Although some drastic changes in economic policies were necessary, and although the long-run effects of adjustment on economic growth and human development are expected to be positive, it borders on irresponsibility to argue that all the effects of adjustment have been positive for everyone. By their very nature, all stabilization programs reduce aggregate demand, leading to at least a short-run reduction in societal welfare. The paper predicts that making this transition to a market-oriented economy is Latin America s greatest challenge over the next 25 years. Other challenges include creating a stronger agricultural system and protecting the region s natural resource base from degradation. The paper suggests that if Latin America successfully manages these challenges, poverty levels will decrease, malnutrition will be eliminated, and the region will be able to meet the increasing food needs of its growing population.
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