Socio-Economic Models of Latin American States

The author started by analysing works of several proponents of socio-economic models (P.A. Hall, D. Soskice, B. Amable). Then he proceeded with giving general characteristics of Latin American states. Finally, he dwelled upon the modern Latin American economic model. It is characterised by the dominance of private domestic industrial-financial groups and MNCs. A characteristic feature of labour relations in the Latin American region is the lack of institutions of interaction between entrepreneurs and workers. Trade unions play a minor role in the region, and unionization is also low. Another feature of the Latin American economic model is the hierarchical system of enterprise management. National business groups in Latin America are family businesses that are predominantly large, capital-intensive and low-risk assets. The corporate governance structure in the Latin American subsidiaries of MNCs is a rigid hierarchical structure, where all key decisions related to development strategy are taken in the parent company. Labour relations in Latin America are flexible and disordered, as they are short-term for most workers. Another peculiarity of the labour market is the lack of horizontal linkages between the labour force and the unions. Another characteristic feature of the Latin American economic model is low expenditure on education and research and development (R&D). To sum up, it can be said that the complementarity of the individual elements of the region's economic model is low. The hierarchical mode of governance hinders the development of corporate governance, intra-firm relations, both financial and stock markets. Inter-firm cooperation between MNCs and national business groups is virtually non-existent