ABSTRACT
Structural reform in Latin America and the Caribbean was one of the main determinants that led to large amounts of Spanish foreign direct investment. Latin American countries had high rates of rural underemployment and urban unemployment, which would have made the adoption of labor-intensive industries more reasonable. Two alternative approaches to the crisis were suggested: the neo-liberal, orthodox or "Washington approach", which called for market-oriented reforms; and the pragmatic or heterodox approach. Colombia, Chile, and Mexico were the most successful cases in coping with the crisis in the 1980s. Between W.W.II and the mid-1950s, the Chilean governments pursued import-substitution policies as a development strategy to cushion the national economy from international shocks and capital shortages. The perceived failure of the Nuevo Trato raised spread criticism among some of the most powerful sectors of Chilean society. In 1990, Fernando Collor de Melo embarked on a program of economic liberalization, reducing trade barriers and privatizing state-owned firms.
