On April 12, 2022, the Institute for International and Area Studies of Tsinghua University (IIAS) hosted the seventh lecture entitled “The Great Instability in Latin America (1970-2001)” of Economic History and Development in Latin America lecture series. The lecture was delivered by Professor Lucas Llach from the Department of History and Social Studies at the University of Ditra, Argentina and presided over by Yuan Mengqi, a postdoctoral researcher at the IIAS.
At the beginning, Professor Llach recalled the sixth lecture about the crisis and internal reform of import substitution industrialization and two limits came along with it: “foreign exchange bottlenecks” and export stagnation; the phenomenon of high inflation. On top of that, he introduced the theme of this lecture, i.e. the great economic instability in Latin America since 1970. During this period, some countries in Latin America began to adopt new development strategies, such as the production of industrial finished products with more international comparative advantages for export, and the expansion of trade openness; whereas some smaller countries reverted to the mode of primary product export. After the first oil crisis, soaring oil prices pushed up inflation in various countries, and the petrodollar system was gradually formed, which was denominated and settled in US dollars. Countries introduced various measures to cope with inflationary pressure,. For example, Argentina began to implement the floating exchange rate system named “Tablita” in 1978, in which the range of exchange rate changes was determined and announced in advance to lower people’s inflation expectations. Tightening monetary policies led to tighter financing environment and prominent debt vulnerability and a debt crisis ensued when a large number of international borrowing debts exceeded the repayment capacity of debtor countries. He then explained how high inflation in Latin America turned into hyperinflation, fueled by governments printing money in response to fiscal crises and falling currencies due to imbalances in the balance of payments. Citing the Cagan Effect and the Olivera-Tanzi Effect, Professor Llach pointed out that Latin America was trapped in a situation where inflation bred inflation. In the 1980s and 1990s, Argentina and Brazil, for example, introduced new currencies, Austral and Cruzado respectively, and implemented the currency board system and the Real Plan. At the same time, Latin American countries successively introduced various measures and reforms to stabilize economic development. Finally, in the 1990s, the Latin American economy was brought into a relatively stable stage of development.
During the Q&A session, Professor Llach interacted with the audience enthusiastically. They had in-depth discussions on whether the national economic autonomy will be affected when foreign investors become privatized under the condition that local companies are still very weak, whether industry security may be threatened in the process of foreign capital involved in privatization and Latin American countries’ expectations toward the future of manufacturing industry development and prioritized industries. The lecture concluded successfully in the audience’s warm applause.
Professor Lucas Llach teaches in the Department of History and Social Studies at the University of Ditra, Argentina and holds a Ph.D. in history from Harvard University. He received his B.S. in economics from the University of Ditra, and his M.S. in history from Harvard University and economics from the University of Ditra. He served as Vice Governor of the Banco Central de La República Argentina from 2016-2018, and Vice Governor of the Banco de la Nación Argentina in 2019, where he was responsible for policy formulation and implementation of financial electronization and informatization across Argentina. His main research areas include economic history, Latin American present and contemporary history, and medieval history. He is the author of a number of books, including Como Sapiens: correr, comer, amar y descansar a la manera de los humanos (Debate, 2020), Macroeconomía argentina (Alfaomeaga, 2006), Entre la equidad y el crecimiento (Siglo XXI, 2004), El ciclo de la ilusión y el desencanto (Ariel, 1998), etc.
Edited by: Xu Shuai
Typeset by: Cheng Yao
Proofread by: Yuan Mengqi
