^1. Comisión Económica para América Latina y el Caribe (CEPAL), Balance preliminar de la economía de América Latina y el Caribe, 1995 (Santiago: United Nations, December 1995), 49–50.

^2. The “tequila effect” refers to the negative repercussions of Mexico's poorly executed devaluation on net capital flows to other Latin American countries. Presumably, the metaphor refers to foreign investors' fears that other countries in the region might also have been secretly consuming strong drink (disguising poor policies). The effect was particularly strong in Argentina, where a large-scale capital outflow mandated a severe monetary contraction because the exchange-rate regime keeps the Argentine peso at parity with the U.S. dollar through an arrangement like a currency board. The Argentine economy is now estimated to have declined by 4.4 percent in 1995. See IMF Survey, 6 May 1996, p. 155. The urban unemployment rate in 1995 averaged an estimated 18.6 percent, compared with 11.5 percent in 1994. See CEPAL, Balance preliminar, p. 52.

^3. This point is emphasized by Stanley Fischer in the Schydlowsky collection (p. 29), as well as by Holden and Rajapatirana (chap. 3).

^4. See Macroeconomic Populism in Latin America, edited by Rudiger Dornbusch and Sebastian Edwards (Chicago, Ill.: University of Chicago Press, 1991). An excerpt from this work appears in the Dietz volume under review here. The most spectacular populist policy failure was that of the Alan García government in Peru (1985-1990).

^5. Edwards explicitly contrasts this “new Latin American consensus” with the “Washington consensus” on policy reform associated with John Williamson. See The Progress of Policy Reform in Latin America (Washington, D.C.: Institute for International Economics, 1990). In other words, Edwards is saying that the reforms are “owned” by Latin American and Caribbean policymakers, not imposed by the international financial institutions. He notes that even the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC or CEPAL) is on board.

^6. Early and partial liberalization of the capital account, combined with lax bank supervision and exchange-rate rigidity, contributed significantly to the sharp downturn in the Chilean economy in the early 1980s (see Edwards, Crisis and Reform in Latin America, pp. 214–18).

^7. Edwards joins many others who are convinced by the “ample evidence that over the medium and long run, faster growth is the main determinant of poverty reduction, improved social conditions, and reduced inequality” (p. 261).

^8. Venezuelan voters demonstrated that this risk was very real by returning Rafael Caldera to office in 1994. After failing for two years to reactivate the economy with populist policies, Caldera agreed in April 1996 to adopt an orthodox stabilization and adjustment program that could be supported by the International Monetary Fund (IMF). Venezuelans, better prepared for orthodoxy than when Carlos Andrés Pérez surprisingly embraced it in 1989, responded much more calmly than they had seven years earlier.

^9. For an insightful analysis of the mutually reinforcing relationships among economic growth, education, poverty reduction, and narrower income disparities, see Nancy Birdsall, David Ross, and Richard Sabot, “Inequality and Growth Reconsidered: Lessons from East Asia,” World Bank Economic Review 9, no. 3 (Sept. 1995):477–508.

^10. Carmen M. Reinhart and Peter Wickham, “Commodity Prices: Cyclical Weakness or Secular Decline?” IMF Staff Papers 41, no. 2 (June 1994):175–213.

^11. “Neoliberal” or orthodox critiques of structuralism and other heterodox policies are hardly new. A good codification of orthodox critiques of heterodoxy can be found in Ian M. D. Little, Economic Development: Theory, Policy, and International Relations, A Twentieth Century Fund Book (New York: Basic Books, 1982). It appeared while the Latin American and Caribbean region was in the midst of its sharp decline in the early 1980s.

^12. ECLAC, Changing Production Patterns with Social Equity, Document No. LC/G.1601 (SES.23/4) (Santiago: United Nations, 1990).

^13. The long publication delay for this book makes obsolete the authors' classification of countries according to progress in structural adjustment.

^14. The editors regard free trade as “the globalization of the neoliberal agenda” (p. 15).

^15. A major risk in dealing with capital inflows is getting on the sterilization treadmill: countries adopt restrictive policies to offset the monetary expansion resulting from capital inflows; interest rates then rise, stimulating even more capital inflows and the need for more sterilization. But the alternative of letting capital inflows finance growing current-account deficits, given an overvalued exchange rate, is also dangerous.

^16. CEPAL estimates that between 1980 and 1990, the number of poor people in Latin America and the Caribbean increased from 135.9 million to 195.9 million, and the incidence of poverty rose from 41 to 46 percent of the population. See CEPAL, Panorama social de América Latina: Edición 1993 (Santiago: CEPAL, 1993), p. 100. Morley reports an increase in the number of poor people from 91.4 million to 130.8 million between 1980 and 1989 and a rise in the incidence of poverty from 26.5 percent to 31.0 percent (Poverty and Inequality in Latin America, p. 44).

^17. Albert Berry, “The Macroeconomic Context for Policies, Projects, and Programmes to Promote Social Development and Combat Poverty in Latin America and the Caribbean,” report prepared as part of the UNDP Project “Poverty Alleviation and Social Development,” Sept. 1995.

^18. I am not counting here Venezuela's rocky implementation in 1989 of stabilization and structural adjustment measures that were not sustained.

^19. These sources include chapters in Thiesenhusen's own important edited volume, Searching for Agrarian Reform in Latin America (Boston, Mass.: Unwin Hyman, 1989), and a significant number of studies from the years 1990–1993.

^20. See Luis Serven and Andrés Solimano, “Economic Adjustment and Private Investment,” Finance and Development 29, no. 3 (Sept. 1992):43-45, esp. 44.

^21. The model for these programs is Bolivia's Fondo Social de Emergencia, which dates from 1986. Most FISs were established in the 1990s.