Diversification in Latin American oil exporters: Was no
Diversification in Latin American oil exporters: Was no intervention the best policy option? Igor Hernandez (IESA) and Osmel Manzano (IDB, IESA, Georgetown University) Latin American still lags in manufacturing exports This performance has been widely documented • • • • Import Substitution in the 50’s Crisis in the 80’s Liberalization and structural reform in the 90’s Oil exporters do not seem different from other LAC countries… • ….averages could be deceiving. Outline of the presentation 1. Diversification in Latin American oil exporters 2. Diversification policies in LAC 3. Policies and outcomes 4. Concluding remarks DIVERSIFICATION IN LATIN AMERICAN OIL EXPORTERS Oil exporters have diversified However, in relative terms they are still concentrated Poor performance is not related to the diversification pattern Diversification in Latin American oil exporters • Oil exporters in Latin America have diversified • However, in relative terms they are still more concentrated • Non-oil export performance is not related to abundance and specialization pattern. DIVERSIFICATION POLICIES IN LAC Argentina: historically a well diversified country Argentina: two periods • Pre-1990: • Standard IS policies. • Big market attracted MNC’s. • 1990-2000 • Macro stability was the main policy objective • Dismantling of IS policies and little intervention • Mercosur • 2000• More intervention: SME’s and Agriculture Colombia: A tale of two commodities Colombia: Still finding a way. • Pre-1990: • Standard IS policies. • Use of exchange rate for competitiveness • Post-1990: • Colombia did not dismantle IS policies in a crisis • Shift to “competitiveness” and dialog with the private sector. • Success in business environment. • However, with each new administration there was a change on how to do it. Ecuador: Better performance after crisis? Ecuador: • Pre-1990: • Standard IS policies. • Use of exchange rate for competitiveness • Extensive use of subsidized credit • 1990-2000: • Liberalization • Public credit remained as the main intervention • 2000-2008: • New crisis and dollarization. • Little intervention and attempt to shift to “competitiveness” • 2008• Return to intervention? Mexico: The transition to a different country Mexico: Taking advantage of integration • Pre 1990’s: • Standard IS policies. • Significant presence of the state • 1990• Liberalization • “Tequila crisis” • NAFTA (1994) • Focus on macroeconomic stability • Presence in certain sectors: energy and agriculture Trinidad and Tobago: Reducing the reliance on Energy? Trinidad and Tobago: Late liberalizer • Pre 1990’s: • Different flavors of IS policies. • Significant presence of the state after discovery of hydrocarbons: 62 firms! • Post 1990’s: • Liberalization started in 1986 and by 1995 all firms were privatized • Government did not abandon industrial policy: • Industrial Policy 1996-2000 • Enterprise Development Policy 2001-2005 • After 2005: Attempt to diversify away from Energy Venezuela: Unable to diversify Venezuela: a tale of a collapse • Pre 1990’s: • Standard IS policies. • Significant presence of the state • 1990-1998: • Liberalization and dismantling of IS • High volatility • 1998• Move towards and command and control economy • Collapsed of non-oil exports POLICIES AND OUTCOMES Policies and outcomes Non-oil Export Growth Post IS policies Relevant trade agreements Argentina 8.3% None until 2000 Mercosur Mexico 13.9% Minimum NAFTA Colombia 7.3% (8.5% w/o coffee) “Competitiveness” Andean Pact with constant changes Ecuador 9.2% Minimum/ ”Competitiveness” Andean Pact Trinidad and Tobago 9.6% Still high intervention Caricom Venezuela -2.4% None/Command and Control Andean Pact CONCLUDING REMARKS Concluding remarks • For Latin American oil exporters, total exports as well as nonoil exports have become more concentrated • This performance on Latin American oil producers seems not be related to their pattern of diversification • A first look at policies might suggest that no intervention is preferred to any intervention. • However, if we look by “pairs”: Argentina, Colombia and Venezuela experienced more frequent changes in productive development policies. Thank you!
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