1Middle and South America,NeoliberalismWed. May 14GEOG 1982Lecture Outline• Landforms & Climate• History• Economic History• Free Trade• Other trends23456Economic HistoryOutline:• Early Extractive Phase• Import Substitution Industrialization• Debt Crisis• Structural Adjustment & Neoliberalism• Informal Economy• Characteristics: poverty, income disparity7Early Extractive Phase• Hacienda, plantation, ranch, mine• Neocolonialism:– Dominant countries’ control of poorer countries’economics and politics to serve own interests– E.g. money from extraction not reinvested inthe area but taken to Europe & U.S.Import Substitution Industrialization• Set of policies whose goal was to keep money andresources within the country or region:– Nationalization - States (governments) boughtindustries (esp. extractive)– State-run manufacturing industries - established usingrevenue from nationalization of extractive industries– High Tariffs - taxes on imported manufactured goods• Development of national & regional economy• Response to neocolonialism and foreign control8Debt Crisis• Surplus money (from OPEC) in internationalbanks (offshore); low interest rates on loans• Governments borrowed millions of $ to financeindustrialization projects• Aug. 1982 Mexico defaults on loans• Banks worried other countries would alsodefault• U.S. & European banks stepped inStructural Adjustment Programs• Structural adjustment - big changes in organizationof countries’ economies– Export-oriented manufacturing (like Japan)– Privatization - sell state-owned industries– Free market policy & Free trade (remove tariffs)• Goal: make economies more efficient & profitableto pay back loans• Policies enforced by International Monetary Fund(IMF)9Neoliberalism• The idea that meeting people’s needs can beachieved through free-market economicdevelopment– Linked to structural adjustment programs– Reduction of social services– Efficient governance• 1980s Ronald Reagan (US), Margaret Thatcher(UK), Augusto Pinochet (Chile), Deng Xioping(China)Effects of SAPs and Neoliberal policy:Poverty, Wealth Disparity• In 2004 40% of theregion’s populationlived in poverty• Income disparity->• Large informaleconomy - notgovernmentregulated10Free Trade• Reduce tariffs & barriers to trade among agroup (or pair) of countries– NAFTA - 1994: Mexico, U.S., Canada– Mercosur - 1991: Brazil, Argentina, Uruguay,Paraguay, Chile– FTAA - proposed: western hemisphere• World Trade Organization - institutionwhose goal is to increase international trade• Maquiladoras, Export Processing Zones(free trade zones)11Contested Tenets of Free Trade• Social services• Labor Rights• Agricultural subsidies & protective tariffs– Tortilla Riots in Mexico, 2007• Agricultural prohibitions (e.g. GMOs)• Copyright protections• Environmental restrictionsCountertrend: Venezuela• President Hugo Chavez elected 1998– Nationalized: oil, telecom, cement, gas, electricity– Raised foreign taxes on oil– Goal: give ordinary people more say in the waythe country is run through communal councils– Supporters say changes benefit the working class,giving them housing, job, social benefits,education12Brazil• President Luiz Ignacio Lula da Silva electedto second term 2006– Dealt with economic instability - reducedinflation and national debt– Extended welfare programs for poorest• Landless Workers’ Movement (MST)– Demand for land reform: 1.6% of populationowns half of Brazil’s land– Land invasions– 1.5 million membersVideo shortsCommanding Heights:http://www.youtube.com/watch?v=mnjgjdwo-Gchttp://www.youtube.com/watch?v=TfkZlbax0Lw&feature=relatedOffshore Ads:http://www.youtube.com/watch?v=vRuY3dww6Gk&feature=relatedhttp://www.youtube.com/watch?v=VByh_C49-3Ehttp://www.youtube.com/watch?v=gwMPEdgUnCICity of Factories:http://www.youtube.com/watch?v=tRdu5qo-htU&feature=relatedNogales, Mex.http://www.youtube.com/watch?v=UKV9e_ZDBWUWTO Cancun:http://www.youtube.com/watch?v=l9pHw9e0fvU13Things to remember (study)• What is El Niño (see p. 106 of textbook)?• Approximate dates of countries’ independence• ISI: motivation for, goals, & policies• Debt Crisis: causes & results• Structural Adjustment Programs (SAPs): definition, goal,examples of programs/policies, who enforces• Neoliberalism: definitions, characteristics, supporters,negative effects/outcomes• Free Trade: definition, examples, arguments against• TERMS: neocolonialsim, IMF, GATT, WTO, informaleconomy, maquiladoras, Export Processing Zones, HugoChavez, Luiz Ignacio Lula da Silva, Landless Workers’Movement, Salvador Allende, Augusto
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