ACHIEVING SUSTAINABLE AND INCLUSIVE ECONOMIC GROWTH IN LATIN AMERICA: NATIONAL DEVELOPMENT DURING THE COMMODITY BOOM

ABSTRACTThis article examines how government policy affects the sustainability and inclusiveness of national development after the boom. The impact of the latest commodity boom (2003-2014) on the sustainability and inclusiveness of Latin American national development varies, but not by whether governments were ideologically left. I present the economic results of the commodity boom for the major Latin American countries, followed by the social results as measured by the reduction in poverty rates and income inequality. I examine potential countervailing economic factors that could mitigate the importance of the political economic determinants of the use of resource wealth. Finding the countervailing economic factors inadequate to explain the variation in social results, I propose that the political economy of linking resource wealth with economic and social outcomes is the key determinant. I conclude the paper with a discussion of current challenges post-commodity boom.Keywords: Commodity Boom; Poverty; Income Inequality. RESUMOEste artigo examina como a política do governo afeta a sustentabilidade e a inclusão do desenvolvimento nacional após o boom. O impacto do último boom das commodities (2003-2014) na sustentabilidade e inclusão do desenvolvimento nacional da América Latina varia, mas não pelo fato de os governos serem ideologicamente de esquerda. Apresento os resultados econômicos do boom das commodities para os principais países da América Latina, seguidos pelos resultados sociais medidos pela redução das taxas de pobreza e desigualdade de renda. Examino os possíveis fatores econômicos compensatórios que podem mitigar a importância dos determinantes político-econômicos do uso de recursos financeiros. Considerando os fatores econômicos compensadores inadequados para explicar a variação nos resultados sociais, proponho que a economia política de vincular os recursos financeiros a resultados econômicos e sociais seja o principal determinante. Concluo o artigo com uma discussão dos desafios atuais do pós boom das commodities.Palavras-chaves: Boom de Commodities; Pobreza; Desigualdade De Renda.

the economic results of the commodity boom for the major Latin American countries, followed by the social results as measured by the reduction in poverty rates and income inequality. I examine potential countervailing economic factors that could mitigate the importance of the political economic determinants of the use of resource wealth. American countries lies in between these two extremes. and Chile stand out for dependence on one commodity, oil and copper, respectively.
But Colombia and Ecuador had more than 90% of their commodity exports represented by just three products (crude oil/coal/coffee and crude oil/bananas/shrimp, respectively) while for Bolivia the top three were almost 80% (natural gas/zinc/soybean meal).
The commodity boom was greatest for oil, with prices increasing almost fourfold between 2003 and 2013, followed by the tripling of metal prices, a doubling of food prices and an increase of 50 percent for agricultural products in the same period.
dramatically increased GDP growth in the region, with average annual growth rates of Of course, it has been argued that resource wealth contains the seeds of economic destruction via either the "Dutch Disease" or the "Resource Curse". The "Dutch Disease" refers to the overvaluation of a currency that results from a commodity boom producing significant inflows of foreign exchange. The strong currency makes imports cheaper, thus disadvantaging any competing local production and resulting in reduced employment and entrepreneurship in those sectors or products. The strong currency also makes non-dollar denominated exports more expensive, thus weakening noncommodity exports with a resultant loss of wealth and employment. Investment patterns in the local economy are also diverted away from import-competing product lines and non-commodity export production, to the detriment of the economy when the commodity boom weakens. According to the World Bank, the negative impact on   Table 2 provides data on the nine major commodity exporters in Latin America: Argentina, indicates that prior to the start of the commodity boom poverty rates in all these Latin American countries except Argentina and Venezuela were higher than during the boom.
The  Table 2 demonstrates poverty fell significantly before these reporting problems.
One of the favorite explanations for declining poverty rates in Latin America points to the existence of Pink Tide governments (left-oriented governments) rather than to the commodity boom because these governments ostensibly favored state over market regulation of the economy. The data in Other pro-market countries did well. Peru and Chile experienced a more than 70 percent decline in poverty rates from 2003-2014 and 2003-2013, respectively    learned the importance of maintaining fiscal balances from the economic meltdowns of the 1980s and 1990s. Thus, they entered they entered the downturn after the commodity boom with low inflation and at least a modicum of foreign exchange reserves. Slower growth was not avoided, but the creation of a severe run on the national currency and balance of payments crisis was dodged except in Venezuela and Argentina. Yet we have noted that post-commodity boom performance on social welfare does not break down into a binary division of Venezuela/Argentina compared to the other seven economies in this study. Hence, economic factors alone cannot account for the differences.
Many advocates as well as critics of government policies over commodity exports make ambiguous and contradictory references to 'resource nationalism' in the defense of their arguments. Though the concept is generally used in the case of subsoil resources, many critics of foreign ownership of agricultural land and water distribution systems, or exports of food crops worry that national needs will be subordinated to foreign interests and call for government prohibition or significant regulation in the name of national security. These claims, therefore, are also being made in the name of nationalism about 'strategic' resources within the nation.
Unfortunately, there is no accepted definition of the concept 'resource nationalism'. If the concept of 'resource nationalism' is to be analytically useful we a clear and non-tautological definition. I propose that Resource Nationalism (RN) is most usefully defined as a perspective about public policy regarding national resources that is based on four interrelated claims: 1) the natural resources, whether publicly or privately owned, constitute a 'national patrimony"; 2) the proper usage of wealth generated from national resources is for the provision of public goods; 3) the government determines how the wealth generated from natural resource is used; and 4) sometimes the government uses the wealth for the generation of public goods and sometimes it does not. RN thus provides legitimacy for government to intervene in the market, but since export and tax policies rarely distinguish between foreign and domestic companies engaged in production and trade.
Appropriation of that wealth, whether directly from state production or via taxation, is in accordance with the principles of resource nationalism only when public goods are produced. If a government, despite its rhetorical claims, is appropriating national wealth for private gain (e.g., corruption, patronage, status 'white elephant' projects to enhance its prestige and reputation, etc.) this cannot be considered 'resource nationalism'. By the same rationale, when important sectors of the society believe that they have not been getting their 'fair' share or one commensurate with their development needs and demand immediate, non-productive and unsustainable goods and services, neither is this 'resource nationalism'.
Governments in Latin America have often created private goods in the name of generating public goods and services. During the period when governments pursued import substitution industrialization (ISI, roughly 1930s-1970s) they legislated high tariffs on many manufactured products as a means of promoting national development.
The tariffs generated benefits for the owners of the firms and their labor force, subsidized by the public purse and domestic consumers. But domestic consumers paid higher prices and the firms did not become internationally competitive and thus could not fuel greater industrialization and related employment opportunities. The labor unions in the protected industries (representing a minority of the labor sector) used their political influence to prolong protection of their firms. The provision of private goods during the ISI process was thus a major obstacle to a transition out of ISI and into a sustainable internationally competitive economy. 15 Understanding when governments will adopt policies to turn national wealth into public goods requires thinking about three political factors: the institutional constraints within which governments operate, the inclusiveness of the political system regarding who is represented and the competitiveness of politics in the policymaking body.
Government institutions (constitutions, laws, offices and agencies) influence the content of legislation, the transparency of governmental behavior, the credibility of any David  commitments entered into by the government and the incentives that lead people and firms to make the production, service and export market related decisions they do. 16 Because countries vary in their institutions of government, the policies regulating commodity exports and taxation will also vary across countries. 17 Government institutions also affect what resources constitute power and therefore which individuals and groups have influence. For example, before the new constitution in Bolivia gave indigenous communities veto over exploration in their geographic areas the only way they could stop exploration and production was through physically blocking access; since the communities are small and dispersed, it was difficult for them to resist the policy and the army. Today, and at times to the consternation of even indigenous President Evo Morales, small communities can lobby what they see as 'their' government. Institutions also affect for whom government will make policy (their own private interests, those of partisans, or for the public good) through the incentives they provide politicians. In addition, institutions affect how much discretion governments have in implementing laws and abiding by contracts.
Turning to the inclusiveness of the political system, I mean not only that a group is represented in the political system, but also that leaders are institutionally accountable to all the included groups. Accountability doesn't just happen at election time but requires that the behavior of elected officials be influenced by constraints that result from included groups making use of their rights as codified in the country's constitution.
Newly included groups may demand a new constitution if they believe the current one has sufficient ambiguity and loopholes that politicians can effectively ignore demands from these new actors. 18 Interest representation is a dynamic process and along the way, many actors will be tempted to create enclaves in which they can monopolize rents or even divert the process into new forms of elite rule. In short, one cannot have inclusiveness without transparency and credibility. obligations and civil rights -because everyone knows that at some point their groups will not be running the government and thus they want protection from those in office.
Because revenues generated by exports can be opaque, competitive politics will be more likely to shed light on how much revenue comes in and how it is spent. Finally, when different political groups are evenly balanced within the body that deliberates and designs policy, they will have equal access to patronage. In this context, patronage offers no advantage, leading politicians to compete more on the basis of provision of public goods.
Understanding Latin American commodity exporters' inability to generate commodity wealth into sustainable and inclusive development requires thinking not just about economics and commodities, but about political institutions, political inclusiveness and political competition.

CONCLUSION
This analysis of the commodity boom and social welfare in Latin America suggests that though commodity export policies differ, their impacts on national development are less dependent on the state-market balance or political ideology than on what governments do with the income their policies generate. Because pro-market reforms failed to promote development during the 1980s-90s it is easy to think that additional wealth in the hands of a government that articulates a vision for national development will mean improvement for those at the bottom. But the experience of Venezuela and Argentina during the commodity boom demonstrates that state-oriented governments can use their wealth to support subgroups that become privileged supporters of the government, dependent upon the provision of private goods at the expense of public goods. National wealth may be wasted through state-directed development policies and less money may be invested wisely in social and economic development.
Politics oriented around the issue of sustainable development represent the fundamental issue for those concerned with poverty and equity. Provision of support to people at the bottom while undertaking structural reforms is a challenge for any government. In the context of corrupt governments and low public trust, this is an even greater challenge for most Latin American countries.