This can no longer be seen as a temporary tendency deriving from fierce stabilisation policies designed to control inflation. Rather, these high levels of unemployment are closely related to the very pattern of more open trade and industrial restructuring that are commonly cited as the positive results of the neoliberal policies.
 
This comes out very sharply in another study from ECLAC. (Jorge Katz, "Structural Changes in Latin American Industrial Productivity, 1970-1996", CEPAL Review 2000) This shows that structural changes in Latin America's economies over the past twenty years have shifted manufacturing away from shoe, textiles, machine tools, and other labour and engineering intensive industries in favour of natural resource processing and assembly ‘maquiladora' industries.
 
Thus, there are two types of production restructuring that have taken place. In Chile, Argentina and, to a somewhat lesser extent, Brazil, structural reforms of the past twenty years have favoured industries producing highly standardised industrial commodities, such as vegetable oil, fishmeal, pulp and paper, iron and steel, and aluminium. As a result, Latin American firms have ended up as price takers in highly competitive world markets in which they have very low unit profit margins.
 
Meanwhile, in order to maintain quality and other competitiveness requirement, the manufacturing plants for these products are highly capital intensive, automated, and technologically advanced, creating little employment. In general, most of their capital equipment comes from abroad) except to some extent in Brazil) thus reinforcing the old pattern of technological dependence.
 
The other type of production restructuring has occurred in Mexico and some small Central American countries. Here, the neoliberal reforms combined together with low domestic wages and geographical proximity to the United States in the context of a rapidly expanding US market, have encouraged assembly plants known as "maquiladoras". These use modern technology to produce state-of-the-art goods including computers, video and TV sets, and garments. However, they use product design and just-in-time technology, logistics and engineering almost entirely from the US, Japanese or Korean companies, which own these assembly plants. There is very little value added in the Latin American side of the operations.
 
Meanwhile, the associated trade liberalisation and elimination of subsidies has meant that manufacturing and competitive skills in leather goods, furniture, clothing and machine tool manufacturing for the domestic market have contracted strongly, with many small and medium-size firms being forced to close because of import penetration. The degree of domestic vertical integration has declined sharply, while outsourcing practices, mostly international, have increased. Inevitably, the region's dependence on external capital goods and technology has increased in consequence.
 
This worrying trend has been reinforced by the privatisation of State-owned production facilities, particularly in telecommunications, energy, transport or water sanitation. Ownership of these sectors has effectively been transferred to large mostly foreign enterprises whose R&D facilities and capital goods suppliers are overseas. Not only has this been associated in some scandalous cases (as in Brazil) with higher costs for consumers and hugely increased foreign exchange outflow, it has also meant the loss of related domestic manufacturing and service production and employment which earlier benefited from linkage effects.
 
As a result, Katz concludes that "in countries where public enterprises carried out most local R&D and engineering efforts, recent structural reforms have had a strong and rather negative impact on the national systems of innovation. At the same time, the new production structure is finding it increasingly difficult to generate new jobs, let alone well-paid ones in high productivity sectors. Those created are precarious and mostly in the area of low-productivity services. Moreover, and as a result of the rapid increase in the demand for foreign machinery and equipment as well as vehicles and parts, the trade balances of many countries show a worrying, chronic tendency toward long-term disequilibrium."
 
All this sounds strangely familiar - this peculiar combination of worsening real conditions amidst greatly increased hype and international celebration of another success story for international capital. But what is also depressingly familiar is the sense that even such examples need not nudge our own policy makers into a more realistic and domestic citizen-oriented approach to economic policy.