Diversification in Latin American oil exporters: Was no

Diversification in Latin
American oil exporters:
Was no intervention
the best policy option?
Igor Hernandez (IESA) and Osmel Manzano (IDB, IESA,
Georgetown University)
Latin American still lags in
manufacturing exports
This performance has been
widely documented
•
•
•
•
Import Substitution in the 50’s
Crisis in the 80’s
Liberalization and structural reform in the 90’s
Oil exporters do not seem different from other LAC
countries…
• ….averages could be deceiving.
Outline of the presentation
1. Diversification in Latin American oil exporters
2. Diversification policies in LAC
3. Policies and outcomes
4. Concluding remarks
DIVERSIFICATION IN LATIN AMERICAN
OIL EXPORTERS
Oil exporters have diversified
However, in relative terms they
are still concentrated
Poor performance is not related
to the diversification pattern
Diversification in Latin
American oil exporters
• Oil exporters in Latin America have diversified
• However, in relative terms they are still more
concentrated
• Non-oil export performance is not related to abundance
and specialization pattern.
DIVERSIFICATION POLICIES IN LAC
Argentina: historically a well
diversified country
Argentina: two periods
• Pre-1990:
• Standard IS policies.
• Big market attracted MNC’s.
• 1990-2000
• Macro stability was the main policy objective
• Dismantling of IS policies and little intervention
• Mercosur
• 2000• More intervention: SME’s and Agriculture
Colombia: A tale of two
commodities
Colombia: Still finding a way.
• Pre-1990:
• Standard IS policies.
• Use of exchange rate for competitiveness
• Post-1990:
• Colombia did not dismantle IS policies in a crisis
• Shift to “competitiveness” and dialog with the private
sector.
• Success in business environment.
• However, with each new administration there was a
change on how to do it.
Ecuador: Better performance
after crisis?
Ecuador:
• Pre-1990:
• Standard IS policies.
• Use of exchange rate for competitiveness
• Extensive use of subsidized credit
• 1990-2000:
• Liberalization
• Public credit remained as the main intervention
• 2000-2008:
• New crisis and dollarization.
• Little intervention and attempt to shift to “competitiveness”
• 2008• Return to intervention?
Mexico: The transition to a
different country
Mexico: Taking advantage of
integration
• Pre 1990’s:
• Standard IS policies.
• Significant presence of the state
• 1990• Liberalization
• “Tequila crisis”
• NAFTA (1994)
• Focus on macroeconomic stability
• Presence in certain sectors: energy and agriculture
Trinidad and Tobago:
Reducing the reliance on
Energy?
Trinidad and Tobago: Late
liberalizer
• Pre 1990’s:
• Different flavors of IS policies.
• Significant presence of the state after discovery of
hydrocarbons: 62 firms!
• Post 1990’s:
• Liberalization started in 1986 and by 1995 all firms
were privatized
• Government did not abandon industrial policy:
• Industrial Policy 1996-2000
• Enterprise Development Policy 2001-2005
• After 2005: Attempt to diversify away from Energy
Venezuela: Unable to diversify
Venezuela: a tale of a collapse
• Pre 1990’s:
• Standard IS policies.
• Significant presence of the state
• 1990-1998:
• Liberalization and dismantling of IS
• High volatility
• 1998• Move towards and command and control economy
• Collapsed of non-oil exports
POLICIES AND OUTCOMES
Policies and outcomes
Non-oil Export
Growth
Post IS policies
Relevant trade
agreements
Argentina
8.3%
None until 2000
Mercosur
Mexico
13.9%
Minimum
NAFTA
Colombia
7.3% (8.5% w/o
coffee)
“Competitiveness”
Andean Pact
with constant changes
Ecuador
9.2%
Minimum/
”Competitiveness”
Andean Pact
Trinidad and
Tobago
9.6%
Still high intervention
Caricom
Venezuela
-2.4%
None/Command and
Control
Andean Pact
CONCLUDING REMARKS
Concluding remarks
• For Latin American oil exporters, total exports as well as nonoil exports have become more concentrated
• This performance on Latin American oil producers seems not
be related to their pattern of diversification
• A first look at policies might suggest that no intervention is
preferred to any intervention.
• However, if we look by “pairs”: Argentina, Colombia and
Venezuela experienced more frequent changes in productive
development policies.
Thank you!