Latin America's Path of Economic Reform as Leadership Changes Hands in the Majority of Republics, Economic Gains Should Be Expanded Rather Than Reversed

Article excerpt

DURING this year and next, new presidents are scheduled to take office in 14 of the 20 Latin American republics. The last such large-scale transformation of leadership in the region occurred in 1989 and 1990, a time when most of Latin America was still mired in a protracted crisis of debt and lack of growth.

Although difficult to predict, this kind of sweeping political change will almost surely have important consequences for the region and for its relations with the rest of the world. The implications for economic policy have been the main focus of attention.

Will the new leaders sustain the dramatic economic reforms - emphasizing fiscal discipline, private markets, and export growth - adopted by most Latin American countries in recent years? Or are governments likely to revert to more traditional policy approaches? This question is of some significance for the United States, now that its free-trade agreement with Mexico has gone into force and the Clinton administration is proposing to build similar economic partnerships with other nations of the region.

Latin America's two most recent presidential elections - in Venezuela in December and Costa Rica earlier this month - brought to power vocal critics of the so-called neo-liberal economic reforms, both of whom campaigned on promises to slow the pace of reform and even to reverse some aspects of it.

Particularly when coupled with the New Year's Day uprising in Chiapas, Mexico, the violent protests in Argentina's Santiago del Estero province, and the intense congressional resistance to economic reform in Brazil and Uruguay, these election results might suggest that reform is becoming more unpopular and difficult to maintain in Latin America.

That conclusion is not yet warranted, however. Venezuelan voters may not all be enthusiastic about recent economic changes, but in voting for former President Rafael Caldera Rodriguez, it was mainly political corruption, incompetence, and paralysis they were rejecting. For their part, the Costa Ricans again chose to switch parties, as they tend to do every four years, within their highly consensual system. The economic policies of Venezuela or Costa Rica are unlikely to change very much because of the elections. And presidential elections in the past year in Chile and Bolivia put strong market advocates into office. …