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Neoliberalism in Latin America

Neoliberalism can be viewed as an economic model that is gainingpopularity across the world where the government no longer controlseconomic factors, but leaves the private sector to control them(Kelly 2). The Neoliberalism policies became popular in the 1980s andthe 1990s and many countries especially in the Latin America adoptedthem. They are policies that allow a free trade and market andderegulation of trade. Under this economic model, the government ismainly encouraged to avoid subsidies, allow private property andremove the fixed exchange rates that are characteristic of manygovernments (H. J 236). It is essential to note that most of theLatin American countries were in debt in the 1990s and theinternational lenders such as International Monetary Fund and theWorld Bank were behind this economic model since they wanted torecover their money and the interests. The rising price of oil whichthese Latin American countries needed forced them to borrow in orderto purchase oil. The adoption of the Neoliberalism policies in thevarious Latin American countries had great effects on the countries,their workers and the labor unions in those countries. The idea of afree market which is the central characteristic of Neoliberalism wasborn in the United States as a way of controlling the economies ofthe Latin American countries which were growing their economiesquickly. The United States felt threatened by the growth of theseeconomies.


Impacts of Neoliberalism in Brazil

Neoliberalism has devastating effects in Brazil. The adoption ofNeoliberalism in Brazil in 1993 was thought as a great move thatwould foster growth of the economy and create employmentopportunities (Cook 5). It was also thought that the new economicmodel would enable the country to pay off its debts ad to have anattractive balance of trade. However, Neoliberalism had somedevastating effect on the Brazilian economy. Research has indicatedthat the growth of the economy stalled and the financial status ofthe country was shaken (Anderson 3). The free trade system allowedfor importation of cheap goods that rendered the growth of localindustries impossible. The government sold majority of the stateowned corporations and therefore it had little or no control of theeconomy. The government of Brazil’s tax income went downsignificantly and this meant that the country would hardly supportvarious critical social services.

The country’s savings and investments reduced significantly as aresult of the Neoliberalism policies. Research has indicated that thecountry received huge amounts in terms of bonds, debts and equitycapital. This implied that the country’s debt continued toincrease. The reduction of the investment and savings rate saw thecountry’s growth stagnate at only 2.4% from 1993 to 2003. This wascontrary to a rate of 6.3% that was witnessed from 1933 to 1980. Itis essential to note that the expectations of the proponents of theNeoliberalism were that the economic policies would enhance growth,increase savings, as well as increase savings (Anderson 4). However,it is evident that the opposite happened. It is evident that wheneveran economy declines, unemployment is inevitable. This is exactly whathappened in Brazil where the levels of unemployment rose from 2% inthe 1980s to about 13% by the years 2003. These rates of unemploymenthave led to poverty and marginalization in the country. It is alsoessential to state that the policies of the Neoliberalism allowed thegap between the poor and the rich to expand between 1995 and 2003.Additionally, the country’s per capita income was greatly affectedby the Neoliberalism policies where it has fallen from 21.6% in the1980s to a mere 15.5% in 2001. It is clearly evident thatNeoliberalism had great effects on the Brazil as a country.

Impacts of Neoliberalism on labor union and workers in Brazil

Neoliberalism in Brazil had devastating effects on the workers. Asit has been mentioned above, there was massive loss of jobs as someof the state owned corporations were sold to the private sector(Whitaker 104). Additionally, the workers were affected by thereduction of the minimum wage. It is evident that the workers musthave become extremely desperate due to the Neoliberalism policies ofthe 1990s to 2000s. There were some industries especially in theurban centers that were closed down. This led to layoffs of numerousworkers. It is also essential to state that one of the policies ofNeoliberalism was reduction of government spending. This wasnecessitated by the need for saving and investment (Anderson 3).However, this resulted in the deprivation of good living standardsfor the workers and the general public.

The desperation that rocked the employees strengthened the laborunions in Brazil. Unions comprising of teachers, bank workers,transit workers and health workers were all united against theNeoliberalism economic and social policies. The labor unions werelargely controlled by the state during the Neoliberalism era and thisforced most workers to unite and fight the regime. Workers’ unionshad little rights and demonstrations were met with force from the lawenforcement officers. The election of Lula as president was based onthe promises he had regarding reviving the economy and championingfor the rights of the workers.


Impacts of Neoliberalism in Mexico

The same fate that befallen Brazil has been witnessed inMexico as a result of the Neoliberalism policies that were adopted inthe country. It is essential to note that the International MonetaryFund was responsible for the adoption of a free trade policy inMexico. The free trade policies allowed the foreign firms to enrichthemselves together with a few billionaires in the country (Viviana,Patroni and Manuel 210). This made the country extremely poor andeffects of the neoliberal policies are still being felt today. Thenumerous immigrants from Mexico to the United States are running awayfrom poverty and harsh living conditions in Mexico. Neoliberalpolicies, which originated in the US and therefore benefited the US,have made the country to be extremely poor. Prior to the neoliberalpolicies, the country operated under the corporatist economy wherethe government used the import substitution industrialization. Thissaw the economy of the country grow steadily but there was unequaldistribution of wealth (Viviana and Manuel 215).

The neoliberal policies in Mexico which were imposed by IMF hadserious and devastating effects. The country’s spending on socialamenities such as water, transportation and health reduceddrastically. The minimum wages were reduced drastically and the percapita income fell by 5% annually between 1983 and 1988. The wagesfell by 50-60% in this period which was devastating for the workers.Neoliberalism also led to the privatization of over 900 state ownedfirms between 1982 and the year 2000.

Impacts of Neoliberalism on the Mexican workers and labor unions

The workers were deeply affected by the neoliberal policies inMexico. The wages fell by up to 60% which meant that the workingconditions and the living conditions were extremely affected. Therewere numerous employees who were laid off from the private sectorsince the private firms could hardly make any profits (Viviana andManuel 216). The percentage of the unpaid workers also increaseddrastically during the Neoliberalism time. This simply meant that theliving conditions of the workers were negatively affected.Additionally, the workers were absorbed by foreign owned firms fromthe US and they worked under difficult conditions, as well as beingpaid peanuts.

The oppression of the workers forced them to join unions.Teachers, doctors, truck drivers and other workers in the variousforeign owned industries formed unions which were aimed at fightingfor their rights as workers (Viviana and Manuel 218). Neoliberalpolicies agitated the workers and this caused an uprising of thelabor unions. The unions would be met with brutality and force fromthe government as they sought to fight for better wages and workingconditions.


Impacts of Neoliberalism in Chile

Chile has been said to be the only country that benefitedfrom the neoliberal policies of the US and never went into recession.The country adopted the neoliberal policies especially the free tradeand this opened up the opportunities for the country to trade withthe US and other countries. The country expanded the exportation ofminerals to the US and this earned the country huge income. Under theleadership of dictator Pinochet, the country adopted the neo-liberalpolicies forced by Regan in the US. The country sold almost all thestate corporations including banks to foreign investors (Lazarra277). At first, it was clear that the country was undergoing economicgrowth but the truth was that the common people were suffering.Essential social services were left in the hands of the privatesector which meant that services such as health, schooling andhousing became extremely expensive and the people could hardly cope.Whereas the proponents of the neoliberal policies argued that theywere success in Chile, it is essential to note that the common peoplesuffered immensely. The privatization and the later collapse of theChilean banks made the interest rates to rise. The country becameextremely poor and the gap between the rich and poor increasedexponentially.

Impacts of Neoliberalism on the workers and labor unions

During dictatorial leadership of Pinochet in Chile, the labor unionswere silenced and numerous leaders of the labor unions were killed.The labor unions went through a difficult time during theNeoliberalism period. Employees were not allowed to form unions sincethe unions were opposing the neoliberal policies that the governmentof Pinochet wanted to implement. The government used force and themilitary to silence all the labor unions. The workers were deeply andextremely oppressed during the neoliberal time under the leadershipof Pinochet. The wages were reduced through the removal of theminimum wage law (Lazarra 275). Employees were working under harshconditions under the foreign companies in Chile. It is also essentialto note that the workers could not afford most of the socialamenities since their prices had skyrocketed during this period.Numerous workers were also laid off as a result of the privatizationof most of the state owned corporations. When the two major bankscollapsed under the ownership of two Americans, the workers lostmillions in savings. It is clear that the effects of theNeoliberalism in Chile cannot be termed as a miracle, but devastatingespecially to the workers and the common people.


The effects of labor unions in the Latin American countries areclear from the research compiled above. The three countries discussedabove all suffered the same fate from Neoliberalism apart from Chilewhich has been known to have benefited economically fromNeoliberalism. It is clear that the countries’ economies werenegatively affected by the importation of cheap products especiallyfrom the United States. The US and other foreign countries’companies benefited largely from free trade policies in LatinAmerica. The workers were highly oppressed by the new policies assalaries ad minimum wages dropped significantly.

However, it is essential to note there are a few ways that thecountries would have sought to benefit from the Neoliberalismpolicies. It is clear that the new policies allowed the countries tofreely export their products and services to foreign countries. Onecountry that took this literally and benefited immensely was Chile.It exported minerals such as copper to the US and other countries toexpand its economy. It would also been essential for the LatinAmerican countries to put conditions on the American companies thatwere exploiting their workers in terms of poor working conditions andlow wages.

The Latin American countries made a huge mistake by selling all thestate owned corporations and gave the markets total autonomy. Itwould have been essential for Brazil, Chile and Mexico to retain somelittle control of the market forces in order to curb inflation. Thiswould have ensured that the countries’ economies remained atsustainable levels. It is clear that the policies of Neoliberalismgave rise and gave new energy to the trade unions especially inBrazil. The trade unions took this opportunity to gather and bringtogether all the employees in various sectors such as healthcare,teaching and drivers in a bid to fight for the welfare of theworkers.

Works cited

Anderson, Perry. Lula’s Brazil. London review of books. Vol33, No. 7. 2011, Print.

Cook, Lorena. Bringing Unions Back In: Labor and Left Governments inLatin America. Cornell University ILR School. 2013. Print.

Farber, Samuel. Cuba’s Workers after the Revolution. HavanaTimes, 2011. Print.

H. J. Communist strategy in Latin America. The World Today.Vol. 4, No. 6. RoyalInstitute of International Affairs. 1948,print.

Johnson, Joshua. From Cuba to Bolivia: Guevara’s Foco theory inpractice. Innovations: A Journal of Politics. Departmentof Political Science. University of Calgary.

Kelly, Lala. Neoliberalism in Latin America. Citizens press.2008. Print.

Lazarra, Michael. Neoliberalism and Chile’s Public Imagination.Spring, 2009. Print.

Legon, Delgado. Trade Unions in Cuba. Havana Times,2013. Print.

Viviana, Patroni and Manuel, Poitras. Labor in Neoliberal LatinAmerica: An Introduction. Labor, Capital and Society 35:2.pp.207-220. 2002, print.

Whitaker, Arthur. Our Reaction to Communist Infiltration in LatinAmerica. The Annals of the American Academy of Political andSocial Science Vol. 330. pp. 103-115. 1960. Print.