The Rise and Fall of Neoliberalism
In the 1990’s, politics were drifting away from nationalism. Dictatorships and violence began to discredit nationalism. This made way for neoliberalism and its return in Latin America. Policies of neoliberalism were free trade, export, production, and comparative advantage. All of the neoliberalism policies were put into practices and it gave some relieve to the1980’s debt crisis. The 1980’s crisis left many Latin American countries struggling to pay their foreign debt. The debts had sky-rocked because oil prices and short-term borrowing. Mexico and Brazil became too overwhelmed and, “temporarily stopped payments in 1982 (321).” This made Latin American countries to be internationally bankrupted and isolated. Influential International Monetary Fund (IMF) lenders believed that policies of free-market would help. Furthermore, these lenders would, “gradually ‘rolled over’ the external debts to one country after another into long-term bond (321).” The relief of the 1980’s crisis, the encouragement of the foreign lenders, and the encouragement of the US government gave neoliberals credibility and popularity amongst Latin America.
The neoliberalism movement was of great help to Latin American countries throughout the 1990’s; it privatized corporations, slashed import tariffs and deregulated capital flow (321). The neoliberalism policies were success because it yielded the hyperinflation in Brazil and Argentina for decades, creating great investment opportunities. This allowed Latin America to get back on its feet economically. MECOSUR was created a year later by Brazil, Argentina, Paraguay, and Uruguay; it was the name of their free-trade zone. The free trade had many benefits for Latin America: it allowed, “middle-class apartment dwellers from Mexico City to Santiago to access the Internet, tune in via satellite to US or European television, and become avid consumers in a transnational economy (322).” It brought a variety of things to be imported and cheap prices. Low tariffs created new transnational corporations, which led to maquiladora. Maquiladora was an assembly line that uses very cheap laborers that meant nothing to corporations.
Like all good things, they must come to an end and that is what exactly what started to happen for neoliberalism. Slowly but surely the popularity of neoliberalism began to decline. The negative affects began to show in society. Though nationalism’s bureaucracies and state-run corporations inefficient it, “provided a living for millions whom the neoliberals have left unemployed (325).” Foreign competition would crush industries leaving many people unemployed. State-run services lost money, it was difficult to get a phone from privatized phone companies if you could not afford one, and the middle-class benefited while the poor got poorer. Zapatistas started to challenge neoliberalism and its policies effectiveness.
Neoliberalism in my opinion was a great idea to help Latin America get back on their feet economically. Latin America benefitted from free trade, which allowed for cheap prices and a variety of products to be imported. The middle-class was benefitting from the economy, instead of only the rich. Though neoliberalism had some negative outcomes, such as unemployment and maquiladora. The positive outcome outweighed the negative outcome in Latin America.
Sources:
Born In Blood & Fire: A Concise History of Latin America
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