Effects of Liberalization Programs on Poverty and Inequality: Chile, Mexico, and Peru
Author(s)
Sheahan, John
Abstract
Programs of economic liberalization have many common features all over the world, but they do not necessarily have the same consequences. Differences in their effects reflect differences in the countries themselves along with accidental factors of timing and external events, and they can also embody systematic consequences of alternatives within the programs. The starting point in this discussion is that different versions of liberalization — alternatives consistent with the basic strategy -can have significantly different effects on poverty and inequality.Liberalization programs are not usually aimed at social concerns, although the common expectation of their proponents is that greater efficiency and success in avoiding inflation should favor economic growth and thereby reduce poverty in the long run. Social programs can surely help, but they leave open the possibility that negative effects from the side of market forces may outweigh gains from the social projects for many years. If the liberalization programs themselves can be shaped in ways that promote reduction of poverty and inequality, any social programs used with them might then become more effective than they would otherwise have been because they would not be caught in an uphill fight against market forces.
