1 THE GLOBALIZATION OF LATIN AMERICA From the Crisis of Neoliberalism to the Crisis of Neo-developmentalism
Since the end of the twentieth century, Latin America has experienced a process of profound transformation. In order to understand this process, it is necessary to attend to different levels of human development and to local contexts of growth, while also bearing in mind the considerable internal differences that result from the specific situations of various countries, that is, from their different social structures, cultures, and institutions as well as from their different relationships to the global system. Latin America’s transformation is the result of two opposing socioeconomic models, their ascent, and their crises. By “neoliberalism,” we mean a model of growth and distribution based essentially on the dynamics of the market, supported by the state. In what we call “neo-developmentalism,” by contrast, the state is the motor of economic growth and the mechanism for the distribution of products; it actively intervenes in market processes and in the creation of infrastructures, though without fully nationalizing the economy.
Socioeconomic Changes
In terms of economic growth, in the first decades of the twentyfirst century, the region as a whole has modernized its productive structure, increased its competitiveness in the global economy, and modified its traditional patterns of dependency on the United States. Growth in annual gross domestic product (GDP) (in constant prices) was 4.5 percent on average between 2003 and 2008. This growth did slow to 3.0 percent between 2009 and 2011, due to the impact of the economic crisis of 2008 in the United States and Europe. Between 2012 and 2013, growth slowed again to 2.3 percent. During the period between 2014 and 2015, the real rate of growth in the region was just 0.5 percent, and in 2016 it was negative (−1.1 percent). Still, for the first time, despite its thorough integration into the global economy, Latin America was more successful than the United States or Europe in combating the effects of an economic crisis, the crisis of 2008; it effectively disengaged itself from the crisis that unfolded in these other world regions.
Obsessed with oil production and considered by many to exemplify bad economic management, Venezuela grew at an average rate of 7.5 percent between 2003 and 2008. Then, during the years between 2009 and 2011, the country had a negative rate of growth (−0.2 percent), only to recover between 2012 and 2013 (when growth reached 3.5 percent). In 2014, the last year for which information was available at the time of writing, Venezuela’s GDP fell by 3.9 percent in real terms. For its part, Argentina grew at an average rate of 8 percent between 2003 and 2008, and at a rate of 3.4 percent between 2009 and 2011, whereas between 2012 and 2013 growth was just 0.7 percent, and between 2014 and 2015, it fell to 0.1 percent. The country’s economy then contracted another 1.8 percent in 2016 (ECLAC, 2018).
In Brazil, as in Argentina and Venezuela, the period between 2003 and 2008 was the period of greatest real growth (4.2 percent on average), followed by the years from 2009 to 2011 (3.8 percent). From this point, the rate of growth slowed to 2.5 percent between 2012 and 2013, and it then fell again to 1.5 percent and 3.5 percent in 2014–15 and 2016, respectively. Mexico’s economy grew by an average of 2.6 percent between 2003 and 2008 before then seeing its rate of real growth slow to 1.2 percent between 2009 and 2011, only to recover to reach 2.5 percent between 2012 and 2013. In 2014–15, the rate of growth of Mexico’s GDP rose to 3.0 percent, and it slowed slightly to 2.9 percent in 2016 (ECLAC, 2018). The economies of Bolivia and Peru grew by around 6 percent between 2012 and 2013. To sum up, then, between 2003 and 2013, Latin America lived through more than a decade of sustained economic growth and increased competitiveness.
Countries in the region managed to contain the effects of the global financial crisis and to ensure continued economic growth between 2002 and 2013 on account of two main factors. The first was the regulatory role of the state, which was stronger in Latin America than in the United States and Europe, especially regulating financial markets after the crisis of the 1990s (or the “Tequila Effect”), the crisis of the real in Brazil in 1999, and the collapse of the banking system in Argentina in 2001. The Cardoso and Kirchner administrations introduced regulatory measures into the financial systems of Brazil and Argentina, respectively, that seem to have been more effective than those in the United States or Europe. These administrations thus adapted more efficiently to the systemic volatility of global financial markets. Secondly, there was a transformation in patterns of world trade, and South–South trade partnerships (both with Asia and within Latin America) became more significant than the classic dependency on the United States and Europe.
Table 1.1: Rates of Year-to-Year Change in Gross Domestic Product, 2003–2016
Note: n.a. = not available
Source: The authors’ own calculations, based on data in ECLAC (2018)
At the same time, however, although democracy, a key issue in Latin American history, has been stabilized throughout Central and South America, its legitimacy has been weakened recently. In 1976, there were only three democracies in the region. Now democracy is generalized throughout Latin America (with the case of Cuba remaining debatable), at least if we apply the standards of democracy used in Florida during the United States presidential election in 2000, and if we set aside the 16 recent presidential ousters in the region, including two coups, both quickly reversed. According to Latinobarómetro, the rate of support for democracy as a form of government preferable to any other reached its highest level (61 percent) in 2010. But a series of experiences and events have worn away at confidence in democracy and especially in the political system that supports it. Support for democracy thus fell to 53 percent in 2017. By contrast, support for authoritarian regimes has increased under conditions of corruption and organized crime. This mainly affects parliaments and political parties whose legitimacy is very weak (Cohen et al., 2017). Today the crisis of the state and of the political system are central to the problems that Latin America is confronting.
Rates of poverty, the other “disease” from which Latin America has traditionally suffered, were reduced from 45.9 percent of the region’s population in 2002 to 30.7 percent in 2017. Extreme poverty also decreased during the same period, from 12.4 percent to 10.2 percent (ECLAC, 2018b: 88). If we also factor in the improvement in one of the main indicators of health and the near universalization of primary school education (despite the poor quality of many schools in the region), we see a Latin America that differs markedly from its traditional image.
The Gini coefficient, which measures inequality, was 0.469 and 0.467 in 2015 and 2016, respectively, for 17 Latin American countries (ECLAC, 2017: 52 and ECLAC, 2018b: 44). According to the same source, this index for the region decreased by an average of 1.5 percent yearly between 2002 and 2008, but it only decreased by 0.4 percent yearly between 2014 and 2016 (ECLAC, 2018b). The reduction in levels of inequality was caused by an improvement in wages in key sectors and an increase in monetary transfers from governments to these sectors. This tendency has, however, begun to be reversed during the last few years. Figure 1.1 shows the evolution and slow decrease in inequality in selected Latin American countries between 2002 and 2016.
We suggest that these phenomena, particularly the decrease in poverty, were caused in large part by the greater presence of the state as a central player in processes of development, with a strategic orientation, a willingness to invest public funds in infrastructure, education, and healthcare, and a commitment to redistributive policies like the program known as Bolsa Família in Brazil.1 In fact, the neoliberal model of unrestricted national participation in globalization, a model generated by the market, collapsed both economically and socially around the beginning of the twenty-first century in most Latin American countries. (The bank freeze in 2001 in Argentina is the clearest symbol of this collapse.) A new model then emerged, a model that proclaimed itself neo-developmentalist, and that was centered on the state but oriented toward competition in the
