CEPAL Review - Volume 2005, Issue 85, 2005

This paper examines the pros and cons of the “new regionalism”, taking as a landmark the negotiations for a Free Trade Area of the Americas (FTAA). It summarizes the main features of the “new regionalism” and reviews some of the challenges and opportunities opened up by North-South preferential trade agreements (a category that includes many of the new vintage of such agreements). It underlines the role of domestic policies as a complement to trade liberalization, an aspect generally overlooked in the debate about trade negotiations and preferential trade agreements. It reviews the record of the FTAA negotiations, emphasizing recent trends and prospects. Lastly, it summarizes the main points raised and emphasizes the problematic features of the FTAA that is starting to emerge after a decade of negotiations.

This article examines the role of the State, institutions and financial markets in the financing of economic development, and in particular the role of development banks. It touches on the limitations of today’s conventional approach to development financing problems. It stresses information asymmetries as a cause of credit rationing and the poor distribution of savings. It also offers an analysis of the role of the State and markets in development financing, together with a policy agenda suggested by the different approach set forth here. It concludes with some considerations concerning problems and challenges now facing development financing in Latin America.

The capacity of political regimes to formulate and implement policies in the common interest appears to be a crucial factor of development. Public institutions in Latin America are often characterized by a lack of common interest orientation. As a result, most countries of the region are ill-prepared to meet the challenges of global market integration and knowledge-based development. Two approaches have been particularly influential in linking institutions to economic development: the good governance approach, originally put forward by the World Bank, and the systemic competitiveness approach introduced by the German Development Institute. Drawing on insights from both concepts, this paper presents a framework for the assessment of reform blockades and propensities in given political systems. This is the “systemic governance” approach, and it focuses on the capacity to generate and implement decisions in the common interest at all levels of the political system. In order to promote second-generation adjustment reforms, the systemic character of governance has to be grasped.

First World priorities and the need for nations to coexist in harmony have given rise in each period to a set of rules constituting the international economic order. This is a shifting order, in which national goals move alternatively towards and away from those of an international nature. The objective of the gold standard was to uphold monetary convertibility, if necessary at the expense of national objectives. By contrast, the Bretton Woods system inverted the terms of the equation by making governments responsible for employment and growth. The monetary pendulum is now swinging back again, from nationalism to cosmopolitanism. In the case of Mexico, owing to failures of adaptation, this latest shift has translated into an all-out struggle against inflation that has brought the country to a state of chronic near-stagnation, leaving it trailing in the rear of the world development process.

This paper looks at Brazil’s fiscal policy during the two administrations of President Fernando Henrique Cardoso: 1995-1998 and 1998-2002. It stresses that the authorities’ austere attitude was as important as institutional and structural reform for the fiscal adjustment that followed the 1998-1999 crisis. The principal cause of the fiscal deterioration in 1995-1998 was the reduction in the primary balance rather than the increase in the interest burden, while the fiscal adjustment in 1999-2002 was largely due to increased revenues, as primary public expenditure by the federal government continued to grow in real terms. We consider the outlook for fiscal sustainability and conclude that, to preserve the country’s hard-won fiscal discipline, the austere fiscal attitude shown recently by the authorities should be permanently embedded into fiscal institutions.

This article argues that the local and regional governments of Latin America, in an increasingly globalized world, must face new challenges that include establishing or improving their competitive strengths and transforming their local production systems. These two aspects must be linked to territorial policies and, more specifically, to the development of a territorial culture that embraces both. While it is true that enterprises are the ones that actually compete, their competitiveness may be enhanced if the territorial environment encourages this dynamic and if they themselves realize the importance of being enterprises “of the territory” rather than “in the territory”. This objective may be thwarted, however, by the existence of territories that are unequally prepared to meet these challenges. Different types of intervention need to be used, therefore, in terms of local and regional policies, to enhance the competitive strengths of such territories.

This article holds that poverty is multidimensional in nature, and that the ways to measure it and the policies to fight it are determined by how it is defined. After reviewing various definitions, the article notes that there is some consensus that poverty means the deprivation of the basic assets and opportunities to which all human beings are entitled; it examines concepts related to poverty, such as vulnerability, inequality, marginality, exclusion and discrimination, and analyses specific forms of gender-based poverty. It then discusses the link between the definitions of poverty and some of the policies being implemented; it compares poverty reduction policies with gender policies; and it proposes a typology that distinguishes four types of policies involving various actions, projects and programmes aimed at fighting gender-based poverty.

On the basis of a study on mortgage loan options available in eight Latin American countries, this article identifies two pending tasks for most of the countries: the need to make long-term funds available to mitigate the risk of a mismatch of maturities and rates, and the need to harmonize profitability criteria for lenders with the criterion of access to credit for the low-income population. The paper recommends the creation of linkages between the housing finance market and the capital market through secondary mortgage markets, for which the housing finance market must use instruments other than subsidies. In addition, the paper proposes a number of options to ensure that the State helps to create mortgage markets that will provide the low-income population with better access to housing.

This article looks at two processes that are affecting the characteristics of poverty in the city of Montevideo: the weakening of lower-skilled workers’ attachments to the labour market and the growing concentration of such workers in neighbourhoods with a high density of poverty. While far from conclusive, the results suggest the advisability of further research into the relationship between changes in the social morphology of cities and the segmentation of their labour markets. If further research confirms both a tendency towards growing polarization in the spatial distribution of social classes in cities and the presence of feedback mechanisms reinforcing the social isolation of residents in the most disadvantaged neighbourhoods, it will be safe to say that these processes, if not effectively countered, will irreversibly widen the already excessive inequalities that affect large Latin American cities.

This article assesses changes in absolute and relative opportunities of access to the upper strata of the urban social and occupational structure in Mexico, drawing on data from the largest retrospective social mobility survey carried out in the country, which covers all the largest cities and some medium-sized ones. It analyses intergenerational mobility in three periods: before 1982, from 1982 to 1988, and from 1988 to 1994. The results show a striking decline in opportunities of access to the stratum of professionals, managers and executives and large employers. This decline has not been linear but has affected first and foremost those from the lowest strata, then those from privileged strata, while leaving the intermediate strata of the sociooccupational structure virtually unaffected. The article also analyses the evolution of absolute and relative opportunities by gender.