SOAS Research Online

Abstract

This chapter critically engages with the concept of fracasomanía. Coined by the economist Alfred O. Hirschman in the 1960s, fracasomanía denotes a failure complex of Latin America’s policymakers causing them to see everything that preceded as utter failure. Fracasomanía hence explains that the failure to continue along incremental policy paths lies at the root of the region’s problems achieving economic and social progress. While this chapter finds Hirschman’s insights helpful to understand paradigm shifts in policymaking in Latin America and to inform context-specific policy changes that reject one-size-fits-all policies, we need to go beyond his theories. Using insights from heterodox political economy theories and empirically drawing on development outcomes, reoccurring crises of neoliberalism, and the COVID-19 pandemic, the chapter argues that radical rather than incremental change is needed. This includes reforms that target the strengthening of governance capacities for states to play a far more active role in economic policymaking. Enhanced state capacities in economic policymaking can help in the transformation of existing production structures and in the development-oriented policies that can drive technological change and stimulate productivity growth.