March, 13, 2013
Reform Responses to Uneven Development
-For some it was the race into mass tourism and the positives for the Latin American countries were 1) foreign
exchange earnings and economic growth which led to direct expenditure and was a multiplier (linkages) 2) relative
ease of entry and speed especially with manufacturing 3) sources of foreign investment and tax revenues
4) comparative advantages like sun, sea, and sand (there were also the cheap labour costs)
-Most developing countries had limited room to manoeuvre and they are now in a beauty contest to compete for
tourism investment and this resulted in the same basic amenities and competition based on price and states were
often providing various incentives
-Incentives could include land that was very cheap or free, infrastructure that would trickle up the system,
incentives like cheap loans, tax holidays, and duty free imports, relaxed environmental standards, and state
promotion as a public money marketing destination and curricula teaching how to be “good hosts”
-In short it was often a political economy of public costs and private benefits
-The negatives were 1) the nature of employment (‘a nation of busboys and maids’) 2) dependence resulting in
vulnerability 3) linkages versus leakages 4) socio-cultural impacts 5) heavy resource budgets 6) loss of public space
-Dependency theory (import substitution industrialization or ISI) in essence involved promoting local
manufacturing to progressively replace imports especially in the 50’s and 60’s in the Southern Cone and Mexico
and the FDI was needed but it was guided by the state
-ISI’s key policies for governments were to support domestic companies (private sector) and to offer them
subsidies and incentives like tax breaks, to nationalize key industries (state ownership) which often involved
purchasing foreign owned assets but this was costly with managerial contracts and ‘technological rents’, to protect
markets for finished products by instituting high tariffs, and to regular foreign investment
Industrializing Brazil:
-Started under Getulio Vargas (1930s-1954) and was spurred on by the resource boom and WW2 but inequalities
limited to domestic markets and there were major social tensions (resonance of Cuba and their revolution)
-Janio Quadros (1960-1) bestowed one of Brazil’s top honours to Che but he was forced out of office after eight
months by the military
-Joao Goulart (1961-64) increased business taxes, regulated profit remittances by trans-national companies,
nationalized oil (PETROBRAS), and instituted modest land reforms
-In 1964 there was a military coup done by Castillo Branco (1964-67) and this resulted in the formation of the junta
from 1964-1985 and it continued the ISI push but it set aside redistributive efforts
-For a time there were some measurable successes like in the 1950s-mid 1960s with the rapid industrial growth in
parts of region, Latin American economies were growing as a faster rate than in Europe and North America
-By the 1960’s the domestic industry was supplying a rising percentage of basic consumer goods and in Brazil and
Mexico it was over 90% by the early 1960’s and there were increasingly more sophisticated technologies
-They were still very unequal societies but with raising wealth there were some improving social indicators like
falling infant mortality rates, rising life expectancy, and improvements in public health and these all played a big
part in soaring population growth (in the 1930’s Latin America’s population was around 100 million and by 1980 it
was five times that and this was a demographic explosion)
-Public health improvements came like understanding disease and transmission (this all led to vaccines,
immunization programs, and malaria control), improved public water quality and waste disposal, and all of this
resulted in the death rates declining and the life expectancy climbing but this all happened without sharp declin
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