Political Economy

The political economy of a region is a crucial determinant of the wellbeing, or otherwise, of its inhabitants. Latin America, more often than not, hits the international news when one of its countries experiences a financial crisis — Mexico in 1994 or Argentina in 2001 — but there is also much talk in the international media about the rise of Brazil as a global economic player as well. This chapter traces the broad outlines of the region’s political economy, commencing with an overview of ‘dependent development’ as both a concept and a reality. We then move to the post-World War II phase of state-led industrialization under generally nationalist and populist political regimes. This is followed by the emergence in the 1980s of the neo-liberal economic model based on pushing back the state and opening up to the world market. Finally, we consider whether there are alternative economic strategies to the dominant Washington Consensus model, an issue that has become particularly pressing after the collapse of the neo-liberal economic model in Argentina in 2001–02 and the global economic recession of 2008/09.