Trade Liberalization Boosts Sovereign Ratings While Other Neoliberal Policies Don't in Latin America

Sovereign bond ratings have become crucial for developing nations raising funds abroad. This analysis examines CRA assessments of 16 Latin American countries from 1992-2003.

Methods & Data

Controlled for standard macroeconomic factors, this study combines quantitative modeling with qualitative insights to isolate reform impacts on credit ratings.

Key Findings

• Only trade liberalization among neoliberal policies improved bond ratings
• Other reforms failed to yield positive CRA assessments despite political difficulty
• Inflation and default rates consistently lowered ratings regardless of reform context

Policy Significance

This suggests policymakers in Latin America have more effective strategies available than previously understood. Countries can lower borrowing costs through selective reforms rather than needing comprehensive policy changes.