Commodity export dependence and the choice of exchange rate regime: Viewing the poles from Saudi Arabia

As financial crises followed capital account opening in the 1990s the hard peg of a currency board regime was seen as the remaining ‘polar’ alternative to flexible exchange rates. With the Argentine peso devaluation of early 2002 suggesting that the fundamental requirement may be peg abandonment through either floating or ‘dollarisation’, the issue as it confronts highly open LDSs reliant on a narrow export base of primary commodities has been substantially neglected. Under pressure to increase financial openness, and with exchange rate variability posing a threat to their price level stability, the study asks whether pegging could remain an effective choice for such economies. Saudi Arabia has combined extreme commodity dependence with financial openness under a rigid peg and her experience is examined for the wider lessons it may contain. While sensitive to fluctuating confidence in the exchange rate evidence on demand for the Riyal suggests that, with appropriate policy support, currency pegs remain appropriate for commodity-dependent economies.     

Truth commissions,trials-or nothing? Policy options in democratic transitions

Gross human rights violations have constituted a hotly contested national issue in many recent transitions from authoritarianism to democracy. This article analyses how newly elected democratic governments have dealt with violations committed by officials of previous authoritarian regimes. Empirical evidence from around 30 (mainly) Latin American and African countries undergoing democratic transition after the mid-1970s shows that the government's choice of human rights policy largely depends on the relative strength of the public's demand for truth and justice and the outgoing regime's demand for amnesty and impunity. Policy choice will tend towards trials as the outgoing regime becomes weaker and away from trials as the outgoing regime becomes stronger. Truth commissions are the most likely outcome when the relative strength of the conflicting demands is roughly equal. Where human rights policy deviates from predictions, the government always does less than expected. These arguments hold true both at the time of regime change and during the consolidation phase, as power dynamics often change over time.     

Exchange Rate Regime,Central Bank Independence,and Political Business Cycles in Brazil

This article examines policy consequences of electoral cycles and exchange rate regime choices in Brazil. The literature on opportunistic political business cycles maintains that governments adopt expansionary economic policies before elections to mobilize voters’ support. However, research findings in Latin America based on the theory has been inconclusive. I argue that the lack of conclusive evidence in Latin America stems from measurement errors common in the use of cross-national aggregate data. Using Brazil’s monthly data from 1985 to 2006, this article shows that there are electorally induced fiscal cycles under fixed and crawling peg exchange rate regimes and electorally induced monetary cycles under floating exchange rates only when the nation’s central bank is not independent. Indeed, accounting for Brazil’s unique economic contingencies and longitudinal variations in the de facto central bank independence, its public policy behavior remarkably resembles that of the more affluent, economically stable OECD countries.

Prediction and management of currency crises in latin America

In recent decades, currency crises in Latin America have often marked the beginning of prolonged periods of inflation, economic recession, and depressed foreign investment. Attempts to anticipate such financial breakdowns have met with relatively little success. As the survey of existing models indicates, there seems to be little hope for the development of a forecasting framework able to predict exchange rate movements with a sufficient degree of accuracy and anticipation that would allow policy makers to mount a timely intervention in currency markets. The analysis of past currency crises, however, shows some common elements which might help formulate benchmarks that could be used as predictive parameters in the future. This paper provides a survey of the models and tools currently used to predict exchange rate movements. It analyzes the origin and evolution of the 1994 Mexican Peso crisis, its contagion effects on other Latin American economies, and the measures taken by the affected countries to manage the crisis. We summarize some of the market solutions, economic policy measures and institutional arrangements adopted in the wake of the December 1994 events as well as some of the lessons that seem to have transpired from this experience.     

Worlds Apart: Social Policy Regimes in Latin America

The region of Latin America exhibits significant diversity with regard to the size and scope of social protection programs. In this article, I propose a new way of measuring a country’s “social policy regime,” moving past expenditure-based conceptions of welfare provision to incorporate the coverage of programs. Employing this new measure, I use cluster analysis to demonstrate that Latin American social policy regimes cluster into four distinct categories. I then employ the comparative historical method to test a theory of why countries fall into each of these four categories. The analysis provides evidence that a country’s record of industrialization, the nature of political incorporation, and levels of ethnic and racial diversity are key determinants of the size and scope of Latin America’s social policy regimes.     

Exchange rate policy and price level changes: Casualty tests for Turkey in the post‐liberalisation period

The purpose of the present study is to examine the relationship between exchange rate changes and price level changes in Turkey during the 1980s using some modified Granger causality tests. During this period, Turkish exchange rate policy was characterised by considerable flexibility, in contrast to the long‐standing policy of fixing the exchange rate until a foreign exchange crisis necessitated devaluation. The weight of the evidence presented suggests that Granger causality runs from price level changes to exchange rate changes but that there is not feedback causality from exchange rate changes to price level changes. This conclusion is not altered by the inclusion of a money supply variable. Thus, for Turkey, exchange rate adjustment does not seem to have created a vicious cycle of currency depreciation leading to inflation as is often feared. Whether this result will hold for other developing countries which adopt flexible exchange rate regimes will require further testing.     

No miracles here: Trade policy,fiscal policy and economic growth

In this paper we consider whether the rate of growth following trade liberalisation differs significantly from growth in other developing countries. We find that it does not. Given this result we explore whether these growth effects are offset by changes in other policy variables, namely changes in fiscal policy. Governments increase welfare spending as a response to greater exposure to international trade. We find evidence that countries that liberalise their trade regimes increase their spending on welfare but not other forms of expenditure. However, once we control for the effects of fiscal policy, trade liberalisation still has no growth effects.     

What Drives Japanese INGOs to Operate in Latin American Countries?

International nongovernmental organizations (INGOs) provide essential aid and public services to less-developed countries. Although most literature focuses on Western INGOs, Asian INGOs have also become globally active. Little is known about what motivates INGOs to provide services in other regions, such as Latin America. In this study, we seek to identify the criteria Japanese INGOs use to select Latin American recipient countries. We propose that Japanese INGO operational location decisions are a function of Japanese foreign policy agenda, Japan-recipient country business relations, and recipient country’s need and liberalization. Using data from Japanese INGOs working in Latin America and 24 Latin American countries on contextual, macroeconomic, and demographic indicators, we find that the significant factors driving INGO decisions to operate in Latin American countries are need and the presence of Japanese businesses in the recipient country. Results have practical implications for foreign aid targeting and economic development.     

Exchange rates in nineteenth‐century Brazil: An econometric model

This paper develops a model for the exchange rate in Brazil during the second half of the nineteenth century. The exchange rate discussion has a bearing in the sources of industrialization in Brazil. Two explanations stem from a primary export base. Whereas the ‘adverse shock argument’ links industrialization to unfavorable conditions in the external sector and exchange devaluations, the alternative approach views industrialization from the standpoint of the growth of income brought by the rise in exports. Those mechanisms are discussed. Also considered are the effects of monetary policy and the behavior of wages. The evidence shows that purchasing power parity is not enough to explain the exchange rate behavior, which clearly responded to coffee export revenues.     

Devolution and individual choice in local government services

Abstract

The Labour government in England is pressing for further individual consumer choice in local authority services and, in the name of localism, exploring possibilities for devolution of powers to councils. Little work has been done on how the two agendas might interact. Are they in inevitable tension, because choice promotes exit and devolution promotes voice? Might devolution be offered as a reward for good performance in choice? What might be the consequences for equity? This article argues that the more significant interaction issues are likely to arise from the dynamics created by their combined effects on incentives on households at the margin to relocate. The article offers conceptual and deductive analysis, because before we know the design of devolution and choice schemes we cannot measure the size of the interaction effects. Although major policy tension is not inevitable, the article concludes that policy makers may have to decide how much gains in voice and from choice are worth the possible losses in equity.     

Reflections on rural violence in Latin America

In recent decades rural violence has escalated in many Latin American countries. Although there is a growing body of literature on the topic, there exist as yet few comparative studies. While there are undoubtedly multiple and evolving causes of violence, this exploratory article focuses on the relationship between sociopolitical violence and agrarian structure and state policy. Particular attention is paid to the impact of agrarian reform and counter-reform experiences on rural conflicts and violence. A contrast is also drawn with countries which have not undergone any significant land reform. The cases discussed are Chile, Peru, Colombia, Brazil, Mexico and several Central American countries (Nicaragua, Guatemala and El Salvador). The complexity of rural violence is demonstrated and the case for further comparative studies is argued, so as to advance our knowledge on the causes, consequences and resolution of violence.     

A note on the functioning of international commodity price stabilisation agreements in periods of fluctuating monetary exchange rates

A belief held by many government officials and development economists is that sizeable and irregular commodity price fluctuations have important detrimental effects on both exporting and importing countries. Given the nature of these adverse effects attempts have been made to negotiate international price stabilisation agreements under which some central authority would make market interventions to offset the random price fluctuations. However, this study argues that the utility of such agreements should be re‐examined due to the effects of floating exchange rates. Empirical evidence is also presented which shows that recent exchange rate variability has had at least as much of a destabilising influence on commodity export earnings as fluctuating prices, and that the effects are borne unevenly by exporters of the same commodity due to their association with different currency blocks. When examined from the viewpoint of commodity importers the price and exchange rate effects are also found to be very different for individual countries.     

Exchange Rate Pass-through to Import Prices,and Monetary Policy in South Africa

Abstract

Understanding how import prices adjust to exchange rates helps anticipate inflation effects and monetary policy responses. This article examines exchange rate pass-through to the monthly import price index in South Africa during 1980–2009. Short-horizon pass-through estimates are calculated using both single equation equilibrium correction models and systems (Johansen) models, controlling for both domestic and foreign costs. Average pass-through is incomplete at about 50 per cent within a year and 30 per cent in six months, and in the long-run, from the Johansen analysis including feedback effects, is about 55 per cent. There is evidence of slower pass-through under inflation targeting; pass-through is found to decline with recent exchange rate volatility and there is evidence for asymmetry, with greater pass-through occurring for small appreciations.     

Long Live Democracy: The Determinants of Political Instability in Latin America

We investigate the underlying causes of political instability in a panel of 18 Latin American countries from 1971–2000. We test whether regime type, regime durability, factionalism, income inequality, ethnic diversity, ethnic discrimination, regional spillover effects, urban growth and macroeconomic variables matter for instability. We find several important results: (1) democracy has a significant negative effect on instability that is robust to several alternative specifications; (2) factionalised political systems experience higher instability; (3) income inequality, ethnic fractionalisation, and urban growth have important nonlinear effects on instability; and (4) of the macroeconomic variables we study, only openness to trade has a significant negative effect on instability.     

When Does Aid Conditionality Work?

Does aid conditionality—the setting of policy goals in exchange for access to aid—promote reform? Many studies on the impact of aid and reform suggest not. However, few explicitly examine whether the impact of aid on reform is mediated by recipient regime type. I argue that conditional aid is effective but its efficacy depends on recipient countries’ level of democracy because the value of aid to governments depends on the degree to which it helps them maintain power, and recent work shows that the marginal impact of aid on political survival increases with level of democracy. I test this argument on data from 68 countries over the period from 1980 to 1999. I focus on the impact of IMF and World Bank aid on fiscal reform, one of the most commonly stipulated conditions in aid-for-policy arrangements. I find that aid from the Bretton Woods institutions promotes fiscal reform, but only in more democratic countries.     

The Evolution of the Foreign Direct Investment Regime in the Americas

The purpose of this article is to describe the international regime governing foreign direct investment in the Americas and assess its implications for regional economic governance. The article develops a novel methodology to map the multi-layered patchwork of investment agreements according to the level of investment protection offered by each agreement. The mapping exercise demonstrates the existence of two distinct legalization projects in the Americas, one which broadly corresponds to the investment protection concerns of the United States, and a second, overlapping regime, which better reflects the interest of many Latin American governments in maintaining their policy autonomy. The article argues that these distinct visions are anchored in a common dispute settlement system based on binding international arbitration, which tends to harmonize the governance effects of the regime.     

Economic Growth and Convergence in Latin America

Little is known about the convergence process among developing countries in general and in Latin America in particular. For the period as a whole there is no evidence of a narrowing in the cross-country dispersion of income (sigma convergence). But there is evidence of convergence to different steady state income levels at a speed that is common to all countries (conditional beta convergence). The article also shows that the estimates of convergence are sensitive to the way in which GDP per capita is measured.     

New directions in welfare: rights-based social policies in post-neoliberal Latin America

What happens to the politics of welfare in the Global South when neoliberal values are questioned? How is welfare re-imagined and re-enacted when governments seek to introduce progressive change? Latin America provides an illustration and a valuable entry point to debates about ‘interruptions’ of neoliberalism and the changing nature of social policy. Drawing on examples of disability policies in Ecuador and care provision in Uruguay, we argue that there is a ‘rights turn’ in welfare provision under the left that reflects a recognition that previous welfare models left too many people out, ethically and politically, as well as efforts to embed welfare more centrally in new patterns of respect for socio-economic and identity-based human rights. Given Latin America’s recent contestation of neoliberal development as well as its history of sometimes dramatic welfare shifts, the emergence of rights-based social provision is significant not just for the region but also in relation to global struggles for more equitable governance.     

Son Preference and Household Income in Rural China

Why is it that couples who have a son or whose last child is a son earn higher conditional income? To solve this curious case we tell a detective story: evidence of a phenomenon to be explained, a parade of suspects, a process of elimination from the enquiry, and then the denouement. Given the draconian family planning policy and a common perception that there is strong son preference in rural China, we postulate two main hypotheses: income-based sex selection making it more likely that richer households have sons, and an incentive for households with sons to raise their income. Tests of each hypothesis are conducted. Taken as a whole, the tests cannot reject either hypothesis but they tend to favour the incentive hypothesis; and there is evidence in support of the channels through which the incentive effect might operate. To our knowledge, this is the first study to test these hypotheses against each other in rural China and more generally in developing countries.     

The new business environment of latin america and the caribbean

Latin America and the Caribbean Region experienced dramatic changes in the 1990s. Politically, all but one country, are governed by a democratically elected government. Economically, import substitution industrialization policies (ISI) followed in the past, were replaced by liberalization programs aimed at reducing inflationary pressures and creating a competitive environment.

The significant increase in capital flows to Latin America in one single year, 1990, buried the 1980s as the “lost decade,” and the successful implementation of privatization programs region-wide prompted to affirm that the 1990s might constitute the “Latin America's decade.” Where does the euphoria come from? Is there any implicit promise to be derived from such international capital flows? Will the pattern be sustained? Has Latin America begun a new era? Are unfolding events on defiance of fundamentals?

These and many other questions can be raised regarding the spectacular transformation of Latin America and the Caribbean, particularly when analysts still debate about the Mexican crisis of 1994, investors eagerly pursue the agenda of a second privatization wave, experts around the world get fascinated with the high-tech push found in Latin America, bankers apply Latin American lessons to deal with the currency crisis in Asia, and casual observers recognize the value-creation process added by Latin American entrepreneurs who challenge the most adverse circumstances. Indeed, Latin America and the Caribbean is a land full of promises and contrasts, where there exists a head to head competition between globalization and nationalism, the haves and the have-nots, capitalism and communism, literature and high-technology, markets and governments, East and West, North and South, myth and reality, and … “despair and hope.”

There is no question, however, that Latin America and the Caribbean, being she a detached wide-land, is a region of great opportunity. Since the external debt crisis of 1982 and its aftermath, democracy, open markets, economic reform and privatization have blended to offer great expectations and opportunities for business and investment in the region. The new vision strongly questioned the status quo to render a new business environment to open the doors and light up the roads of the upcoming millennium.

It is the purpose of the International Journal of Public Administration to offer to its readers, for the very first time, a special issue devoted entirely to the discussion of the new business environment of Latin America and the Caribbean. We are, therefore, grateful to all the authors who generously are sharing with us the findings from their scholarly research. Given the far reaching consequences of their contributions, we, as guest editors of this special issue, had no other choice but to incorporate the fruits yielded by this symposium of thirty-seven papers in four issues in one single volume. The papers have been sorted according to the following four focal points: Privatization of State Owned Enterprises; Mexico; Economic, Financial and Foreign Investment Issues; and Economic Integration, Trade and Cultural Issues.

Part I of this special issue on “The New Latin American Business Environment” looks at one element of the broad economic strategy followed by most Latin American countries: Privatization of State Owned Enterprises. The role of governments is to provide the framework that will allow the private sector to create wealth. Notwithstanding, this partnership between the public and private sectors must ensure the inclusion of the poorer sections of the population. In many ways, the long-term sustainability of these economic programs will largely depend on this. The ten papers selected for this part, provide insight on how this phenomenon is affecting different Latin American countries.

The first paper by Shamsul Haque argues that there is a need to analyze the social consequences of privatization programs. Further research is needed to identify the main advocates and beneficiaries of privatization programs. According to the author, “critical economic conditions have not improved significantly after privatization, and in many instances, the conditions have deteriorated.” About fifty percent of Latin America's population of 470 million people live under poverty.

The late Sister Martin Byrne (1) documents in her paper, “Cananea Consolidated Copper Company from Nationalization to Privatization: 1972-1991 ,” the problems of ownership and management faced by La Cananea, a Mexican copper mine. Sister Byrne argues that “The Cananea mines were profitable under entrepreneurial and MNC ownership, but proved to be a financial drain on the government during the paraestatal period.”

The third paper by Garcia and Dyner, examined the reform and regulation of electricity in Columbia. According to the authors, the regulatory framework adopted by the government is going to determine the success of these programs. Furthermore, “the challenge is the change of public intervention in the sector, so that it regulates, supports, and supervises the decentralized activities of the firms, and liberates resources to be invested in other areas.”

Walter and Gonzalez provide interesting philosophical arguments on technology and human resources management derived from the cases of privatized companies in Argentina. The authors consider two variants, “systemic modernization and revamping of existing teams” to invite a reopening of the old debate on technological blending. They argue, however, that “to compete you do not necessarily need to ‘ be on the frontier.’”

Joan B. Anderson examines, the “Privatization, Efficiency and Market Failure: Transforming Ecuador's Public Sector,” privatization in Ecuador through the shift experienced by development theory with respect to the role of the public sector. In this paper the author points out that “while careful privatization can be positive, privatizing monopolies like the electric utility and/or quasi-public goods like highways are likely to be detrimental to long run economic development.”

Doshi identifies the successes and failures of the privatization program in Mexico by analyzing the cases of Mexicana Airlines, Aeromexico and Telmex. The author argues that even though the government was able to sell a number of state owned enterprises, a “successful” privatization program required appropriate macroeconomic policies and defining the role of foreign investment in economic development. One can argue then, that even though the size of the state is shrinking, its role is becoming more important.

The article by Vetter and Zanetta analyze also the case of Argentina. The authors argue that in order to consolidate the economic reforms implemented by the national government, provincial reform has to take place. A number of important lessons were identified.

John M. Kirk and Julia Sagebien present, in “Cuba's Market Rapprochement: Private Sector Reform - Public Sector Style,” the highlights of Cuba's process of transition towards a market economy by analyzing the conditions that lead to a market opening as well as the ends, the means and the actors of the ensuing process of economic reform.

Walter T. Molano contributes a paper, “The Lessons of Privatization,” based on his book The Logic of Privatization: The Case of Telecommunications in the Southern Cone of Latin America by looking at privatization as a process that may end up in varied outcomes as seen from microeconomic-, macroeconomic-, and political perspectives of analysis.

The focal point of Part II is Mexico. It is very clear that since the beginning of the decade, Mexico has made major efforts to transform its economy in order to play a more significant role in the global economy. Different attempts have been undertaken leading to: first, address the aftermath of the debt crisis of 1982; second, modernize and open the economy through a structural change that have included, among other programs, privatization, deregulation, fiscal deficit reduction, and trade liberalization: and third, change the political landscape.

Ephraim Clark models, in his “Agency Conflict and the Signaling Snafu in the Mexican Peso Crisis of 1994,” the conflict as a government held option to default and introduce signaling by assuming that the Mexican government had monopolistic information on the economy's true situation. The author argues that “if steps had been taken in late 1993 and early 1994, the crisis element of the adjustment could probably have been avoided.”

Blaine's article examines the role of foreign capital in economic development. By studying the Mexican case, the author answers a number ofvery important questions: How are once protected markets going to react to a large inflow of foreign capital? How did Mexican authorities deal with these inflows? What are some of the lessons that could be derived from the Mexican experience?

Hazera's paper discusses the history and legal basis of Mexican financial groups. On the basis of various stock market and financial statement data, an examination is also made of the groups’ evolution from 1991 to 1994.

Eugene M. Salorio and Thomas L. Brewer consider, in “Expanding the Levels of Analysis of FDI for Improved Understanding of Policy issues: The Case of Mexico,” both macro-, and micro-level shifts of analysis which mutually complement one another, and yield, for example, a “components profile” of disaggregated national level FDI flows which depends on the type of the project. The authors identify far reaching implications for public policy that may be extrapolated from the case of Mexico to the new business environment faced by the Latin American countries.

Francis A. Lees suggests also, from another angle, that the crisis of December 1994 could have been avoided because the financial disequilibrium was clearly evident by mid-1994 just be looking at Mexico's GDP and balance of payments.

C. Bulent Aybar, Riad A. Ajami, and Marca M. Bear provide a comparative study of the recent experiences of Mexico and Turkey. The authors identify common elements in the development and eruption of the crises to conclude that “under capital mobility strong internal and external shocks may lead to explosive crises … even though overall macroeconomic balances are sound.”

James P. D’Mello shows in “An Analysis of Mergers and Acquisitions in Mexico: 1985-1996,” that the Mexican crisis has led to an escalation of corporate restructuring such as mergers, acquisitions and joint-ventures.

Jiawen Yang joins the current debate on the causes of the recent Mexican financial crisis by arguing that “capital inflows that are not well absorbed by the private sector will cause financial instability under a fixed exchange rate regime.”

Part III of the new business environment of Latin America and the Caribbean includes ten papers on Foreign Investment, Economic and Financial issues which add significantly to the understanding of the overall transformation carried out in recent years by this region of the world.

Christopher Korth and Ajay Samant, and Craig A. Peterson andK. C. O’Shaughnessy recognize, respectively in the following two papers, “American Depositary Receipts (ADRs) from Latin America: An Opportunity for American Investors.” and “Financial Investment Via ADRs in Mexico and South America,” the usefulness of ADRs for operationalizing international diversification.

Juan Espana surveys the literature on models and tools currently used to predict exchange rate movements, and aims to suggest market solutions, economic policy measures and institutional arrangements to currency crises. The author analyzes the origin and evolution of the 1994 Mexican Peso crisis, its contagion effects on other Latin American economies, and the measures taken by the affected countries to manage the crisis.

Prakash L. Dheeriya and Mahendra Raj provide, in “An Investigation in Exchange Rate Behavior of Emerging Countries,” insights on the role that exchange rate risk plays by identifying similarities and differences through international comparisons.

Kumar's paper examines the important role of foreign direct investment in promoting economic development. The emphasis here is on the transfer of technology through foreign direct investment.

Neupert and Montoya study the characteristics of’ Japanese foreign investment in Latin America, with a focus on Brazil and Mexico. The authors looked at the preferred modes of entry and the post-entry performance of these subsidiaries.

Thomas M. Fullerton, Jr. shows, in “Currency Movements and International Border Crossings,” through two ARIMAmodels that “northbound bridge traffic to El Paso is nonrandom and follows fairly well defined patterns each year.”

Trevor Campbell makes, in “A Note on the Current and Capital Accounts Compilation of Barbados under the Fourth and Fifth IMFEditions,” a comparison with respect to the composition and structure of the current and capital accounts of Barbados.

Janet Kelly and Alexeis Perera argue, in “Antitrust Policy in a Hostile Environment: Institutional Building in Venezuela's Procompetencia,” that the theories of bureaucracy in Latin America generally stress institutional weakness, political volatility and the politicized nature of government agencies which motivated, in Venezuela, the creation of the anti-monopoly agency called “Procompetencia.”

G. Scott Erickson and Andrea Nhuch recommend in ‘The Latin American Business Environment: Patent Protection Issues” a general hybrid system to deal with patent rights issues.

Finally, Part IV deals with a blend of Trade, Economic Integration and Cultural issues. Since much of the world still tends to view Latin America and the Caribbean in terms of stereotypes, it seems appropriate to end this special issue on the new business environment of the region with a group of papers that revisits the rich mosaic of Latin America, and permits appreciate her new reality.

Isaac Cohen argues, in “Hispanics and Foreign Policy.” that though the primacy of economics in Hemispheric relations provides an opportunity for Hispanic businesses, yet this community will have to act deliberately to benefit from the opportunities that are emerging.

Eva Kras contributes, in “The Viable Future of Mexico and Latin America: A New Business Paradigm,” with a South looking North approach for doing business that challenges the traditional view of business relations.

Guillermo Duenas argues, in “Cultural Aspects in the Integration of the Americas,” that managing cultural integration successfully requires a process of “intercultural learning.”

Andres A. Thompson, Francisco B. Tancredi and Marcos Kisil introduce, in “New Partnerships for Social Development: Business and the Third Sector,” the novel argument that corporate philanthropy can make the difference in social development because grantmaking is still the least frequent used strategy in Latin America and the Caribbean region.

Chris Robertson, Pol Herrmann and Kevin Duffy measure, in “Exploring Perceptions of Technology Between the United States and Ecuador,” perceptions of technology on the basis of the typology of motivators and inhibitors of technological growth.

Melissa H. Birch argues, in “Mercosur: The Road to Economic Integration in the Southern Cone,” that Mercosur represents, in contrast to the historical record of economic integration in the region, an adaptation to the contemporary political climate.

Wu and Longley discuss the rationale for extending NAFTA to Chile. Their study examines also how NAFTA negotiators may address issues such as trade and investment rules, intellectual property rights, and labor and environmental standards among other things.

Roger Kashlak and Srinath Beldona identify, in “Partner Reciprocity, Telecommunications Flows and Balance of Trade Patterns Between the United States and Latin America,” partner reciprocity as the issue at the core of the international long-distance industry.

Ines Bustillo extends, in “Overview of Economic-wide NAFTA Models” computable general equilibrium models to the case of NAFTA.

We hope that this special issue is informative and interesting to business-decision makers, regulatory policy makers, and students concerned with gaining an understanding of the ongoing transformation of Latin American and the Caribbean.

Finally, we are again most grateful to the contributors of articles for making this special issue possible. We would also like to thank Jack Rabin, editor-in-chief of the International Journal of Public Administration, for trusting us the delicate mission of providing to the readers a fresh view of the new business environment of Latin America and the Caribbean.