Economics at your fingertips  

External Fragility or Deindustrialization: What is the Main Threat to Latin American Countries in the 2010s?

Roberto Frenkel and Martin Rapetti ()

World Economic Review, 2012, vol. 2012, issue 1, 37

Abstract: In this paper we evaluate whether the surge of capital inflows to Latin American countries after the 2007-08 global financial crisis poses a threat for these economies. Recent IMF's documents have warned that capital inflows could lead to boom-and-bust cycles ending up in external and financial crises as in the past. We provide evidence that the external conditions of these economies are far more robust than in periods prior to crises. The evidence that Latin American countries are not showing signs of external fragility does not imply, however, that the current flow of capital does not pose a threat for them. In our view, capital inflows could harm economic development in the region by weakening the expansion of modern tradable activities. We show that capital inflows have induced an appreciation of real exchange rates and a deterioration of tradable sector profitability. Signs of deceleration of growth in manufactures and tradable services have started to emerge.

Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5) Track citations by RSS feed

Downloads: (external link) ... ntries-in-the-2010s/ (text/html) ... nkel-and-Rapetti.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

World Economic Review is currently edited by Kyla Rushman

More articles in World Economic Review from World Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by Jake McMurchie ().

Page updated 2021-12-31
Handle: RePEc:wea:worler:v:2012:y:2012:i:1:p:37