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PRINTED FROM the OXFORD RESEARCH ENCYCLOPEDIA, LATIN AMERICAN HISTORY ( (c) Oxford University Press USA, 2020. All Rights Reserved. Personal use only; commercial use is strictly prohibited (for details see Privacy Policy and Legal Notice).

date: 30 September 2020

Summary and Keywords

First utilized in Latin America in response to the mid-20th-century decline of populist economic policymaking in the region, modern neoclassical theory, or neoliberalism, can be generally defined as a market-oriented form of economy policymaking that seeks to decentralize state authority and redefine state administrative responsibilities through deregulation, privatization, and the creation of common markets. Based on principles of classical 19th-century economic liberalism, the economic and political framework of neoliberalism advocates for a dramatically limited role for the state, which should only act to maintain the integrity of contract law and private property as a means of supporting the market. In the absence of state intervention, neoliberalism in Latin America alternatively emphasized the role of multilateral organizations, such as the International Monetary Fund, the World Bank, Inter-American Development Bank, and the U.S. Agency for International Development in bringing financial stability and growth to the region through the manipulation of interest rates, the devaluation of exchange rates, and the establishment of free-market pricing of goods. Ultimately, the widespread implementation of neoliberal reforms through the 1980s and 1990s ushered in a new era of transnational economic policymaking that had long-term, mixed results for the environmental, political, and social landscape of Latin America.

Keywords: free market, debt crisis, social unrest, macroeconomics, common market, development, trade, tariff, investment, financial, transnational, populism, economic policy, reform, neoliberal

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