In recent years, Chile has arrived at a significant consensus regarding a number of subjects central to the country's development; and, notwithstanding certain important differences between the Concertación government and its opposition, there is considerable agreement regarding certain basic aspects of economic growth which will doubtless continue to be maintained in the mid-to-long run.

The official policy, as laid down by the government, is that Chile's economy is now oriented toward achieving growth with social equity, and that the way to reach those goals is by strengthening the country's insertion into the international economy, since the world is now moving towards a globalization which no country can afford to ignore. Given this new reality, the Chilean economy is also moving to take part in this process in a strategy that has proved fairly successful in recent years.

In recent years, many Latin American countries (LACs) have embarked upon trade liberalization drives. This article reviews the radical changes in trade policy which this has entailed, together with the current and foreseeable results, and offers some policy recommendations regarding complementary measures.

The first sustained experience with trade liberalization in recent decades was in Chile, which launched a process in the 1970s that, by the end of that decade, had made its economy one of the most open in the world.

One of the most dramatic political-economic changes over the last 15 years has been the shift in patterns of international finance. At the beginning of the 1980s, a select group of prosperous Third World nations had privileged access to an enormous volume of commercial bank credit. They could also attract fairly important levels of direct investment. For all practical purposes, finance was no longer a binding constraint on the development strategies of this group of countries. Although poorer developing nations could not rely on private credit or investment, many of them had access to substantial amounts of funds via bilateral donors and the multilateral institutions.

During the early 1990s, many Latin American countries enjoyed exceptionally strong economic growth, which has been credited with making possible substantial reductions in their rates of poverty. However, the collapse of capital flows to Latin America that began in 1995 portends a decline in the region's economic growth. If these countries now register growth rates that are only modestly positive (on the order of 1-3%), the question then arises as to whether this progress in overcoming poverty is bound to stall.

Despite new rhetoric to the contrary, Latin Americans have relied on growth almost exclusively as the way to overcome poverty. The distribution of income has changed very little over the past decade and, where change did occur, in many cases it has been for the worse.

Economic development under a capitalist market economy is usually not a smooth process. In addition, restructuring the economy with the aim of promoting a freer market economy often entails high economic costs as well. This article has two goals: (1) it will outline the inter-relationship between the restructuring of the economy now taking place in both Bolivia and Peru and how this process is affected by the illicit coca drug sector in each of those countries; and (2) it will discuss the domestic anti-drug policies in each and how, or to what extent, these are affected by the anti-drug policies of the United States. On the one hand, the illegal drug industry may have served to ameliorate the costs of restructuring; at the same time, it may also have made economic adjustment somewhat more difficult.