|Agricultural and rural development policy in Latin America. New directions and new challenges. (FAO Agricultural Policy and Economic Development Series - 2) (1997)|
|II. Economic and Agricultural Performance and the Changing Policy Environment|
Latin American agriculture has been exposed to large macroeconomic and sectoral policy shocks. Before we analyze these policies in detail, it is important to assess whether the combination of shocks and reforms has resulted in a stagnant or growing agricultural sector and in stagnant or growing labor productivity in agriculture. Recent analyses of agricultural policy reforms have concluded that reforming agriculture is extremely difficult and that it has rarely been successful, with Chile, Ghana, and New Zealand among the few success stories (Gardner, 1996). Failure for the reforms to result in an improved performance of agriculture has been blamed on (i) unfavorable macroeconomic contexts, particularly overvalued currencies and excessively high real interest rates, and (ii) political difficulties of sustaining the reforms, leading to a return to protectionism.
This section provides an overview of macroeconomic and agricultural sector performance for the Latin American and Caribbean region between 1970 and 1994. Our analysis divides the two and a half decades since 1970 into three distinct epochs distinguished, for each country, by macroeconomic performance, and broadly associated with distinct policy regimes:
· Early growth, starting in 1970, and lasting for as long as per capita GDPs are rising. It is a period characterized by ISI policies, debt accumulation, and ultimately unsustainable fiscal and trade policies.
· Recession, characterized by falling per capita GDPs, and the initiation of stabilization and structural adjustment policies.
· Late growth, characterized by economic recovery in per capita GDP growth, with relaxation of stabilization policies (including fiscal austerity and competitive exchange rates) and a deepening of neoliberal policy reforms.
The analysis also focuses on discerning the features of strong economic performance in the late growth period. The countries used in the study were grouped into 2 categories:
· Rapid late growth: countries with annual GDP per capita growth rates in the late growth period that were greater than the sample average growth rate (2.75%/year.)
· Slow late growth: countries with GDP growth rates in the late growth period that were lower than the sample average growth rate.
The analysis looks for correspondences between economic performance and the macro-economic policy environment (real exchange rates, inflation, government expenditures) and indicators of agricultural sector performance (agricultural value added per capita, agricultural labor productivity, and rural population density). The country-level data are presented in separate tables in the appendix; the aggregate group data are presented in the summary table.