ECON361FINALSTUDYGUIDE - Economics 361- Economic...

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Economics 361-- Economic Development of Latin America Fall 2010, Final Exam Study Guide Carrie A. Meyer Study these 5 questions for the final exam. 1. Why has inflation been so high in Latin America? Characterize the structuralist-monetarist debate about inflation in Latin America. What accounts for the very high levels of inflation in the 1980 and early 1990s? How can inflation be controlled? Give some country examples of heterodox and orthodox approaches to controlling inflation – i.e. stabilization. 2. Describe the new role of international trade in Latin America and the progress that Latin America has made toward more open markets. Describe the major features of trade reform in Latin America. What kinds of costs and benefits have been observed? What kinds of attempts have been made to liberalize trade relationships within the region and how successful have they been? Use country experience to illustrate your answer. 3. In the late 1980s and early 1990s Latin America privatized most state enterprises. What was the rationale for privatization and what were some expected benefits and costs? What have been the key sectors subject to privatization in Latin America? Describe some of the experience of privatization in Latin America using country examples. What have been the principal problems and key areas of success? -The rational for privatization was mainly pushed by the disappointing results from state owned enterprises and the motion to retain rents and reinvest domestically. Many of the state owned enterprises were to increase capital in host countries and other economic focuses such as to increase employment rates. State owned enterprises were not only induced by economic reasons but also socio-political reasons such as the spread of income distribution, regional imbalances, and nationalism. State owned enterprises were the strongest competitors with the well established presence of elite families. -Instead of reaching their intended objectives, many if not the majority of state owned enterprises were evident of poor productivity levels and profit gaining rates. There was no incentive for workers and managers to complete projects because organizations noted that they would be paid whether the job was performed efficiently or completed at all. Such closed market strategies to growth proved more harmful than intended and shifted the economic development strategy to privatization . -Privatization had its appealing benefits that would increase efficiency, productivity, lure foreign direct investments, and increase exports. Some of the benefits to privatization included helping to alleviate government budget difficulties. Benefits: Return of dollars reduced gov’t debt Potential for increased efficiency and productivity Increased investment and technology Plans to broaden ownership outside SOE & elite families to shift to productive assets.
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This note was uploaded on 01/24/2011 for the course ECON 361 taught by Professor Meyer during the Fall '10 term at George Mason.

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ECON361FINALSTUDYGUIDE - Economics 361- Economic...

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