ABSTRACT

This chapter focuses on the Latin American development strategy in the period leading up to the Global Financial Crisis (2003-7) and places it in a historical context and in the light of Prebisch's old, and still relevant, concern with the limitations of primary export specialization. It also addresses Latin America's growth trajectory in the post-crisis period. The chapter analyses the current economic performance of Latin American economies using a demand-driven approach, and more specifically the financial-balance approach. It examines the performance of the external sector and of remittances and financial flows, respectively. The chapter draws preliminary policy implications. At the regional level, the improved external trade performance in the aggregate for Latin America and the Caribbean for 2003-7 years was feasible mostly as a result of an improved position in the current account. The commodity-exporting countries transferred a flow of resources to the rest of the world equivalent to 4 per cent of their GDP.