MNCs and Structural Adjustment in Latin America: Lessons from the Debt Crisis

In the backwash of the debt financing of the 1970s and the world-wide recession of the early 1980s, many developing countries, particularly in Latin America, ran into serious debt-servicing difficulties. To cope with this debt crisis, radical policy changes were introduced. These ‘structural adjustment programmes’ generally included deregulation and privatization of the economies, and opening them to external markets and competition.1 The shift from inward to outward orientation has involved shifting production from domestic to export markets. In this study, we examine the extent to which a number of heavily-indebted Latin American countries have redirected their sales of manufactured goods to world markets and the role of multinational corporations in this shift. We are particularly interested in investigating whether affiliates of multinational firms are better equipped to redirect their sales than local firms in developing countries.2