OECD Paris October 12th 2006

1
LATIN AMERICAS POLITICAL ECONOMY OF THE
POSSIBLEBeyond Good Revolutionaries and Free
Marketeers
Javier Santiso Chief Economist Deputy
Director OECD Development Centre
OECD ? Paris - October 12th 2006
2
LATIN AMERICA IN THE GARDEN OF DELIGHTS?
3
THE FLOOD OF PARADIGMS IN LATIN AMERICA

• Utopia in Latin America from a spacial search
  to a temporal search.
• A search which has impregnated the history of
  Latin American political economy from
  structuralism to monetarism, from Marxism to
  Liberalism.
• In the 20th Century the whole Continent was
  dancing a waltz of paradigms.

4
DEMOCRACY AND THE MARKET THE NEW ALPHABET

• The transformations of the Latin American
  continent are now obvious.
• In the region as a whole, the conceptual and
  practical framework of political economies have
  been transformed.
• Democracy and the Market have taken over from
  Revolution and the State on the altar of
  references.
• To sum up, a complete vocabulary and grammar have
  disappeared from the political and economic
  repertoire allowing a new ideology to emerge.

5
THE POLITICAL ECONOMY OF THE POSSIBLETHE SILENT
TRANSFORMATION
Javier Santiso, Latin America's Political Economy
of the PossibleBeyond Good Revolutionaries and
Free-Marketeers, Cambridge, Mass., MIT Press,
2006.
6
THE GREAT TRANSFORMATION THE MONETARY MAST
Inflation ()
250
200
150
100
50
0
Latin America
Total Emerging Markets
Source Based on IMF
7
THE GREAT TRANSFORMATION THE FISCAL ANCHOR
By Country (2005)
0.3
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.0
-3.5
-4.0
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Central Government
LAC-7 FISCAL BALANCE (SPNF, in of GDP)
8
THE GREAT TRANSFORMATION THE EXTERNAL ANCHOR
Trade openness in Latin America
Trade openness in 2005
50
45
Brazil
40
Peru
35
Colombia
30
Argentina
25
20
Uruguay
15
Venezuela
10
Chile
5
Mexico
0
0
10
20
30
40
50
60
70
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
1974
1976
1978
1980
2004 (e)
Source OECD Development Centre
Source Based on BBVA
9
GRADUALISM AND CONTINUISM PENSIONS REFORMS
10
GRADUALISM AND CONTINUISM PENSIONS REFORMS
11
CHILE A MAJOR PERFORMER IN LATIN AMERICA IN
TERMS OF POLICY STABILITY
Average
Source IADB Politics of Policies Report, 2006
12
Latin America 2006 The political cycle is back
Next presidential elections 2007 -
2009 2006 2004 - 2005
13
Emerging Democracies in Latin America
Average
Source Javier Santiso, Latin Americas
Political Economy of the Possible Beyond Good
Revolutionaries and Free Marketeers. MIT Press.
Cambridge, Massachusetts, 2006 Based on the
Inter-American Development Bank
14
Latin America The pending challenges
Gini Market Income
Gini Disposable Income
Note Gini coefficiente calculated before and
after taxes, social security and transfers.
Fuente The World Bank
15
Social Pacts and Fiscal Pacts
Gini Market Income
Gini Disposable Income
Note Gini coefficient calculated before and
after taxes, social security and transfers.
Fuente The World Bank