Latin America Climbs Out of Its Economic Hole
THE economic stagnation, hyperinflation, and mega-debts of the 1980s have become known as the ``Lost Decade'' in Latin America. The Inter-American Development Bank (IDB) has a new term for the 1990s: the ``Found Decade.'' It may not have the same poetic ring to it, but the IDB's annual report released April 11 reveals some encouraging signs:
* Three straight years of growth. Regional gross national product (GNP) grew at a 3.3 percent clip in 1993, up from 2.9 percent in 1992.
* Twenty of 26 Latin American and Caribbean states maintained or lowered their inflation rates. Inflation in Argentina fell from 23 percent to 11 percent in the past year. Mexico dropped from 15.5 percent to under 10 percent. And Jamaica fell from 77.3 percent to 18 percent.
* The ratio of total Latin American external debt to GNP was cut from 34.6 percent to 31 percent during 1993. Interest payments as a percentage of exports was down from 26 percent in 1988 but held even at 13.5 percent over the last year.
* Capital inflows continued at a strong pace, with $52.8 billion invested in the region in 1993. Mexico was the biggest recipient, with a 53 percent slice of the investment pie. Argentina received 23 percent, and Chile, Colombia, and Peru together totaled 13 percent. The United States was the No. 1 investor in the region.
But Latin America is climbing out of a deep hole. And the progress, while generally encouraging, is uneven. Mexico, for example, after five straight years of growth, grew less than 1 percent last year. That is not enough to provide jobs for the 1 million workers entering the labor force each year. Despite free-market reforms, privatization, and the North American Free Trade Agreement, per capita income in Mexico is $2,289 - less today in real terms than it was in 1980.
Members of the IDB board meeting in Guadalajara, Mexico, agreed to increase the bank's capital by $40 billion, to a total of more than $100 billion for development lending.