LATAM, time for the micro (tax reform)

Whenever one travels around Latin America and starts asking for some specific economic issues one realises how damage the search for macroeconomic stability and crony capitalism have had in the past two decades of fighting against poverty and in the future prospects. Certainly, and eventhough there exists a macroeconomic stability (which seems to be consolidating) there still persists important inadequacies in terms of the necessary microeconomic foundations leading to sustainable and equitative growth.

One of the issues where the lack of reforms was most striking concerns the inability of the tax systems of the countries in the region to collect enough resources to implement accurate policies conducive to development. I just read this interesting article from the IMF and the WB (Fiscal Policy for Growth and Development: An Interim Report), at some point (page 2) it asserts:

"The success of fiscal policy in relation to its stabilization objective may have come at the cost of long-term economic growth."

It seems that the IFIs are starting to publicly admit there was too much obsession (and probably some miopysm) when advising for restrict fiscal and macroeconomic balance. It's time to focus on microeconomic reforms!

Here you can find (in Spanish, though) a similar analysis specific for Peru and considering the recent elections won by Alan García.