The International Political Economy of Transformation in Argentina, Brazil, and Chil (International Political Economy)

276 Pages·2002·0.73 MB·English

The International Political
Economy of Transformation
in Argentina, Brazil, and Chile
since 1960
Eul-Soo Pang
The International Political Economy of Transformation in
Argentina, Brazil, and Chile since 1960

The International Political
Economy of
Transformation in
Argentina, Brazil, and Chile
since 1960
Eul-Soo Pang
Colorado School of Mines
Golden, Colorado
© Eul-Soo Pang 2002
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First published 2002 by
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Library of Congress Cataloging-in-Publication Data
Pang, Eul-Soo
The international political economy of transformation in Argentina,
Brazil, and Chile since 1960 / Eul-Soo Pang.
p. cm. – (International political economy series)
Includes bibliographical references and index.
ISBN 0-333-91972-6
1. Argentina – Economic policy. 2. Argentina – Economic conditions –
1945– 3. Argentina – Politics and government – 1955–1983. 4. Argentina –
Politics and government – 1983– 5. Brazil – Economic policy. 6. Brazil –
Economic conditions – 1945– 7. Brazil – Politics and government –
1964–1985. 8. Brazil – Politics and government – 1985– 9. Chile – Economic
policy. 10. Chile – Economic conditions – 1970–1973. 11. Chile – Economic
conditions – 1973–1988. 12. Chile – Economic conditions – 1988– 13. Chile
– Politics and government – 1973– I.Title. II. International political economy
series (Palgrave (Firm))
HC167.S67 P36 2002
338.9–dc21 2001036351
10 9 8 7 6 5 4 3 2 1
11 10 09 08 07 06 05 04 03 02
Printed and bound in Great Britain by
Antony Rowe Ltd, Chippenham and Eastbourne
Contents
List of Tables viii
Acknowledgements ix
Abbreviations xi
Introduction xv
Part I Latin America in a New Age 1
1 Latin America in the Age of Globalization 3
Globalization at work 3
The global economy 4
Latin America: then and now 7
The genesis of the Latin American state and IPE 8
A variety of authoritarian states and
their offspring 10
Incompatibility of the B-A regime with
the global economy 14
Core groups and actors in B-A regimes 15
Political economy of reform and adjustment 16
“Cosmopolitical” economy of Latin America 17
Latin America in the age of economic multipolarity 18
Part II From Populism to Military Rule
and Democracy 21
2 Argentina: the Birth of Latin American Populism 23
The road to populism 23
The making of a populist Argentina 26
The early or sunrise phase: 1880–1930 27
The classical or golden phase: 1945–66 29
Argentina in the world economy 33
The final or sunset phase: 1976–89 35
3 Brazil: Building a Capitalism without Risk 45
The liberals of 1964 45
The state and the market 46
SOEs’ borrowing schemes 48
v
vi Contents
Allocation of and access to capital 50
“External savings and parallel dollars” 51
State-owned enterprises vs. foreign direct investment 54
National informatics policy 63
4 Chile: the Revolution That No One Desired 70
The end of the calm 70
The rise of Christian Democrats 73
Frei’s reforms 75
The presidential election of 1970 79
In retrospect 91
Part III Transition and Consolidation
of Democracy and Market 93
5 Argentina’s Travails of Democracy
and Market Economy 95
Populism’s last tango 95
Al-Mukhalisfrom La Rioja 96
The Cordobés from Harvard 106
Menem bets on a new horse 108
Argentina at a crossroads 118
6 “Brazil Is Not a Serious Country” 123
A new beginning 123
‘Collor’ed reform 125
Opposing camp 135
Sex, corruption, and globalization 136
Itamar the President Pífio 140
Cardoso, the Savior of Brazil 142
7 Chile: Pinochet’s Not Too Silent Revolution 146
Consolidating market authoritarianism 146
The junta’s long-term development policy 155
Resurgent democracy 165
Chile goes global 169
The second civilian government since 1990 170
The 1998 economic woes 173
The beginning of the end? 173
Conclusion: Will the Past Overtake the Future
in Latin America? 177
Globalization versus sovereignty 177
Contents vii
Democracy or market, but not both 178
The supremacy of the state 179
SOE: an engine of growth or a breeder of corruption? 180
ISI: a double-edged sword? 181
Is democracy compatible with market? 182
Globalization: an elixir or a nadir? 183
Backlash to globalization 184
Contested globalization: state over market? 185
Notes 187
Bibliography 217
Index 241
List of Tables
1.1 Fifteen Latin American and Other Countries:
GNPs and Per Capitas, 1970 and 1996 8
3.1 Foreign Direct Investment Inflows into
Latin America, 1984–95 54
5.1 MERCOSUR Countries: Social Indicators, 1997 116
6.1 MERCOSUR Countries: Economic Indicators, 1997 133
7.1 State-Owned Enterprises: Their Shares in GDP
and Investment as Percentage of GDP, 1985–95 172
7.2 Foreign Portfolio Investment: Argentina,
Brazil, Chile, and Mexico, 1990 and 1999 174
viii
Acknowledgements
Every author owes intellectual debt to someone. Since 1986 when I
moved from the University of Alabama at Birmingham to the
Colorado School of Mines to establish the Latin American Center for
Minerals and Energy Development, I have had numerous opportuni-
ties to travel to Latin America and the Caribbean and learn from
policy makers, business leaders, and academics of various countries.
During these years, much of what I have learned about the ABC
countries and observed first hand has gone into this book. In Latin
America, many academics often take up positions as government
officials; hence, their perspectives are invaluable, tested by time and
enriched by public-sector experience. I envy their opportunities to
combine intellectual pursuit with policy making and implementa-
tion. As their friend, I would like to believe that when we discussed
policy issues I played a role in policy making as well, however indi-
rectly it might have been. I am grateful for those opportunities as
their friend and consultant. I will not cite all of their names, but
should mention that friends like Juan Antonio Zapata and Alejandro
Bulgheroni (along with Juan Martin, Patricio, Mariana, and Alex Paz)
of Argentina, Antônio Carlos Pojo do Rêgo, Ana Studart, João Paulo
Machado de Peixoto, Augusto de Oliveira, Marquinho de Carvalho,
Adonis de Carvalho, Ozires Silva, Breno Augusto dos Santos, Luciano
Borges, and Roberto C. Villas Boâs of Brazil, and Mario Meza M.,
Alejandro Hales, and Mario Maturana of Chile are truly my teachers
in helping me understand, unravel, and appreciate the history of the
ABC countries, especially their cultures and their political
economies. Dr. Carlos Bakota of the US Department of State has
been a valuable mentor to this project through the years. And Peter
Andrews at Palgrave Macmillan has done a superb job of turning
Korean English into a readable prose. I thank them for their contri-
butions; without them this book would not have been possible.
Finally, I must mention that during the years of travel to Latin
America, I have had the best sounding board to this book: my wife,
Laura, who is an accomplished Latin Americanist, and the conversa-
tions with her have helped me understand the nuances of the state,
the behavior of the Latin elite and their culture, and the peculiar
ix