Since the first edition of this book was published in 1994, the new paradigm based on market-friendly policies and export-led growth has been consolidated in Latin America. At the time of the first edition, it was too early to evaluate the impact of this New Economic Model on long-run economic performance and difficult to make comparisons with the previous paradigms. It is now clear, however, that the outcome of the new paradigm is unlikely to differ substantially from its predecessors. A few countries have been able to lift their long-run growth rates significantly, but most have not and several have performed much worse than during the inward-looking phase of development. Thus, the prospect of Latin America achieving a high standard of living in the near future is still remote and the gap between income per head in Latin America and that in developed countries, notably the United States, is as wide as ever.

The influence of the international context has always been of great importance for Latin America. However, the new wave of globalization – leading to the integration of product and factor markets around the world – has increased the impact of the external environment on the region despite the reduced importance of primary products. Latin America is still struggling to find a way to maximize the benefits of globalization while minimizing the impact of negative external shocks.