Paraguay is in a state of emergency following violent anti-government protests.

An economic policy that favours privatisation and free trade is seen as having prompted the demonstrations.

BBC News Online finds out why.

Why is privatisation and free trade such a problem?

The bottom line is that selling off state industries usually results in job losses.

State-run organisations are often notoriously inefficient, and the privatisation process can often mean thousands of redundancies.

And the move towards free trade means that local industries will not be protected from international competition.

But the extreme anger over the threat of job losses comes against a backdrop of rising poverty and corruption.

There is growing anger in much of South America that the people at the top are squandering money while the poor are getting poorer.

So why is poverty on the rise?

Paraguay's economy, hindered by political instability, has been stagnant since 1995.

Now it is being further hit by Argentina's economic crisis and Brazil's weakening currency.

That combination led Paraguay to devalue its currency earlier this year.

And that means that Paraguayans can buy less with their money.

Aren't other South American countries facing similar problems?

Yes. Peru, for example, has already cancelled its privatisation plans following protests.

But there are also specific circumstances surrounding each country's trouble.

Venezuela's president was ousted and reinstated amid mass strikes over his handling of the oil firm where he reportedly appointed his cronies as managers.

Argentina's government chronically overspent, leading the country to default on its international debt repayments.

And the forthcoming presidential elections in Brazil have caused investors to spurn the country's currency, the real, because of fears over a future change in economic policy.

Meanwhile smaller and poorer economies such as Uruguay and Bolivia are suffering from the general turmoil in the region.

So where did the push to privatise come from?

The idea comes from a Washington consensus back in the early 1990s which encouraged South American countries to emulate Asian economies in pushing for free trade policies and privatisation.

Argentina, Brazil and Mexico have already pushed ahead with such policies.

But some people feel that the perceived wisdom from the US has not benefited those states.

And, amid growing anti-US feeling, many people object to adopting the international agenda on free trade when it seems to be doing so little to counter rising poverty on the street.