Sage Journals: Discover world-class research

Abstract

In recent years, many South American countries have moved from policies embracing neoliberal, market-based economic policies to those supporting nationalization of industries and the re-institution of trade barriers (to protect domestic industries). This paper first addresses the concept of “globalism”, efforts at globalization of trade, and development of free markets in South America since the 1980s. Second, it reviews regional trade agreements, with a focus on Mercosur, the most important regional trade organization. Third, it discusses recent trends in South America's nationalization of industries. Fourth, a political risk analysis of future free trade and foreign direct investment in the region is undertaken. Fifth, conclusions and recommendations are offered, including: 1) the effects of increased government control of the economy may result in full-member status countries in Mercosur becoming less attractive as host nations for foreign direct investment, while conversely, non-full members may become more attractive; 2) center-left governments, unlike those embracing orthodox socialist policies, are not instituting policies discouraging foreign direct investment; and 3) where there are instances of host country expropriation of private property (without fair market compensation), a robust corporate policy of pursuing claims (with home country support) through the International Centre for Settlement of Investment Disputes is recommended.

Keywords

Free trade Foreign direct investment Globalism Mercosur Multinational corporations Nationalization of industry

Get full access to this article

View all access options for this article.

References

Associated Press (2006) Ecuador rejects IMF recommendation in Occidental Petroleum suit, International Herald Tribune, 7 October, at: http://www.iht.com/articles/ap/2006/10/07/America/LA_GEN_Ecuador_IMF_Occidental_Petroleum_php.

Associated Press (2007) South American leaders refocus Mercosur trade bloc on needs of poor, International Herald Tribune, 17 January, at: http://www.iht.com/bin/print.php?id=4246493.

Balch

(2005) Goodbye and good riddance, 19 December, at: www.guardian.co.uk/argentina/story/0,11439,1670834,00.html#article_continue.

BBC News (2002) Profile: Hugo Chavez, 5 December, at: http://news.bbc.co.uk/1/hi/world/Americas/3517106.stm.

BBC News (2003) Kirchner: President by default, 15 May, at: http://news.bbc.co.uk/1/hi/world/Americas/2981797.stm.

BBC News (2004) Uruguay elects left-wing leader, 1 November, at: http://news.bbc.co.uk/1/hi/world/Americas/3965755.stm.

BBC News (2006) Mercosur – common market of the south, 15 December @http://newsvote.bbc.co.uk//mpapps/pagetools/print/news.bbc.couk/2/hi/Americas/5195834.stm.

BBC News (2007) Country profile: Brazil, February, at: http://newsvote.bbc.co.uk/mpapps/pagetools/news.bbc.co.uk/2hi/Americas/country_pr.

Behn

(2003) Bush, Lila da Silva to meet to build a positive agenda, Washington Times, 20 June, at: http://www.washingtontimes.com/functions/print.php?StoryID=20030619-82753-9609r.

10.

Brink

C.H.

(2004) Measuring Political Risk: Risks to Foreign Investment (London: Ashgate). Business Week (2007) Nationalizations of the week, 14 May, p. 31.

11.

Caporaso

J.A.

Levine

D.P.

(1992) Theories of Political Economy (New York: Cambridge University Press).

12.

Caranza

M.E.

(2003) Can Mercosur survive? Domestic and international constraints on Mercosur, Latin American Politics and Society, 45(2): 67–104.

13.

CBC News (2007) Ecuador's new leader has no kind words for the US, 15 January, at: http://www.cbcca/world/stor/2007/01/15/correa-ecuador.html.

14.

Champion

M.E.

(2001) Nationalization and privatization in Peru: Socio-economic images in perpetual conflict?, Journal of Socio-Economics, 30(5): 517–532.

15.

Clendenning

(2006) South America trade zone faces challenges, 14 February, at: http://www.bilaterals.org/article-print.php3?id_article=3833.

16.

CODELCO (2007) The corporation (history), at: http://www.codelco.com/english/la_corporacion/historia.asp.

17.

Crawley

(2004) Mercosur: In Search of A New Agenda, Rapporteur's Report-Working Paper-SITI-06A, July, Inter-American Development Bank, Integration and Regional Programs Department, Washington, DC.

18.

Democracy Now! (2006) Latin America, US foreign policy and the role of indigenous people of Bolivia, 22 September, at: http://www.democracynow.org/article.pl?sid=06/09/22/1323211.

19.

Economist, The (2007) Country briefings: Chile, 14 February @ http://www.economist.com/country/Chile/index.cfm.

20.

Financial News (2007) Venezuela mulls mining nationalization, 18 January, at: http://biz.yahoo.com/ap/070118/Venezuela_mining_nationalization.html?v=2&printer=1.

21.

Gamarra

E.A.

(2007) Bolivia on the brink (CSR No. 24), Council on Foreign Relations, Center for Preventive Action, February, New York.

22.

Hanson

(2007) Bolivia's turmoil, Council on Foreign Relations, 21 February, at: http://www.cfr.org/publication/12669/bolivias_turmoil.html.

23.

Ingram

(1974) Expropriation of U.S. property in South America: Nationalization of Oil and Copper in Peru, Bolivia, and Chile (New York: Praeger).

24.

Jensen

N.M.

(2006) Nation-states and the Multinational Corporation: A Political Economy of Foreign Direct Investment (Princeton: Princeton University Press).

25.

Klonsky

(2007) Backgrounder. Mercosur: South America's fractious trade bloc, Council on Foreign Relations, 1 March, at: http://www.cfr.org/publications/12762.

26.

Lapper

(2005) Shift to the left in Uruguay sets off alarm bells, 28 February, Financial Times, at: http:www.ft.com/cms/s/152ba0d8-89c3-11d9-aa18-00000e2511c8.html.

27.

Luhnow

de Cordoba

Gallegos

(2007) Chavez moves new socialism to faster track, Wall Street Journal, 9 January, pp. A1 and 17.

28.

Lynch

D.J.

(2007) US blasts Chavez plan to nationalize electricity, phones, USA Today, 9 January, at: http://www.usatoday.com/money/world/2007/2007-01-08-venezuela-usat_htm.

29.

Maltby

Horrox

(2004) Political risk analysis and investment decisions, Institute of Risk Management, at: http://www.theirm.org/riskforum/documents/irm_risk_forum_d11_control_risks_roups.pdf.

30.

Manzetti

(1993–1994) The political economy of Mercosur, Journal of Interamerican Studies and World Affairs, 35(4): 101–141.

31.

Markwald

Ribeiro

Rios

(2007) Report: MERCOSUR (2005 second semester–2006 first semester), Report No. 11, February, Inter-American Development Bank, Integration and Regional Programs Department, Buenos Aires, Argentina.

32.

Martinez

Garcia

(1996) What is neoliberalism: A brief definition for activists, at: http://www.corpwatch.org/article.plp?id=376&printsafe=1.

33.

New York Times (2007) Two oil firms are defiant in Venezuela, 27 June, p. C1.

34.

Omni Bridgeway (2006) Latin America's ‘take it or leave it’ approach: How far will it spread?, at: http:www.omnibridgeway.com/newsroom/article.asp?ID=%7B45970BC6-9A1E-4F-4B-A460-5ED5E242440C%7D.

35.

Padillo

(2007) Analysis: Chavez living up to radical promise, 16 January, at: http://www.cnn.com/2007/WORLD/Americas/01/16/Venezuela.chavez/index.html.

36.

Pearson

N.O.

(2007) Venezuela to seize foreign oil projects, My Way News, 26 February, at: http:apnews.myway.com/article/20070227/D8NHOMEG0.html.

37.

Philip

(1982) Oil and Politics in Latin America: Nationalist Movements and State Companies (Cambridge: Cambridge University Press).

38.

PINR (Power and Interest News Report) (2006) Venezuela moves to nationalize its oil industry, 19 May, at: http://www.pinr.com/report.php?ac=view_printable&repor_id=92&language_id=1.

39.

Quiroga

C.A.

(2006) Bolivia: Gas nationalization just the start, boston.com, 1 May, at: http://www.boston.com/news/world/latinamerica/articles/2006/05/01/bolivias-military_tak.

40.

Reel

(2006) In Bolivia, new setbacks to a leader's lofty vision, Washington Post, 31 August, p. A16.

41.

Reel

Mufson

(2006) Bolivian president seizes gas industry, Washington Post, 2 May, p. A01.

42.

Robock

S.H.

(1971) Political risk: Identification and assessment, Columbia Journal of World Business, July–August: 6–20.

43.

Rojas

(2007) The Bolivian nationalization of hydrocarbons process, International Legal News, 2 January, at: http://www.imakenews.com/iln/e_artticle000722418.cfm?x=b11.0.w.

44.

Rotman

(2005) A guide to MERCOSUR legal research: Sources and documents (GlobaLex), at: http://www.nyulawglobal.org/globalex?Mercosur.htm.

45.

San Pedro

(2006) Latin America's new left axis (BBC News Analysis), 18 April, at: http://news.bbc.co.uk/2hi/Americas/4916270.stm.

46.

Sigmund

P.E.

(1980) Multinationals in Latin America: The Politics of Nationalization (Madison, MI: University of Wisconsin Press).

47.

Soares de Lima

M.R.

(1996) Brazil's response to the ‘new regionalism’, in Mace

Therien

J.-P.

(eds), Foreign Policy and Regionalism in the Americas (Boulder, CO: Lynne Rienner), pp. 137–158.

48.

Spar

Deringer

Wang

(1997) Note on Political Risk Analysis (9-798-022), Harvard Business School, Harvard University.

49.

Stallings

(1992) International influence on economic policy, in Haggard

Kaufman

(eds), The Politics of Economic Adjustment (Princeton: Princeton University Press), pp. 41–88.

50.

Steger

M.B.

(2002) Globalism: The New Market Ideology (Lanham, MD: Rowman & Littlefield).

51.

Stevens

F.Y.

(1997) Quantitative perspective on political risk analysis for foreign direct investment – a closer look, Multinational Business Review, 5(1): 77–84.

52.

Thorsen

D.E.

Lie

(2006) What is neoliberalism?, working paper, Department of Political Science, University of Oslo, at: http:folk.uio.no/daget/What%20is%20Neo-liberalism%20Final.pdf.

53.

Tockman

(2007) Chavez, Morales seek transformation of MERCOSUR trade bloc, ZNet, 21 January, at: http://www.bilaterals.org/article-print.php3?id_article=6971.

54.

United Nations Conference on Trade and Investment (UNCTAD) (2007) Foreign direct investment surged again in 2006, investment brief, No. 1, New York.

55.

Velez de Berliner

(2006) Energy integration and nationalization in South America: What the future holds, Regional Focus, Latin Trade Solutions, Inc., 16 December, at: http://www.latrasol.com/analysis/?p=129.

56.

Weisbrot

(2006) Doing it their way, International Herald Tribune, 28 December, at: http:www.int.com/articles/2006/12/28/opinion.edweis.php.

57.

Weyland

(1998) The politics of neoliberal reform in Latin American democracies: Argentina, Brazil, Peru, and Venezuela, paper for panel on Democracy and the New Market Model in Latin America, XXI International Conference, Latin American Studies Association, Chicago, 24–26 September.

58.

Wilson

G.K.

(2003) Business and Politics: A Comparative Introduction, third edition (New York: Chatham House).

59.

Zissis

(2007) Bolivia's nationalization of oil and gas, Council on Foreign Relations, 12 May, at: http://www.cfr.org/publications/10682.

60.

Zysman

(1996) The myth of a ‘global’ economy: Enduring national foundations and emerging regional realities, New Political Economy, 1(2): 157–184.

The Political Economy of Globalism in South America: Strategic Implications for Foreign Direct Investment

Abstract

Keywords

Get full access to this article

References