ABSTRACT
This chapter examines why most Latin American states abandoned strategies of inward-looking, state-led industrialisation during the 1980s and 1990s, and the social and political consequences of this dramatic policy shift. The catalyst for this change of heart was a debilitating crisis that began in 1982 during which Latin American countries struggled to meet payments on crippling foreign debts. Changes in policy were justified by a new ‘neoliberal’ consensus that formed around ideas restating the main themes of economic liberalism, the central emphasis of which is the free market. Neoliberalism transformed the character of the Latin American state that had evolved alongside industrialisation, and reconfigured the relative power of interest groups such as business organisations and trades unions. As neoliberal reforms also appeared to coincide with the end of military governments, they were often, albeit questionably, associated by policymakers in the developed world and financial institutions with democratisation (see Chapter 4). Initially, neoliberalism gave the political right a new and, at times, even popular banner to rally behind in the democratic era; more recently it has provided a strong focus of ideological opposition for Latin America’s revived left (see Chapters 12, 16). It has thrown open Latin America’s economies to flows of trade and investment from across the globe, deepening the region’s incorporation into the momentous process of globalisation that has accelerated since the end of the Cold War. There is considerable interest in the social and political impact of globalisation upon Latin America because the region’s fate has always been so closely tied to developments in the international economy. Globalisation has significant implications for the nature of the state, the character of political competition, inequality and culture. Regional integration, the growth of foreign investment and even the new opportunities offered by globalisation for Latin American companies to develop multi-national characteristics all have consequences for national sovereignty.
