Policies for Growth

The Latin American Experience

Proceedings of a conference held in Mangaratiba, Rio de Janeiro, Brazil

March 16–19, 1994

André Lara Resende

Moderator

International Monetary Fund

Washington • 1995

© 1995 International Monetary Fund

This book was designed and produced by the IMF Graphics Section.

Library of Congress Cataloging-in-Publication Data

Policies for growth : the Latin American experience : proceedings of a conference held in Mangaratiba, Rio de Janeiro, Brazil, March 16–19, 1994 / André Lara Resende, moderator.

• p. cm.

• Includes bibliographical references.

• ISBN 1-55775-517-5

1. Economic Stabilization—Latin America—Congresses. 2. Latin America—Economic policy—Congresses. 3. Fiscal policy—Latin America—Congresses. 4. Monetary policy—Latin America—Congresses. I. Resende, André Lara. II. International Monetary Fund.

HC125.P637 1995

338.98—dc20

95-33289

CIP

Price: US$24.00

Please send orders to:

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Internet: publications@imf.org

CONTENTS

• Foreword

• Acknowledgments

• 1. Introduction

  • André Lara Resende

• 2. Stabilization Programs: Recent Experience in Latin America

  • Ricardo López Murphy

  • Comment: Felipe Larraín

• 3. Distributive and Welfare Effects of Inflation and Stabilization

  • Edward J. Amadeo

  • Comment: Ricardo Ffrench-Davis

  • Carlos Noriega

• 4. Capital Inflows in Latin America: Causes, Consequences, and Policy Options

  • Roberto Steiner

  • Comment: Guillermo A. Calvo

• 5. Central Bank Independence and Coordination of Monetary Policy and Public Debt Management

  • Tomás J.T. Baliño

  • Comment: Roberto Junguito

• 6. Recent Tax Policy Trends and Issues in Latin America Parthasarathi Shome

  • Comment: Miguel Rodríguez

    • Luis Viana

• 7. Trade and Industrial Policy Reform in Latin America Sebastián Edwards

  • Comment: S.J. Anjaria

    • Jaime Ros

• Participants

Foreword

Following years of high inflation, entrenched protectionism, and heavy indebtedness, Latin America in the early 1990s appears poised to exploit its formidable economic potential. The successful implementation of adjustment and reform programs in the region has given millions of people new hope for a brighter future.

The International Monetary Fund, in collaboration with other international organizations, has been closely associated with Latin America’s transformation efforts and has contributed to the “silent revolution” in economic policymaking in the region and throughout the world. It has done so through its policy dialogue with country authorities as part of its surveillance function and by providing financial support to economic reform programs.

To extend the policy dialogue beyond official circles, the IMF cosponsored a seminar entitled “Macroeconomic, Structural, and Social Policies for Growth: The Latin American Experience” in Mangaratiba, Brazil, on March 16–19, 1994. The cosponsors were the Catholic University of Rio de Janeiro and the Central Bank of Brazil. Academic and business economists and national and international officials discussed and debated the role of macroeconomic policy in achieving stabilization and sustainable growth. The debate served to confirm the consensus that is emerging among economists and officials alike on the policies that are likely to be most conducive to high-quality economic growth.

The papers and comments presented in Mangaratiba and published in this volume will, I hope, serve as a useful reference for economic policymakers everywhere as they face the challenges of improving the human condition by promoting greater economic efficiency and sustained growth.

Michel Camdessus

Managing Director

International Monetary Fund

Acknowledgments

The productive and illuminating discussions held in Mangaratiba, Brazil, during the seminar “Macroeconomic, Structural, and Social Policies for Growth: The Evolving Latin American Experience” would not have been possible without the dedicated contribution of a number of staff in the three institutions that cosponsored it.

On behalf of all the participants, I would like to extend our appreciation to Luiz Afonso Simoens da Silva of Banco Central do Brasil, Edward Amadeo of Pontificia Universidade Católica (Rio de Janeiro), and Hernán Puentes of the International Monetary Fund, who were responsible for planning and implementing the event. Our warmest thanks go also to those at the Banco Central do Brasil who were responsible for the arrangements in Brazil. This team was led by Paulo Miranda da Fonseca and Jane Luiza Fialho F. Santiago and included Mario Bellardi Neto, Pedro Valdenir Pinto da Silva, Miriam Pessoa Braga, Cleyd Soares Teixeira, and Silvia Regina Pinto Netto. Thanks are also due to the IMF’s Kathleen White and Patricia Kane for their organizational contribution in Washington and to Elisa Diehl, who painstakingly edited and produced this volume.

In light of the subsequent developments in the Latin American region, the timeliness and relevance of the discussions held in Mangaratiba in March 1994 are, indeed, remarkable.

Shailendra J. Anjaria

Director

External Relations Department