The global financial crisis was a result of failures in both the market and state—markets created financial turmoil and regulatory agencies failed to detect risks and correct imbalances. As Latin American countries emerge from the crisis, both the market and state are needed to ensure sustainable growth.

Analyzing the successes and mistakes of economic policies over the past twenty years, Foxley makes recommendations for Latin America to achieve development that creates fewer inequalities and increases the capacity for innovation.

Recommendations

• Establish more competitive markets: The economic crisis should not serve as an excuse to increase protectionism. Latin American economies need to move toward a greater reliance on the market and more competition in industries known for monopolies or oligopolies.
   
• Restructure state institutions: To compete globally, governments need to retool economies to spur development and create new, better-quality jobs. High-quality education that creates a well-trained workforce should be a priority. 
   
• Develop a welfare society: Policies should make it easier for women and other vulnerable groups to get jobs and provide equal access for all children to education.|
   
• Create public-private partnerships: States need to increase the involvement of the private sector in providing basic social services, including education, health, and housing.

“As they emerge from the most recent crisis, Latin American economies need both—more market and more state. More market will enable them to exploit new opportunities through bilateral or multilateral trade agreements, and expand public-private partnerships,” writes Foxley. “A more intelligent state, acting as a catalyst for development, could encourage creativity and foster entrepreneurship.”