The main objective of this paper is to see how economic globalisation has affected the size of\nthe state in Latin America, determining which of the effects ââ?¬â?? efficiency and compensation ââ?¬â??\nhas been stronger in Latin America, a region that has joined the world economy gradually\nsince the 1980s, with diverse experiences. In absolute terms, however, the state was more\npresent in the economy in 2011 than in 2000 or 1980, helping reduce inequality, meaning\nthat the compensation effect may exist, despite the analysis showing an ambiguous result.\nThe results are generally confirmed by the quantitative analysis, with multiple linear cross sectional\nregressions and panel regression (with and without outliers) showing that indeed\nopenness to trade, measured either through tariffs or through trade as share of GDP, is\nassociated with a smaller state, with a (reliable) tariff coefficient. Our work in mainly\nconceived as a theoretical research grounded on statistical data. The conclusions of the case\nstudy point towards the existence of the efficiency effect, with growing trade associated\nwith a smaller relative presence of the state in the economy. Globalisation does slightly\nreduce the size and the scope of the state in Latin America, but there is ââ?¬Å?an alternative view,\nbased on global social justice and a balanced role for the government and the market.
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