Economic liberalization has left many unfulfilled promises. Our region hasbeen particularly active in implementing the reforms proposed as part of the'Washington Consensus', but the results have not lived up to expectations.Dissatisfaction with growth rates that haven't allowed the introduction ofsubstantial changes in living conditions, along with distributive trends that are oftenadverse, have triggered a debate that promises to enrich the development agenda.

Globalization has yet to bear its fruits. Currently, it reproduceslong-standing asymmetries and creates new ones, reflecting the contrast between the rapidinternationalization of a few markets and the absence of a complete, less-biased worldagenda. Developing countries must participate actively in the process through regionalinstances, which offer them more autonomy, organization and mutual support. At the sametime, a network of regional institutions, respectful of the global order, offers the bestoption for gradually building a solid, well-balanced structure of internationalinstitutions.

The main challenge lies in the social field. The improved functioning ofsociety at large will result from concentration on three basic factors: long-term socialpolicy based on education, which aims to improve equity and guarantee inclusion; economicgrowth, which generates the right amount of quality employment; and reduced structuralheterogeneity, which helps to close the productivity gaps between different sectors,agents and regions.

The close ties between economic and social development demand anintegrated approach to public policies, based on an institutional foundation that ismissing today. Institutions must encourage the active participation of social players,respecting rights and helping the poorest sectors to articulate their views. They mustalso develop effective ways of including social priorities into the heart of economicpolicies, and establish rules that give greater public visibility to the social effects ofeconomic policies.

'Globalization has yet to bear its fruits'. Ensuring the consistency of macroeconomic policies requires a broader viewof stability than one limited to controlling inflation and the public deficit, twoimportant achievements for the region during the 1990s. Experience reveals that, on onehand, instability of real variables is very costly and, on the other, private deficits areas damaging as public imbalances. Both areas are linked to the degree that the dynamics offinancing remain the main determinant of economic cycles in developing countries. Theimplementation of countercyclical macroeconomic policies is no simple affair, given thatglobalization imposes objective limits on the autonomy of domestic policies. This is whyit is a good idea for management of these elements to rely on policy instruments andinstitutions that generate credibility.

The combination of external openness, low inflation and a controlledpublic deficit has not been enough to initiate a sustained process of economic growththroughout the region. Orthodox explanation blames this on incomplete liberalization ofmarkets. Other views emphasize shortcomings in the development of institutions and humancapital, or place the accent on the need for complementary meso-economic policies.

ECLAC's view is that the possibilities of economicgrowth are determined by the conformation of productive and technological apparatuses, theconfiguration of factor and goods markets, the characteristics of business agents and theway markets and players are connected to the external environment. Thus, the best way toensure the progress of the region's open economies seems to be through the definitionof development strategies that aim to introduce innovation in the broadest sense and buildproductive complementarities.