On the other hand, the liberalization in Latin American countries was still relatively limited during the 1980s, which meant that most of the industries were either controlled by central authorities or private initiative was generally not encouraged that much. This translated to the commercial segment as well, with private initiatives for import and exports being still relatively rare.
At the same time, foreign companies were not encouraged to penetrate the Latin American market and this was still a trend at the beginning of the 1990s. Only during the 1990s the U.S. companies and some of the European ones (notably from Spain or Italy) began to invest in Latin American countries and to benefit from the large internal market that Latin America was offering.
The reasons that the trade between Latin American countries and the U.S. And the EU experiences such a boom during the 1990s can be found in the gradual opening of the Latin American market, along with an encouragement for exports, a rise in internal consumption and the general governmental policies that were aimed at boosting the volume of trade and accelerating the liberalization process. Let's have a look at each of these in part.
The opening up of the Latin American market meant that foreign companies found at the beginning of the 1990s a business environment that facilitated foreign implementation in these countries and that created the premises for the further development of these economies.
With new management methods and production techniques, the Latin American economies gradually grew at a rate that allowed them to increase their exports as well, because there were surpluses that could not be turned towards the international market. This in part explained the growth in exports from Latin America, mainly towards the EU and the U.S., where the companies investing in Latin America were also located.
At the same time, it was obvious that with the growth of the economies, the internal consumption also increased, this being immediately reflected into the import levels with the main suppliers from the EU or the U.S. Internal consumption meant a constant increase in demand levels from the internal market, because the potential consumers had the revenues to spend on imported products.
On the other hand, governmental policies also meant political negotiations, not only for the creation of free trade agreements between some of the countries in the region and the United States or countries in the European Union, but also for the simplification of administrative and custom procedures, which encouraged the better circulation of goods and services and facilitated the dialogue between exporters and importers. It did not necessarily resume to the governments simplifying the procedures, but also direct actions in terms of promoting trade, including through diplomatic means.
The consequences of the trade liberalization wave to which Latin America participated during the 1990s had both positive and negative consequences. On one hand, the positive consequences are obvious. The countries in the region became involved in a mechanism at a global level that encouraged commercial trade, boosted revenues both for internal producers and the government and brought the Latin American products and goods on the EU and U.S. markets. At the same time, liberalization meant that products could enter the Latin American market as well.
It is interesting to see some of the negative consequences of commercial liberalization, this being in general connected with the incapacity of the local governments...
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