999, chps.1, 2 and 4.