OECD & Trade of Latin America

This research paper discusses recent changes in the level, composition and orientation of the trade of the nations of Latin America (Central and South America, excluding the Caribbean area) and the special role being played recently by the Organisation for Economic Co-operation and Development (OECD) in facilitating that trade expansion. With a number of exceptions, the international, including intra-regional, trade of the principal Latin American nations has expanded during the past decade, reflecting changes in the global economy and the revitalization through structural reform of domestic economies in a number of countries. International financial assistance and private capital flows, primarily direct foreign private investment (FDI), from the developed world have played an important role in improving the trading and balance of payments positions of the major Latin American countries.

OECD has become more involved with Latin America because of rising levels of Western European trade, lending and investment there and the common interest of all the members of OECD in leveling the playing field for FDI in Latin America. OECD is playing an important role in ameliorating the current trade environment in Latin America by persuading governments in the region to remove barriers to further expansion of international trade and development.

Traditional International Trade Environment

During the era of gunboat and dollar d

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past many saw foreign direct investment as a substitute for international trade; later it was viewed as a complement to trade. Today companies see trade and investment as inextricably intertwined; they invest in order to trade and they trade in order to invest." (3) Steps Taken by Some Latin American Governments to Enact and Implement Structural Reforms. The package of structural internal reforms which IMF proposed to all Latin American governments as a condition to its financial assistance includes various austerity measures, such as internal budget restraint, forced domestic saving, curtailment of unnecessary imports and privatization programs, which are designed primarily to improve each nation's balance of payments and to strengthen its currency. Duran described the reasons why many Latin American countries have swallowed this generally bitter medicine: "Attention was constantly being drawn to the urgent need to break the vicious circle generated with the policies of the 1970s and the financial crisis of the 1980s, through the development of efficient public policy programs which made their appearance once the external sector had been opened unilaterally, and once the external debt had been renegotiated . . . Gov
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Approximate Word count = 3502
Approximate Pages = 14 (250 words per page)

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