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Trade policy reform in Latin America and the Caribbean in the 1980s

Author

Listed:
  • Alam, Asad
  • Rajapatirana, Sarath

Abstract

The authors examine the wide-ranging and fundamental trade reforms undertaken in 16 Latin American and Caribbean countries in the 1980s. These reforms have dramatically altered the nature of the trade regimes in these countries and are particularly significant because they were undertaken during severe economic crisis and uncertainty. The authors show that the average levels and the growth rates of imports and exports were substantially higher during the reform period. But imports did not show the surge many had expected, possibly because of low domestic demand. Domestic demand was low because of stabilization and structural adjustment policies, real exchange rate devaluations, and limited access to foreign loans. All the trade reforms were preceded or accompanied by restrictive fiscal and monetary policies and by devaluations of the real exchange rate. The reform period also moved toward the unification and floating of exchange rates. The trade reforms were associated with changes in the political regimes. In most countries, the reforms began under the auspices of democratically elected governments, despite resistance - belying the conventional wisdom that democratic leaders are particularly vulnerable to powerful special-interest groups and are thus less able to sustain reforms. Crucial to the success in implementing these reforms was the boldness with which the governments pursued them. The authors point out that the success of the trade reforms lies in ensuring their domestic viability through macroeconomic stability and growth. A successful conclusion of the Uruguay Round of multilateral trade negotiations would also enable the countries to realize greater benefits from their trade reforms, making them more sustainable.

Suggested Citation

  • Alam, Asad & Rajapatirana, Sarath, 1993. "Trade policy reform in Latin America and the Caribbean in the 1980s," Policy Research Working Paper Series 1104, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1104
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    Citations

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    Cited by:

    1. Ibarra, Alonso Aguilar & Reid, Chris & Thorpe, Andy, 2000. "Neo-liberalism and its impact on overfishing and overcapitalisation in the marine fisheries of Chile, Mexico and Peru," Food Policy, Elsevier, vol. 25(5), pages 599-622, October.
    2. Roe, Terry L. & Gopinath, Munisamy, 1996. "World Trade Issues And Food Security," Working Papers 14425, University of Minnesota, Center for International Food and Agricultural Policy.
    3. Juan Carlos Moreno Brid & Esteban Pérez Caldentey, 2010. "Trade and Economic Growth: A Latin American Perspective on Rhetoric and Reality," Chapters, in: Mark Setterfield (ed.), Handbook of Alternative Theories of Economic Growth, chapter 20, Edward Elgar Publishing.
    4. Michael Henry, 2007. "Formulating Trade Policy in a Small Hydrocarbon‐dependent Economy: The Case of Trinidad and Tobago," The World Economy, Wiley Blackwell, vol. 30(8), pages 1222-1252, August.
    5. Richardson Kojo Edeme & Nelson C. Nkalu & Chisom Emecheta & Sam Ugwu, 2017. "Trade Policies, Exchange Rate and Developing Country's Real Sector Export Performance," International Journal of Economics and Financial Issues, Econjournals, vol. 7(2), pages 601-607.
    6. repec:aer:wpaper:70 is not listed on IDEAS
    7. González-Vega, Claudio, 1995. "Strategic options of commercial policy for Central America: basic guidelines," Oficina de la CEPAL en Washington (Estudios e Investigaciones) 28977, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    8. Laird, Sam, 1997. "WTO rules and good practice on export policy," WTO Staff Working Papers TPRD-97-01, World Trade Organization (WTO), Economic Research and Statistics Division.

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