inequality have nothing to do with the policy changes introduced
by LOC and some conservative governments in the economic and
social sphere. For sure, favorable changes in the external
environment played a major role in accelerating growth and reducing
inequality. It is also true, as argued by these authors, that the recent
developments have not reduced the long-term dependence of the
region on the export of primary sector. But, as this paper has
indicated, changes in public policies adopted during the 2000s seem
to explain part of the inequality improvements.
- The Distributive Impact of the Present Crisis
The rapid growth and inequality decline which began in 2002-2003
was abruptly interrupted by the onset of the global financial crisis in
mid-2008. In the early stages of the crisis, it was commonly believed
that the region would be bypassed due to the solidity of its financial
sector, steady growth of the Asian economies and good
macroeconomic conditions.
However, the view of ‘decoupling’ has been rapidly abandoned as
the region was affected not by ‘financial contagion’, but by a series
of ‘real economy’ shocks including (Ocampo 2009 and CEPAL
2009b): (i) a modest improvement of terms of trade (three percent
for the region as a whole) in 2008, and an aggregate decline of -
10.8% by mid-2009 (year on year). By mid-2009, the drop in terms
of trade was particularly acute (between -20 and -28%) for six
Andean countries exporting primary commodities, but moderate (-
6.2%) for the Mercosur, minimal for Mexico (-4.5%) and positive
(+4.8%) for Central America. The terms of trade deterioration was,
on balance, of medium intensity, bringing the regional index
broadly to the same level of that of 2004, i.e. a relatively good year.
(ii) A drop in the growth of export volumes began immediately after
the onset of the sub-prime crisis in July 2008, and become negative
in October of the same year. By the first quarter of 2009, the
volume of exports had dropped (year-on-year) by 3% in Central
America and by 6-14% in the rest of the region. According to
Ocampo (2009), the shocks to international trade are the main
factors affecting Latin America’s performance since mid-2008. (iii)
A 20% decline in migrant remittances by mid-2009, affected in a
major way the Central American economies (which benefitted from