Indice De Liberalizacion Financiera

SERIE REFORMAS ECONÓMICAS

12

INDEXES OF STRUCTURAL REFORM IN LATIN AMERICA
Samuel A. Morley Roberto Machado Stefano Pettinato

LC/L.1166 January 1999

This document was prepared by Samuel Morley, staff member of the ECLAC Economic Development Division, Roberto Machado, Research Assistant and Stefano Pettinato, intern, as part of the project “Growth, Employment and Equity: LatinAmerica in the 1990s” (HOL/97/6034). The authors wish to thank Stephany Griffith-Jones, Eduardo Lora, Ricardo Ffrench-Davis, Graciela Moguillansky and Barbara Stallings for their help. The views expressed in this document, which has been reproduced without formal editing, are those of the authors and do not necessarily reflect the views of the Organization.

CONTENTS
ABSTRACT.......................................................................................................................................... 5 I. INTRODUCTION ............................................................................................................................ 7 II. MEASURING STRUCTURAL REFORM .................................................................................... 9 III. TRENDS ANDPATTERNS OF REFORM ............................................................................... 13 IV. CONCLUSIONS.......................................................................................................................... 23 BIBLIOGRAPHIC ESSAY ................................................................................................................ 25 STATISTICALANNEX..................................................................................................................... 27 General Reform Index ....................................................................................................................... 29 Commercial Index .............................................................................................................................30 Financial Reform Index ..................................................................................................................... 31 Capital Account Liberalization Index................................................................................................. 32 Privatization Index............................................................................................................................ 33 Tax Reform Index (0-1)..................................................................................................................... 34

Notes

ABSTRACT This paper is an attempt to quantify the process of structural reform in Latin America in five areas: trade reform, financial liberalization, tax reform, liberalization of external capital transactionsand privatization. It presents indexes for these five areas for 17 countries for the period 1970-1995. The resulting indexes permit one to make comparisons of the degree of reform across countries over time and to examine in a quantitative way the impact of these reforms. The indexes show that the reform process has not been uniform across time, country, or area of reform. The reforms started inthe 1970s in the Southern Cone stopped or even reversed after the debt crisis of 1982-1985, but spread to the rest of the region after 1985. Trade reform and domestic financial liberalization were the first components to be widely adopted with eleven countries reaching a level of 85% of the most liberalized by 1990, and all but one of the rest reaching that level by 1995. The period after 1990witnessed a very significant opening of the capital account. By 1995 there was widespread agreement and policy convergence in these three areas of reform. However, there is much less convergence and more variance in the indexes of privatization and tax reform. With respect to privatization, there have been significant sales of government enterprises in a number of countries, but the overall change in...