ITS 201 Chapter Notes - Chapter 12: Import Substitution Industrialization, International Monetary Fund, Structural Adjustment
19 Dec 2017
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To decrease imports, latin american leaders put tariffs and other barriers on foreign imports. Also directly taxed foreign investment and forced profits to be reinvested in latin. Import substitution industrialization was initially a success with lots of manufacturing growth, growth of the middle class and development of am middle class. However in the long term, import substitution industrialization was a failure. +machines for manufacturing still needed to be produced abroad. Not enough domestic consumption and wasn"t focused on exports so minimal amount of profits from international trade. +latin americans were too poor to buy most goods. Domestic industries were too protected so didn"t produce well because there were no competitive threats. Debt exploded because borrowed too much and earned too little. Latin america faced a debt crisis in 1980s. Owed the world bank, international monetary fund and european as well as united. Lots of countries defaulted in the 1990s and never recovered.
