The International Financial Crisis: Eight Lessons for and from Latin America

27 Pages Posted: 27 Jan 2010 Last revised: 31 Jan 2010

Date Written: January 27, 2010

Abstract

The international financial crisis of 2008–09 exposed the strengths and weaknesses of the current paradigm of development in Latin America, a paradigm based on liberalized capital accounts and significantly improved macroeconomic conditions. This paper presents lessons derived from the crisis, not only for the region itself, but also for other developing countries that might seek economic growth in the context of greater integration to the international capital markets. Some of the lessons are not new but have been reinforced by the crisis, such as Latin America’s imperative need for export diversification (not only in products but in partners). Other lessons break with longstanding myths about the region, such as its inability to undertake counter-cyclical policies - at least on the monetary side. Yet other lessons reflect new developments in the current growth paradigm, such as a renewed assessment of (1) the relative roles of foreign and domestic banks in shielding the financial system against external shocks and (2) the desirability of adopting blanket international financial regulations that do not account for a country’s degree of development. Taken together, the lessons in this paper bring a new sense of optimism for growth in Latin America.

Keywords: economic growth, development, finance, Latin America

Suggested Citation

Rojas-Suarez, Liliana, The International Financial Crisis: Eight Lessons for and from Latin America (January 27, 2010). Center for Global Development Working Paper No. 202. Available at SSRN: https://ssrn.com/abstract=1543451 or http://dx.doi.org/10.2139/ssrn.1543451

Liliana Rojas-Suarez (Contact Author)

Center for Global Development ( email )

2055 L St. NW
5th floor
Washington, DC 20036
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
255
rank
112,040
Abstract Views
1,407
PlumX