A Changing of Systems

In the beginning of the 1990s Latin America started to inch away from Nationalism and started to lean more towards. “neoliberalism is promoted as the mechanism for global trade and investment supposedly for all nations to prosper and develop fairly and equitably.” (http://www.globalissues.org/article/39/a-primer-on-neoliberalism) Free trade, export production, and comparative advantage are the three aspects of neoliberalism. Proponents of neoliberalism supported the free market and regarded nationalism as unacceptable. What they basically did was sell off, privatize, corporations that were under state rule.

With this change of ownership came privatized social services, and cut down import tariffs to make trade fair among countries. With the cutting down of these tariffs that Nationalists used as an aid to maintain local industry. Without these import tariffs nationalists couldn't limit the profits multinational countries would take away from nations in Latin America to take advantage of them. When the 1980s debt crisis came, and with it came high oil prices, heavy short term borrowing in the 1970s, and then having short-term loans had to refinance at higher rates. All of the debts that Latin American had accumulated had been debts from foreign banks. External debts for Latin America increased from 105 billion in 1976 to 397 billion 1986.

The countries that owed the most t foreign banks were Brazil and Mexico. As a result of this debt foreign lenders supported free trade so that they could profit form Latin America. Even when lenders were aware of the fact that countries in Latin America were making horrible financial decisions by borrowing so much money and not imposing tariffs on imported goods, they didn’t bother to advise them to do otherwise. They only cared about benefiting from those countries and selling their goods in the free market. “In order for many nations in Latin America to deal with this economic crisis, they were forced to cede democratic control of their economies to these international actors.” (http://citizenspress.org/editorials/neoliberalism-in-latin-america).

Even the International Monetary Fund thought that there needed to be neoliberal reforms. They basically restructured their debts only if Latin American countries made certain reforms. With these reforms countries in debt could make payments. The IMF requested Latin American countries to make cuts in social spending. These strategies were successful in resolving some of the problems this crippling debt brought to Latin America.  For example, in Argentina and Brazil hyperinflation was stopped. Another success was that Latin America started to become an emerging market for investment. Much of the investments came from foreign countries.

Foreign countries began to further their influence in Latin America and the Free Trade Agreements began. One of the agreements was the North American Free Trade Agreement became the door into Mexican neoliberalism. Then came another agreement from Brazil, Argentina, Paraguay, and Uruguay make a free trade agreement called MERCOSUR. Then came the Maquiladoras, which were factories that had women make products out of foreign parts. Overall, all of these changes create a new advantage to foreign countries like the U.S to take advantage of Latin American Countries.