GINS 2010 Lecture Notes - Lecture 10: Import Substitution Industrialization, Populism, Neoliberalism
13 Dec 2016
School
Department
Course
Professor
Experiences of Economic Development: Latin America
Week 10 – November 24th
Proportions, development and distances
-Latin America, as a whole, middle income among developing countries
-Four countries account for ¾ of the region in the area, population and economic size:
-Brazil, Mexico, Colombia, Argentina
-15 other counties account for the rest
-Economic development today varies greatly:
-Southern South America: higher GDP/c
-Andean, Brazil, Mexico: middle GDP/c
-Central America: lower GDP/c
-Very large region, Mexico closest to North America (NA) and Europe, South America as far away as East
Asia or Russia from NA
History and economic development
-Spanish, Portuguese and French colonization (1500s-1800s)
-Earliest independent region from Western colonialism
-No strong linkage between colonial experience ad current development
-Most intensively colonized: Mexico, Peru, Bolivia, Cuba
-Least intensively colonized: Argentina, Brazil, Honduras
-1800s Independence wars fought over free trade and less taxes, against slavery
-During early independence: civil wars between liberal free traders and conservative closed
market traditionalists
XX Century Development and World Economy
-Liberals won civil wars and free trade (but no democracy) became the model of development, minimal
state and foreign investment to modernize
-Latin America traded inter-industry, primary commodities for manufactures
-British, US and European investment built infrastructure for trade, not development
-World Wars and Great Depression broke that liberal model
-o trade, o fiacig, o iestets aore…
-Development strategy changed by default and design to import substitution industrialization
-Default: no choice given global lack of demand
-Design: learning from US, Soviet, German, Japanese models of industrialization
What is import-substitution industrialization?
-Prebisch-Singer Thesis: commodity exporters condemned by ever declining prices, and manufacturers
blessed by ever increasing demand (and higher profits)
-led to eport pessiis, istead seekig to deelop local idustr ad auget local dead
-Since 1950s until 1980s: government restricted imports via tariffs/quotas, controlled banking and
pushed investment into industrial sector (not agriculture or mining)
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Document Summary
Latin america, as a whole, middle income among developing countries. Four countries account for of the region in the area, population and economic size: Very large region, mexico closest to north america (na) and europe, south america as far away as east. No strong linkage between colonial experience ad current development. 1800s independence wars fought over free trade and less taxes, against slavery. During early independence: civil wars between liberal free traders and conservative closed market traditionalists. Latin america traded inter-industry, primary commodities for manufactures. British, us and european investment built infrastructure for trade, not development. Liberals won civil wars and free trade (but no democracy) became the model of development, minimal state and foreign investment to modernize. World wars and great depression broke that liberal model. Development strategy changed by default and design to import substitution industrialization. Prebisch-singer thesis: commodity exporters condemned by ever declining prices, and manufacturers blessed by ever increasing demand (and higher profits)
