United States and Latin America need each other by the virtue of sharing common boundary hence the importance of the economic policies which favor these countries for mutual benefit. Latin America is one of the United State export market, for example in 1992 export exceeded $ 100 billion to this region . According to Fryer 1993, Latin American economic association with United States resulted to negative effect. Latin America eternal debts in 1992 was approximately $330 billion United States lending institution getting the largest amount of monthly servicing of this debt about 2 percent .
This resulted to Latin American contributing to deficit in the United State budget hence the importance of better economic and foreign policy for mutual benefit . Latin America due to it geographical position to United States is inextricably dependent on the United States economy and on the other hand United States economy benefit a lot from trade. After accusation of neglect of Latin America, United States authorities have changed tune time of cold war perception that Latin America was a threat to an important economic partner .
United States and Latin America have been having historical imbalances economically and in foreign policies. Overtime, policies to change this trend have been put in place due to realization that these countries are important to United States equally like northern partners (Vasquez). This means, policies favoring healthy relationship designed by United States would help in ensuring these countries enjoy mutual benefit. To Latin American, Economic and foreign policies are important since they are dependent of the United States economy.
If the economic well being of United States is affected for example by recession this duplicates to their economies. Relationship of most government from south and United States economic policies has been unhealthy characterized by opposition to various policies. In the history, Latin countries foreign policies have been designed in opposition to the United States policies . This is due to United States authorities trying to interfere and meddling with the internal affair of these countries.
A good example to this is the influence which Russia was able to influence most of the Latin Government to adopt communism policies against United States capitalism policies. According to Rabe 1988, Latin Americans in history have bitter to various United States policies mostly economic and foreign. A good example to this argument is the episode which transpired to Vice President Nixon being stoned in May 1958 in his tour to South America in attempt to smug confidence on foreign and economic policies .
This was under leadership of Eisenhower and his foreign and economic policies of anti-communism. In 50s and 60s, Southern economy was growing in a sluggish manner since price of produce from these countries continued to decay yet United State imported 70 percent of their produce . United States showed no interest in stabilizing prices making Latin American countries to suffer economically. This made the socialism ideology to take centre stage in the policies of most of Latin American country protesting against U. S economic and foreign policies.
This resulted to counter policies by United States against the communism and economic sanction which harmed economic status of southern countries. This trend continued to the cold war period until fall of Soviet Union and it communism policies. Current foreign and economic policies toward Latin America have been designed to amend bitter past relationship and forge for healthy foreign and economic policies for mutual benefit. There has been a major progress since the collapse of the Berlin wall in 1989, hence falls of Soviet union resulting to change of various administrative policies in South America.
From 1990, Latin America has experienced major changes which include giving way to democratic governance, adoption of free market economy model, regulating on protectionism policies, giving way to privatization and adjusting on their trade regime. This gave way to future relationship of United States which was initially forged by former President George Bush, under Enterprise for the Americas Initiative umbrella. This was marking end to U. S. cold war policies which were obstacle to social, political and economic progress in Latin America countries .
United States foreign policies employed to third world countries since cold war period are confrontation or engagement. Allies of U. S. have been subjected to engagement policy which meant that, they would get economic and military support. On the other hand, they were expected to adopt an environment favorable to United States policies . On the Latin America, United State has been persuading Latin American countries toward the policy of engagement without a major success hence subjecting these countries to U. S foreign policy of confrontation. Policy of confrontation was employed to countries against U.
S policies of capitalism and interests. United States use it economic, military as well as political mighty to convert countries to support their interests during cold war period. This policy was employed to Latin America although in most instances it failed . Turn around of the U. S relationship with Latin America has resulted to Latin countries embracing American economic policies. For example Mexico has been in fore front of Latin America region in ditching inefficient protectionism polices, adopting privatization, debt reduction and foreign investment all which are under United States economic policies for south.
United States economic policies have shown major effect in Mexico with North American Free Trade Agreement (NAFTA) helping this country to economic reformation. Mexico approval by NAFT is a major test for post cold war relationship among Latin American countries and success of failure having a direct impact to rest of the Southerners . United States economic policies on free trade advised to be employed in Latin America and in operation in Mexico does not automatic translates to a well-distributed economic growth overnight.
Also, it does not convert ailing economies as it is purported to be. Latin American economy is comprised of very little wealthy class of people consisting of ruling elite. Their middle categories of people consist of very few individuals with the majority of the population living in poverty like any other third world countries . United States trying to duplicating its economic policies to Latin America may be misplaced due to the fact that if wealth distribution structure is different from that of third world countries.
This gets us to quagmire of whether the economic policies advanced by Unites States to Latin America can reduce current economic injustice . Some scholars have for argued that the policy of laissez faire capitalism results to wide gap between poor and rich in the community, questioning rationality of employing it in Latin America . There is a contradiction of capitalism and socialist theory not able to give the right answer to the eradication of poverty in the third world countries economies. Communism tried to employed idea of supporting every one towards equality by ignored the human fundamental drive i.
e. incentive system which have been key to economic growth under capitalism economic policies . On the other hand, capitalism policies and liberalization of the economy which a key economic policies advanced by U. S. to Latin America may fail. For example opening up market by Australian Authority resulted to loss of employment and fall of production sector resulting to increased imports against export. This gets to the question whether this may duplicate to the economies of Latin America countries since case of western capitalism contains it own contradiction.
Various studies indicate that unregulated markets lead to economic exploitation and injustice which may be experience in Latin American after adopting U. S. economic policies. If the economic policies advanced by United States to Latin America fail, bitter rivalry which has been in existence before the cold war might escalate again and blame game of United States sabotaging Latin America economy may be renewed . To ensure United States economic and foreign policies succeed on Latin America, policies geared toward bridging the economic diversity within this region are important.
This is because some countries have adopted the United States economic policies while others are about or implementing them. For example Mexico and Chile economic policy implementation has lead to economic growth . On the other hand countries like Argentina are not yet stable economically stable. Argentina recorded economic deterioration in 2000 and 2001. For Latin America to benefit from United States economic and foreign policies there should be a defined categorization according to economic differences since needs may be different .
Economic policies to nurture growth of private sector and improve productivity are of great importance. These policies lead to enhanced economic growth, a right answer to poverty eradication in Southern hemisphere. United state economic and foreign policies should put emphasis on productivity through partnering with institution like Inter-American Development Bank (IDB) and other financial partners . This will be inconsistent with President Bush policies i. e. investing in people, ruling justly and opening doors for economic freedom.
Meaning that a major emphasis on development of human capital through improving education system and employment of new technologies for high productivity. Ruling justly help attaining of increased productivity as corruption and protection of contracts may attract private investment which is key to increased productivity. Therefore, United States economic policies should focus on the area of productivity and apply it categorically according to economic needs of different Latin American countries. Bibliography: Feldstein, Martin S. (1988): The United States in the World Economy:
National Bureau of Economic Research. ISBN 0226240789, 9780226240787; University of Chicago Press. Fryer Wesley A. (1993): Defining and Refocusing US Policy Toward Latin America. Retrieved on 17th November 2008 from; http://www. wesfryer. com/uslapolicy. html. Garcia, Enrique 2005: Magazine article; The Quest for Development in Latin America Rabe Stephen G. (1988): Eisenhower and Latin America: The Foreign Policy of Anticommunism. ISBN 0807842044, 9780807842041; UNC Press Krueger, Anne O. 1993: Economic Policies at Cross-purposes: The United States and Developing Countries.
ISBN 0815750536, 978081575053 6Brookings Institution Press Mishkin Frederic S. and Savastano Miguel A. 2002: Monetary Policy Strategies for Emerging Market Countries: Lessons from Latin America Journal article; Comparative Economic Studies Paulo Sotero (2005): Democracy in Latin America: Alive but Not Well Magazine article; Foreign Policy Taylor John B. 2002: United States Economic Policy Toward Latin America and the Role of the International Financial Institutions. Retrieve on 17th November 2008 from; http://www. stanford. edu/~johntayl/taylorspeeches/United%20States%20Ec