Latin America and the Neoliberal Model

Latin America and the NeoLiberal Model

In this paper I will argue that the best indicator of the economic policies of the countries in Latin America is the Neoliberal Model, and more importantly the Washington Consensus. I will do this by first giving a description of the Neoliberal model. Second I will show how the presence of effects of the Washington Consensus in the Latin American countries prove that other ways of indicating economic policies fall short. And lastly I will look at possible problems with looking at the Neoliberal model as the best indicator of economic policy.

First of all, The Neoliberal Model is a development model that is pushed by the IMF through it's Washington Consensus. What it comes down to is that the IMF is more or less the, "lender of last resort." The fact that is true, makes the IMF more apt(like any reasonable person or organization) to add some requirements to that money. If the country adopts the conditions, that are better known as the Washington Consensus, then the country in question is given the funds they wanted. The basic conditions laid out in the Washington Consensus are: trade liberalism, privatization of state-owned enterprise, the promotion of foreign investment and deregulation of the economy.

The fact is that these countries have little to no choice in whether or not they want to accept the very restrictive conditions in order to gain the funding they need. The reason for their lack of choice in the matter is the only way that these developing countries applying to the IMF for funding be the part of the international economic community that every nation seems to want to be in, is because that money is their only real shot to get to that place in the international economic community. Not just that but in some cases such as was the case in Lima, the economic disaster was so bad that no matter whether the government really wanted to or not(and they didn't want to at all if it were at all possible) they had to apply for the IMF money to rebuild their country.(Alma, 71)

Second of all, the effects of the Washington Consensus are very easy to spot in the Latin American countries economic policies, showing that it is the Neoliberal model that is the predominant indicator of economic policy.

The first example of an obvious effect of the Washington consensus is the existence of the "electronic herd."(Waltz, 694) In this example the Washington Consensus opens up the Latin American countries to free markets and direct foreign investment. Now that these countries are open to free trade and foreign investment, the Transnational Corporations head on in and set up shop.(Gereffi, 92) With the TNC's pretty well rooted in the economy of these Latin American countries'(Brazil and Mexico specifically in this article) economies, the TNC's will take advantage of the situation and demand favorable economic policies to help them out. (Gereffi, 100) Since the Latin American host countries are too afraid to loose the money and a big part of their GDP, they mostly agree to the demands.(Gereffi, 93) Seeing as the TNC's are getting such favorable policy their way and all of the attention on themselves, there is little attention or preferential treatment left for the domestic interest groups such as the business, labor, and environmentalist groups. With that in mind, it is hard to believe that those domestic interest groups can be any sort of indicator of economic policy in these Latin American countries.

The second example of the obvious effect of the Washington Consensus has on the Latin American Nations is that the ideology of the leaders that prescribe, whether begrudgingly or not, to this Neoliberal model of economic policies. In Jorge Dominguez's article, he mentions the many varied presidents of different countries at different times that all prescribed to the Neoliberal model of economic policies.(Dominguez, 80) This multitude of parties and ideologies that are presented by the author that all seem to come to the same conclusion that the other candidate was right after all even though they campaigned totally