Resuming growth in Latin America

Vol. 28 No. 3 (2008)

Jul-Sep / 2008
Published July 1, 2008

How to Cite

Lopez G., Julio, and Fernando J. Cardim de Carvalho. 2008. “Resuming Growth in Latin America: Short and Long Term Policies”. Brazilian Journal of Political Economy 28 (3):392-413.

Resuming growth in Latin America

short and long term policies

Julio Lopez G.
Universidad Nacional Autónoma de México, Facultad de Economía
Fernando J. Cardim de Carvalho
Professor Titular do Instituto de Economia da Universidade Federal do Rio de Janeiro – UFRJ
Brazilian Journal of Political Economy, Vol. 28 No. 3 (2008), Jul-Sep / 2008, Pages 392-413


The authors of this paper assert that the paralysis of the state generated by the crises of the 1970s and 1980s deprived the economies of the region of an important lever to resume and sustain growth. They thus maintain that to overcome stagnation it will be necessary to reconstruct the state’s capacity to implement pro-growth policies. Following Keynes’s and Kalecki’s ideas, but also classical development economists, the authors argue, first, that short-term macroeconomic policies, to reduce unemployment and to increase the degree of capacity utilization, should be used to promote the generation of profits to firms and to wake up entrepreneurs’ animal spirits. Short-term expansionary policies should be coupled with measures to improve competitiveness and avoid balance of payments problems. They also claim that alternatives to the liberal programme will fail unless a pro-growth strategy is adopted which includes both short- and long-term policies. They thus propose that long-term policies must complete the package, signaling: a) sustained increases of effective demand in the future; and b) investment priorities to ensure that capacities will be created in strategic sectors and branches of the economy.

JEL Classification: E61.

Keywords: Economic growth effective demand policies of growth Keynes Kalecki