Structural Adjustments and Stabilization

1
Structural Adjustments and Stabilization

• Econ 403
• International Economic Development
• Carlos Benito

2
Less Developed CountriesStylized Economic History
Neo-Liberalism/ Globalization
Developmentalism
?
Free International Trade
1875
1930
1970
1982
2001
1948
Primary Export Economies
Industrial-Import Substitution
Industrial Export Promotion
Adjustments
?
3
Developmentalism supported by Structuralism

• Growth at-any-cost
• The Developmentalist (Desarrollismo) Era
• Growth as an end and a mean- The Culture of
  Growth
• Expanding Middle Classes
• Industrial Import Substitution - Manufacturing as
  a means and an end.
• Agriculture and Rural Populations as means
• Economic Planing
• Institutional Based Financing

4
Developmentalist Strategy
Expanding Middle Class
Growth
Industrial Import Substitution
Institutional Financing
Appropriating Agricultural Surplus
Economic Planning
5
Neo-Liberalism supported by Neo-Classical
Economists

• Washington Consensus
• Structural Adjustments as means to re-structure
  external debt
• Macroeconomic Stabilization (IMF)
• To generate fiscal surplus
• Structural Adjustments (World Bank, WTO)
• To generate trade surplus
• Poverty Alleviation (WB and IMF)
• To manage poverty growth
• Basic needs (WB)
• Social Investment Funds (IMF)

6
Structural Adjustments Neo-classical economists
perspectives

• From growth at-any-cost to growth-with efficiency
• Macroeconomic Stabilization - Short Run
• Reducing inflation and fiscal deficits
• Equilibrium in exchange rates
• Structural Adjustments - Long Run
• International Trade Liberalization
• Deregulation of Domestic Markets
• Privatization
• Downsizing Government