(Due to most countries using import substitution and protecting home industries which became more and more inefficient , public spending / GPD ratio soared ) PFT Ch10)
Argentina : in 1900 has developed
: together with Chile and Uruguy have developed demographics
Now on the gold standard
Learned by experience to break up industries before privatising
Casualty of Mexican crisis , growth stopped in Arg and investment fled($8 bil of deposits left), banks folded Price stability but economy shrank by 4.4%, unem at 17% The poor and much better off than in the inflatinary 80s but dont remember Govts to privatise airports and post offices soon 3 bigest failures seen as health, educ and welfare -run by corrupt Peronist regions Despite high unemp , labour bosses won't accept more flexible laws ( many firms as a result are not hiring but increasing overtiime Bolivia Formerly many coups, civilian rule from 1982, av income only $800 compared with Peru's $2300 Privatised to foreign firms on the condition that they invested so much ( deposited at the beginning) Privatised as monopolies and prices have risen making the reforms unpopular Brazil Econ May 17th 1997
Huge Privatisation drive
Lowest inflation since the 50s : 10%
tax risen from 25 to 30% of GDP
Chile Economic growth has been strong since
the late 1980s. Aud is prosperity trickling down? Again, yes.unemployment is below 5%, the official minimum wage is $100 a month, but few of those in the informal economy, around 40% of the workforce, earn that much. They pay no insurance, and get no cover, notably for health care.
Federal spending on both health and education has risen substantially under the current government.(benefits are low, under $3 a monnth for a child, about $35 for a typical state pension, well below subsistence levels; the govem ment believes those who can help themselves must.
Education free of charge and compulsory at primary level, illiteracy only 5%, 13.3% of spending Soc sec managed by private sector 33.4% of govt spending ! NHS set up in 1951, (11.1% of spending) Chile: Santiago has only 30 judges in a city of 4 million people, But its civil service and courts are uncorupt by LA standards Nationalized copper mines, etc, are rather socialist. Very high tariffs (by Western European standards) and rather high taxes on upper income levels is rather socialist. Restrictions on international transactions, controls on Chileans investing abroad, and foreigners investing in Chile are rather socialist.Controls on Chileans who wish to transfer their money internationally are rather socialist.Their public health program is rather socialist.Conscription is rather socialist. Yes, by South American standards, Chile is radical extreme capitalist, but hardly by Western European standards.What make Chile important and exceptional was that it was the first country of the twentieth century to turn back towards capitalism, that its recovery from socialism was the high tide mark for socialism,which is now everywhere in retreat. As a result of these changes, infant mortality has dropped to near western levels, life expectancy has risen to near western levels, and GDP per head is now $8,316 in US 1995 dollars. Collumbia Drug barons, paramilitaries, defecit of 4% this year (97), strikes by health workers and teachers Mercosur : absolutely no barriers and trade volumes up 100%
New fig in Ec26Jul97- $5bil ->16..9 bil 1991->1996 Military expenditure takes 50% of all investment-
Mexico
In 94 started licensing foreign banks ( previously businesses paid real int rates of 15%) Although inflation fell to 8% lastyear, Mexicans are paying 30% on mortgages or car loans, 40% on credit card debts and around 25% for business loans. Banks were nationalised in 82.But the weakness of Mexico's judicial system makes it hard and long to enforce loan guarantees,
Mexico: Unfortunately, as in too many Latin American countries the first effect of market policies has been to widen the already ample gap between rich and poor. In time, economic growth that reform has started to will start to close that gap. Social spending has risen hy 85% since he took office military spending has never been high. 50% of budget is interest on public debt, education cannot be provided by religious bodies , compulsory primary 100% go, 56% secondary ( not comp) , 13.7% of budget, 26% of non-debt budget., 1% on roads, 2% on defence, 14% on social security, Although the Federal government has cut through swathes of red tape, state and municipal governments have been more grudging. A typical example: road haulage is now deregulated in federal law, allowing lorries to travel on any route, but some states still require goods to be loaded on to local transport for the final leg of their journey. Monopolies. Many still exist, public and private , poor infrastructure , Before crisis had privatised 1000 companies, after inflation 60% and unemp doubled, Inflation down to 15% from 50% in 1995, output growing at 8%, Vat is 1/3rd of revenues, bailouts of banks and now possibly toll road operators Peru :
Peru, with its coups, guer rilla violence and social unrest. After a decade in which it received negligible foreign direct investment, lastyear Peru sucked in nearly $500m. ,stop-go privatisation
Countries with socialist policies always do worse than those with out, affecting the welfare of their poorest people. Peru in the 70s had a GDP equal to Chiles but Peru under Garcia taxed and regulated everything ( De Soto related it took a year of filling in forms and applying for licenses to open a small business in Lima, bribes requested 10 times )- this led to a fall in tax revenues and when the government raised rates, tax yields fell further - Laffer curve.
70- 90% of the population agreed with his dismissal of Congress- state of emergency needed to fight shining path guerillas who intimidated judges etc. The other party wanted return to Garcia's socialist reforms. In 1993 Fujimori's party won decisively and rewrote constitution in more free market way. Financial sector, foreign trade and labor markets freed up.Eliimination of price controls and public monopolies, increases in property rights security, near price stability restored and real GDP grew 13% in 1994 Venezuela : At the central univerity students pay $1 a semester when the annual cost is rougly $1500 a year.