Saturday, November 26, 2011

So much for unity

Should we be too surprised that Latin American countries can't agree on currency swaps or pooling reserves? The same logic about monetary union applies. The governments of the region get along quite well--which really annoys Alvaro Uribe--but are very hesitant to link their economic fortunes together too tightly. Indeed, coming to some sort of broad agreement would be a major accomplishment. There is always going to be a collective action problem (assuming, that is, that a collective approach is the best strategy, which I suppose is up for debate) but Latin America already has a long history of failing to establish regional unity.


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