Entrepreneurial Response to Economic Liberalization and Integration: an Inquiry about Recent Events in Uruguay Aimed at Developing Better Hypotheses about Economic Behavior

This study outlines behavioral hypotheses drawn from actual decision-making processes. It is based on in-depth interviews with decision-makers in manufacturing enterprises in a small, relatively conservative and stable Latin American country (Uruguay) and on detailed questionnaires given to members of those firms as well as to economic agents in government, the service sector, and labor unions whose activities may have influenced the enterprises’ decisionmaking. The paper considers the responses to major new incentives that have accompanied an ongoing process of economic liberalization and integration. It offers the tentative conclusion that while serious perception and judgment problems do not characterize all areas, where they are present they are more important than generally recognized and distort decision-making. Some important problems are difficult to ascertain ex post, and there may be serious limits to the ability to verify a number of hypotheses except by direct involvement in the decision-making process.