The New Economic Model and Labour Markets in Latin America

As FitzGerald makes clear in Chapter 2, the implementation of the New Economic Model (NEM) involves replacing the earlier import-substituting industrialisation (ISI) strategy with a drive for export-led growth (ELG). This requires a shift in production from non-tradeable to tradeable goods and services, with a corresponding movement of factors of production from the first sector to the second. This process represents one of the major impacts of the NEM on the labour market, since changes in the relative price of labour are required to send the appropriate signals to employers and employees in order to bring about these changes.