Uprising in chiapas a region of extraction unsettled

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Uprising in Chiapas (a region of extraction) unsettled regional financial markets: Mexican peso lost 30% of value in December 1994, generating negative “tequila effect” throughout Latin America 3. Financial loan package of $18 billion from U.S., Canada, global banks and IMF for bailout to stabilize the peso and restore confidence in Mexican economy 4. Chiapas has been occupied by the Mexican federal army ever since, demonstrating value of foreign investment over human rights b. Policies to stabilize these destabilizing global circuits (of debt, money, investment, and pension funds) now embedded into national economies (and vice versa) i. Global governance deepens global market relations within states, compromising their sovereignty and accountability to citizens 1. Open markets reflect conditions favored by global managers—officials of the international financial institutions (IMF, World Bank), G-7 political elites, executives of TNCs, and global bankers. 2. Indebted states restructure political-economic priorities to obtain creditworthiness in the global financial community. 3. Example: Agro-export policy conforms to sound financial policy by enhancing foreign exchange earnings ii. Expanding trusteeship role for multilateral agencies: Reorganization is unrepresentative; decided by global bureaucrats, not citizens c. Liberalization and the Reformulation of Development i. Liberalization downgrades social goals of national development ii. It upgrades participation in world economy (tariff reduction, export promotion, financial deregulation, relaxation of foreign investment rules) iii. Proponents claim it facilitates capital transfer, competition, and trade expansion toward economic growth iv. Liberalization is realized through new forms of social inequality d. Case Study: Chile – The Original Model of Economic Liberalization i. 1973: Military coup eliminated democratically elected socialist president Salvador Allende ii. Eight years of authoritarian rule under General Augusto Pinochet with detentions, torture and execution of thousands iii. Implemented “shock treatment” – radical free market reform masterminded by University of Chicago neo-classical economists 1. 600 state enterprises sold 2. Foreign investment expanded into strategic sectors such as steel, telecommunications, and airlines 3. GDP became much more dependent on trade (35% in 1970; 57.4% in 1990) iv. Before authoritarianism, Chile had been most democratic of Latin American countries v. Debt restructuring in 1980s increased social polarization 1. Social spending fell, wages were frozen, and the peso was seriously devalued. 2. With deindustrialization, unemployment rose to 20-30% 3. 1990: 40% of population of 13 million Chilean people in poverty vi. Sustained grassroots movement succeeded in regaining elections in 1988, when Pinochet was defeated e. Comparative Advantage – theoretical justification for liberalization 6
McMichael – Development and Social Change, 5e – Instructor’s Resources i. 19 th Century political economist David Ricardo linked economic growth to optimizing

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