Changing paradigms: Changing interpretations of the public sector in Latin America's economies
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Abstract
This paper attempts to show that over time most economists' view of the role of the state in Latin America's economies has changed considerably. In the 1950s and 1960s state enterprises were considered to be an important instrument of economic development through Import Substitution Industrialization. The state and its enterprises were complementary rather than competitive with the private domestic and multinational sectors. The decadence of state enterprises occurred mainly in the 1970s and 1980s, when they were used as instruments of macroeconomic policies, when many abused their monopoly positions, and when there was increasing political interference in their operations. With state enterprises having increasingly a “crowding-out” effect, and with most countries of the region needing fiscal adjustments, privatization came into vogue. The rest of the paper concentrates on some of the positive and some of the problematical aspects of Latin America's privatization experience.
I would like to thank Charles Mueller, Claudio Paiva and Eduardo Ribeiro for some very useful comments on the first draft of this essay.
Keywords
Economic Development Public Sector Public Finance Macroeconomic Policy Import SubstitutionPreview
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