ABSTRACT
This chapter reviews the divergence in the experiences of inflation and stabilization between East Asia and Latin America during the postwar decades. It also reviews the reform of trade policies and key institutions in the East Asian countries that helped them establish a sustainable pattern of economic growth and which led to the perpetuation of the vicious circle of balance of payments crises, persistent inflation, and sluggish economic growth. The chapter examines the interactions between export growth and domestic price stability in selected East Asian and Latin American countries during the decade or so before the first oil shock. It discusses the consequences of different policy responses to external shocks in the 1970s between the East Asian and the Latin American countries, which led to the further divergence of their economic conditions. The chapter provides a brief commentary on the latest stabilization efforts in Argentina, Brazil, and Bolivia.
