Peruvian Economic Policy in the 1980s: From Orthodoxy to Heterodoxy and Back

Abstract

Looking back over patterns of economic adjustment and structural reform in Latin America since the debt crisis began in 1982, two broad trends stand out. The first is the dramatic fluctuation in macroeconomic policy between the orthodox programs traditionally advocated by the International Monetary Fund (IMF) and the more interventionist or “heterodox” strategies that marked the policy environment after 1985 (Sheahan 1989). Although the orthodox-heterodox policy cycle is hardly new to the region and in fact has characterized the policy-making experience over the entire postwar era (Kaufman 1990), the 1980s represented the intensification of this cycle, especially in the extremity to which each set of policies was applied. The second trend follows from the first: the inability of states to follow through coherently on any given policy course (Fishlow 1989). While some exceptions to this trend can be cited (Chile, for example), the Latin American pattern has generally been one of failed adjustments and changed courses.