countries to obtain a rapid expansion of their non-traditional manufactured exports. Secondly, continuing trade barriers set additional limits to the expansion of manufactured exports even in those areas, such as textiles and steel, where Latin American countries had nevertheless proven competitive. Thirdly, some sectors proved uncompetitive once exposed to external competition, and finally, the upsurge in international interest rates increased Latin America's debt servicing burden, thus reducing the availability of resources needed for investments to adapt industrial structures. 38. In response to growing external imbalances at the beginning of the 1980s, many countries in the region introduced in 1982 vigorous macro-economic stabilization and adjustment policies. Sharp devaluations, more restrictive monetary policies and efforts to curtail deficits in government budgets did indeed reduce the imbalances in the external sectors of many Latin American countries. In fact, the region, which up to 1981 had regularly shown a deficit in its merchandise trade balance, recorded an unprecedented surplus of almost $31.2 billion in 1983. The successful reduction of the external deficit was, however, largely based on a reduction of imports into the region, instead of an increase of international competitiveness and an expansion of manufactured exports. Inflows of foreign capital into the region dropped to $4.5 billion in 1983 compared to $38 billion in 1981, whereas net remittances for profits and interest decreased only marginally. Thus, Latin America made a net transfer of resources to the rest of the world of almost $30 billion in 1983. 39. As a result of domestic austerity measures combined with a reduced availability of essential imports, investment in most countries dropped sharply, and in many countries there was a substantial deterioration of installed industrial capacity. These in turn had serious 
**Analysis**
The text discusses the challenges faced by Latin American countries in expanding their manufactured exports, the impact of trade barriers and international interest rates on their economies, and the consequences of implementing macro-economic stabilization and adjustment policies. It appears to be focused on the economic development and trade aspects of the region.

**Category**
Economic development, International trade