Economist looks at Latin America

A prominent Venezuelan economist told approximately 80 students yesterday that the 1980s was "a lost decade" for Latin America, and that the region must overcome its economic problems in the 1990s. Pedro Palma, a 1976 Wharton Ph.D. graduate in economics, discussed what the problems and possible solutions are to current economic difficulties facing Latin America in a presentation in Vance Hall yesterday, sponsored by the Wharton Latin American Student Association. Palma began by emphasizing the dire situation the countries are in as they enter the '90s. He said that during the past 10 years, Latin American economies worsened on the average. He said they experienced negative G.N.P. per capita growth, adding that the average inflation rate in 1988 was 758 percent and in 1990 it reached almost 1,000 percent. "No developing country can have a chance to achieve a decisive growth or development [under these circumstances]," Palma said. However, he acknowledged positive political developments in the region. He said by 1990 every Latin American country, with the exception of Cuba, Panama and foreign protectorates, had converted to democracy. Palma speculated that to solve the problems, three basic areas had to be addressed: handling the external debt, keeping inflation down, and achieving a positive growth in the economy. Palma explained different plans to alleviate the foreign debt problem, saying that despite attempts, "the situation is less serious, but the problem is still there." He also said that in the 1930's, all of the countries were considered as a region, so countries like Bolivia defaulting on their international bond debts effectively closed the bond markets for all countries until the 1970s. Palma said history shows "we are considered as a region [when problems arise]. It is crucial to continue to have access [to international bond markets]." Among Palma's solutions for inflation are public sector reform, privatization of public services and reducing the fiscal deficit. But Palma emphasized that to achieve positive growth in the economy, international trade barriers would have to come down. "The name of the game [today] is openness," Palma said. He said the government must stimulate foreign investments and competition in private companies, as most industrialized countries are promoting now. But this is difficult because they sometimes have to compete with protected industries, he said. "It's almost impossible for any agricultural sector in Latin America to compete with the artificially low [foreign prices]," he added. Palma ended his one-hour lecture by detailing the basic parts of the Initiative for the Americas that President Bush unveiled in June 1990. The initiative calls for a unified hemisphere to face the rest of the world in the long term. Palma then opened the floor to questions from the audience. First year MBA student Eduardo Muller, treasurer of the Wharton Latin American Student Association, said he was very satisfied with Palma's speech. "Here one hears a lot about what's happening in the USA, Japan and Europe, but not a lot from the developing countries," Muller said. "Dr. Palma really knows what's going on in Latin America. I learned a lot from him." Other audience members also seemed to enjoy the lecture. "This lecture gave me a clear and well-informed insight into the real, concrete problems facing Latin American economies," said College sophomore Alejandra Torres.

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