The problem was described as a failure of privatization in Latin America has largely due to poor implementation. During the years from the early 1980's to the early 1990's, what seemed at the time to be serious privatization efforts were occurring all over Latin America. By the late 1990's Latin American privatization revenues were several times higher than Southeast Asian privatization revenues and accounted for nearly 55% of such revenues worldwide. However, those very same privatization efforts now seem largely illusionary.
Yes, trade barriers fell and state-run government enterprises were sold, but the power and capital was not dispersed. The majority of it was simply transferred to a group of private bourgeois that continued to broker power with the state. So, what had looked like more than 10 years of privatization was not because there was still no real public enterprise ownership. The article goes on the describe how the ratio of IPO to population in Latin America is 10 times smaller than the world average and the ratio of private companies to population is more than 3 times less than the world average.
Johnson also writes that Brazil and Columbia have the world's most highly concentrated business capital ownership. Among the many problems in Latin America is its economic dependence on commodities for more than 50% of its exports. Johnson states that "… commodity driven economies are politically explosive: they tend to reproduce plantation societies and mining towns, not create an expanding and increasingly well-educated middle class, and they make Latin America more vulnerable than most to highly cyclical demand in richer nations. "
In spite of all the troubles, most Latin American politicians know what needs to be done. There needs to be another wave of reform to create a real working private sector. Regulations in Latin America need to be eased and the ineffective court system needs to be over-hauled. Knowing what needs to be done, and doing it, though are two different things. If the economic and political turmoil in Latin America continues, the world could see a rash of governments topple and new wave of dictatorships in place in many countries including Bolivia, Ecuador, Peru, and others.
The newly created totalitarian governments will more than likely not be on friendly terms with the US and will probably tighten trade regulations and raise import tariffs to unacceptable levels thereby essentially shutting out foreign goods and capital. While this may increase local jobs in the short-term, history has proven these methods will fail in the long term (Russia, China, North Korea, North Vietnam, etc… ). Latin America needs strong-willed and strong-voiced leaders to step up and implement true economic reform and win back the trust of their various peoples.