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Bulmer-Thomas (1997. p298) says that overall, wealth has risen following the implementation of the NEM in Latin America. I would suggest that this wealth increase has simply made the rich richer and increased economic inequality and social polarisation. There has been privatisation, which has led to widespread lay-offs of workers who are made redundant in an effort by private owners to cut costs and become more efficient and profit maximising. There have also been labour market reforms though, which would be expected to counteract this.

The labour market becomes more flexible spatially and in terms of not over-specialising in one field. In practise in Latin America, this has led to even more unemployment as it has been made easier and cheaper to recruit labour. So overall, unemployment is greater then before the NEM. When looking over a list containing seven Latin American countries and their rates of growth of real gross domestic product, per head, showing data from the three decades before the debt crisis, 1985-1990 and 1990-1994, growth rates have all increased (with the exception of Colombia) in the nineties compared to the eighties.

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Levels have not reached pre-debt crisis (apart from Argentina and Chile), in terms of growth, but the NEM has shown progress, even if it has been below expectations. Many of the processes that the NEM creates, have led to the Gini coefficient getting higher, meaning that inequality has increased. Inflation has fallen at least, which has proved good for the rich and poor, but real wage rates have declined. As formal unemployment has increased, people have been forced into the urban informal sector, which has increased following the NEM and even though they may actually be working, they are able to be exploited and paid below the minimum wage.

I would say that the increase of wealth has not reached the poorer people in Latin America. The significance of poverty and inequality “The most positive feature of the NEM is the reduction in inflation and the gains this brings for the bottom decile (quintile)” (Bulmer-Thomas. 1997. p301). The decrease of inflation and relative stabilisation of prices is good for poor people as it should mallow goods and services to be more affordable. Apart from the reduction in inflation, most of the other factors which have resulted from the implementation of the NEM have led to more poverty and inequality.

Even the inflation effect is counteracted with the decrease in real wage rates though. It is a fact that the NEM has not been implemented in its entirety in any Latin American country and has not been put into practise how it was originally intended, with only portions that are deemed suitable being employed. If the model is not implemented how it was intended, that it cannot really be blamed for rises in poverty and inequality. It is similarly true that it is not just the factors resulting from the implementation of the NEM that cause poverty and inequality.

Education, health care, sanitary standards and more, all have a decided impact on poverty. The processes that have been put into place by the NEM have led to rises in poverty in the majority of cases. If implemented correctly, in theory the NEM should reduce poverty though. With economic growth, produced through the promotion of and increased levels of exports and the exportation of non-traditional goods, wealth should be generated for a wider ranging labour force. This has not been the case though, with traditional exports being the focus and growth not even resulting from exports in many cases (like Argentina).

Therefore I would say that rises in poverty and inequality are not the most significant outcomes of the NEM in Latin America. The model is designed to reduce poverty if implemented in theory and there are other large-scale factors to take into consideration such as demographic fluctuations. I believe that the main or major outcomes of the NEM have been the gradual stabilisation and return to growth of many Latin American economies and the efficiency of governments increasing. In time when governments have become self-sustaining and are developing, they will be able to tackle the problems of poverty and inequality with more vigour.

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