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Macroeconomic Policy Challenges 41 Osvaldo Kacef and Rafael López-Monti

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Macroeconomic Policy Challenges 41 Osvaldo Kacef and Rafael López-Monti E8I<8J 86BAB@<6 6B@@<FF<BA9BE ?4G<A4@8E<64 4A7G;864E<5584A DE'&& 7FH?B(&'& 7b_Y_W8|hY[dW 5hUSedYfUCUSbUdQbi 7djed_eFhWZe 4U`edi5hUSedYfUCUSbUdQbi E8I<8J 86BAB@<6 6B@@<FF<BA9BE ?4G<A4@8E<64 4A7G;864E<5584A EilWbZeIkda[b 3XQYb]Q^_VdXU5TYd_bYQ\2_QbT 7dZh>e\cWd 4YbUSd_b C_]k[bJehh[i DUSX^YSQ\5TYd_b <FFA#%($ %,%# The CEPAL Review was founded in 1976, along with the corresponding Spanish version, Revista de la CEPAL, and is published three times a year by the United Nations Economic Commission for Latin America and the Caribbean, which has its headquarters in Santiago, Chile. The Review, however, has full editorial independence and follows the usual academic procedures and criteria, including the review of articles by independent external referees. The purpose of the Review is to contribute to the discussion of socio-economic development issues in the region by offering analytical and policy approaches and articles by economists and other social scientists working both within and outside the United Nations. The Review is distributed to universities, research institutes and other international organizations, as well as to individual subscribers. The opinions expressed in the signed articles are those of the authors and do not necessarily reflect the views of the organization. The designations employed and the way in which data are presented do not imply the expression of any opinion whatsoever on the part of the secretariat concerning the legal status of any country, territory, city or area or its authorities, or concerning the delimitation of its frontiers or boundaries. A subscription to the CEPAL Review in Spanish costs US$ 30 for one year (three issues) and US$ 50 for two years. A subscription to the English version costs US$ 35 or US$ 60, respectively. The price of a single issue in either Spanish or English is US$ 15, including postage and handling. The complete text of the Review can also be downloaded free of charge from the ECLAC web site (www.cepal.org). This publication, entitled the CEPAL Review, is covered in the Social Sciences Citation Index (SSCI), published by Thomson ISI, and in the Journal of Economic Literature (JEL), published by the American Economic Association. To subscribe, please apply to ECLAC Publications, Casilla 179-D, Santiago, Chile, by fax to (562) 210-2069 or by e-mail to [email protected]. The subscription form may be requested by mail or e-mail or can be downloaded from the Review’s Web page: http://www.cepal.org/revista/noticias/paginas/5/20365/suscripcion.pdf. 8QLWHG1DWLRQVSXEOLFDWLRQUnited Nations publication ,661SULQWHGYHUVLRQ±,661RQOLQHYHUVLRQISSN printed 0251-2920 – ISSN online version 1684-0348 ,6%1ISBN 978-92-1-121724-7 /&*3LC/G. 2442-P &RS\ULJKW8QLWHG1DWLRQV$SULO$OOULJKWVUHVHUYHGCopyright © United Nations, April 2010. All rights reserved. 3ULQWHGLQ6DQWLDJR&KLOHPrinted in Santiago, Chile Requests for authorization to reproduce this work in whole or in part should be sent to the Secretary of the Publications Board. Member States and their governmental institutions may reproduce this work without prior authorization, but are requested to mention the source and to inform the United Nations of such reproduction. In all cases, the United Nations remains the owner of the copyright and should be identified as such in reproductions with the expression “© United Nations 2008” (or other year as appropriate). CEPAL REVIEW 100 5 S UMMARY Structural constraints on development in Latin America and the Caribbean: a post-crisis reflection 7 Alicia Bárcena The financial and economic crisis of 2008 and its repercussions on economic thought 29 Gert Rosenthal Latin America, from boom to crisis: macroeconomic policy challenges 41 Osvaldo Kacef and Rafael López-Monti The economics of climate change in Latin America and the Caribbean: stylized facts 69 Luis Miguel Galindo and Joseluis Samaniego Trade unions in the “South” in the era of globalization 97 Joseph Ramos Technological dynamism and social inclusion in Latin America: a resource-based production development strategy 121 Carlota Pérez Agricultural and trade policy reforms in Latin America: impacts on markets and welfare 143 Kym Anderson and Ernesto Valenzuela Regional integration and export diversification in MERCOSUR: the case of Argentina and Brazil 165 Marta Bekerman and Cecilia Rikap Development banks in the financial-liberalization era: the case of BNDES in Brazil 189 Jennifer Hermann Paraguay’s Tekoporã programme for cash transfers: debating targeting methods for beneficiaries 205 Rafael Perez Ribas, Guilherme Issamu Hirata and Fábio Veras Soares Guidelines for contributors to CEPAL Review 217 Recent ECLAC publications 218 APRIL 2010 Explanatory notes The following symbols are used in tables in the Review: … Three dots indicate that data are not available or are not separately reported. (–) A dash indicates that the amount is nil or negligible. A blank space in a table means that the item in question is not applicable. (-) A minus sign indicates a deficit or decrease, unless otherwise specified. (.) A point is used to indicate decimals. (/) A slash indicates a crop year or fiscal year; e.g., 2006/2007. (-) Use of a hyphen between years (e.g., 2006-2007) indicates reference to the complete period considered, including the beginning and end years. The word “tons” means metric tons and the word “dollars” means United States dollars, unless otherwise stated. References to annual rates of growth or variation signify compound annual rates. Individual figures and percentages in tables do not necessarily add up to the corresponding totals because of rounding. 7 $&1"-3&7*&8t"13*- KEYWORDS Financial crisis Structural constraints Economic development Development strategies on development in Latin Sustainable development Macroeconomics Investments America and the Caribbean: Productivity Income distribution a post-crisis reflection Social policy Latin America Caribbean region Alicia Bárcena The development of Latin America and the Caribbean is still a work in progress. Although there have been macroeconomic improvements, allowing the region to confront the recent crisis on a better footing, this crisis has exposed old and new structural constraints faced by the countries of the region, which are reflected in the persistence of large social, economic, fiscal and environmental gaps. These gaps need to be closed for the sake of future generations and as a precondition for viable development that combines economic growth with equality and sustainability. This suggests that there are more than just economic reasons for the State to play, once again, a major role in development strategies, so that public policies take the lead in building the future. The main purpose of the present article is to make this argument. Alicia Bárcena Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) [email protected] 8 $&1"-3&7*&8t"13*- I Introduction ECLAC has put forward three general hypotheses about expanding the coverage and improving the design of the character and consequences of the recent crisis. The social policies. This confirms the need to rebuild the first is that it is not just a manifestation of weaknesses capabilities that will allow the State to resume strategic in financial system regulations, or the exclusive result planning of long-term policies, create more leeway of a moral crisis brought on by ambition and greed. for fiscal policy and design appropriate instruments The crisis is also bringing a particular “development to deal with the structural challenges affecting the style” to an end and opening up new avenues for current pattern of development in the region. economic, social and environmental debate. This article offers a reflection on State policies The second hypothesis is that the State needs and action in Latin America and the Caribbean. to play a renewed part in guiding development It advocates new forms of policy intervention and strategies in the region’s countries. Setting out from management, without which there can be no progress a critical review of its recent performance, there is towards the different goals of development combining a vital need to redefine the role of the State and the growth with equality and sustainability. At the same way it operates, with a view to achieving a balanced time, it argues for a new debate and for the centrality interaction between the market, institutions and of politics when it comes to redefining the roles of citizens in the development process. the State and the market, so that the requirements of The third hypothesis, which follows naturally development can be reconciled with the expansion of from the first two, is that there needs to be a return citizen rights and democratic institutions. to the idea of building “long-term” development This article is structured as follows. Section II strategies. This will require a greater capacity to briefly reviews the macroeconomic performance of devise and implement public policy measures that Latin America and the Caribbean, discussing how can reconcile what is enduringly important with the this relates to external dependency and the structural needs of the moment. problems that have traditionally afflicted the region. For all the progress in the past decade, the Section III supplements the analysis by discussing the economic and social development of Latin America accompanying social trends in the region. Transmission and the Caribbean is still a work in progress. There mechanisms and the effects of the crisis on the
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