Globalization Alone Isn’t Enough

At a recent Summit of the Americas meeting in Mexico, US President George W. Bush urged Latin American countries to adopt a Free Trade Area of the Americas agreement so that the region could become even more integrated into the global economy. Latin American leaders, however, are cautious. In the 80s and 90s, most Latin American countries opened their economies to foreign trade and investment and were expecting instant growth and a cure for widespread poverty in the region, but the results were woefully short. Recalling these experiences, the leaders of Brazil, Argentina, and Chile have been critical of the recent US proposal. Stephen Haber, senior fellow at the Hoover Institution, argues that both sides are missing the point: "openness to trade and investment is important but is not in itself a panacea." An open economy, Haber writes, helps sectors that produce tradable goods like automobiles, but it has "very little effect on sectors that produce nontradables, such as education." To improve the situation, concludes Haber, Latin American countries will have to undertake serious domestic reforms independent of globalization. – YaleGlobal