ABSTRACT
Since the onset of the international debt crisis in the early 1980s, the dismal economic performance of the Latin American debtor countries has been frequently contrasted with the strong performance of their East Asian counterparts. The debt crisis of the early 1980s was triggered by a combination of global economic events and domestic developments in the debtor countries. The extent of borrowing at variable interest rates differs widely across debtor countries. This chapter examines some of the leading hypotheses concerning the Latin American—East Asian economic record and shows the importance of export growth in explaining the differential performance of the two regions. It focuses on some of the political developments that turned the Asian economies toward export promotion and the Latin American countries toward import substitution. The chapter reviews briefly at the current political economy of trade in Latin America to show how political paralysis is contributing to the continued economic paralysis.
