Latin-America is the home to the Spanish and Portuguese speaking people I the Americas. Latin-America had many problems as it became home to many national since most people from different countries moved to live there. People from different countries have diverse cultures, and this is where problems arose. Social status in Latin-America was part of discrimination. People were classified according to the cultural, linguistic and historical background. There was no equality, and everyone thought themselves to be superior compared to others. There was no national identity as nationals were from various countries. Their democracy did not flourish, and the economy did not grow as the republics had not stabilized and developed their own national identity. To gain national identity some of the brutal wars such as War of Pacific and the War of Triple Alliance had to come to an end.
Latin America developed a strategy known as developmentalism. Developmentalism was a way in which this country could grow their economic status by fostering a strong and varied internal market by imposing high tariffs on imported goods. This was an ideal strategy for economic growth in Latin America in which they also incorporated import substitution strategy. This was an attempt to break out of the economic poverty of world division of labor. They specialized in the export of food and raw materials as they imported manufactured goods from countries like Europe and the United States. They established domestic production facilities which they used in manufacturing goods were previously imported. This strategy was to help the help the country create the capacity to produce the new increased demand. In this era of the nineteenth century, the government played a role in protecting and encouraging the growth of young and small industries. Infrastructure was relied on from financial help where industries in the domestic country carried out the manpower, and the machines were imported from abroad.
Latin America had conducted manufacturing activities in workshops and small factories in textiles and food products. Also, machine tools and spare parts factories and workshops came up to give service to rail-roads and sugar refining mills. Such activities came to surface as a result of importers of equipment raising tariffs to encourage the creation of new industries. All manufactured goods in Latin-America were either produced or imported by domestic workshops whereas the exports consisted of almost all primary products. Unfortunately, there was the Great Depression of the Thirties which resulted in shortages of manufactured goods which were imported raising the prices of goods which became impossible for Latin-America to import goods. After the World War II, the Import Substitution strategy became a policy tool for development in Latin America improving their economy. There have been dynamic growth rates in the largest Latin America countries as they import and export products to and from diverse countries.
This policy brought greater economic independency to Latin American countries, especially in manufactured goods, placing it top of the world economy. The major policy instruments used to promote this strategy were: protective tariffs and exchange controls, use of special preferences for domestic and foreign firms that imported capital goods for new for new industries. They also used preferential import exchange rates for industrial raw materials, fuels and other intermediate goods and less expensive loans by government development banks for those industries that were favored. The government also constructed infrastructure designed to complement the industries and participation of the government in certain industries especially steel industry were some of the policies used. In my opinion, Import Substitution strategy in Latin-American countries was not a fail as it advanced the economic growth of the country in its stages of industrialization. It also led to productivity improvement in terms of physical and human capital.
Adoption of national developmentalism was a strategy to minimize several problems that were there in Latin America. The Economic competition was spread worldwide. The re-election of government and their supporting officials was to depend on how well they could improve the economic growth and reduce economic inequality. Adoption of this strategy was motivated by the foreign debt crisis that Latin America was in combined with high inflation rates. Between the 1930s and 1970s, Latin-America grew at an extraordinary pace as it took advantage of its weakness of the center in order to come up with national development strategy, which is protecting infant industries. To achieve national development policy, all businessmen, middle class, the state bureaucracy, and workers were to define the means to reach this goal with the framework of the capitalism system.
National develomentalism faced a lot of challenges and in some ways failed due to the following. The first reason is very common- large countries such as Brazil, Mexico, and Argentina had grown and industrialized. They, therefore, wanted to compete internationally if they wanted to grow farther. This is because their developmentalism strategy was based on the import substitution which could not allow them to compete at international levels. Another reason for the failure of national developmentalism was the dependency interpretation which contributed to the weakening of economic nationalism in Latin America. There was a turning point of Latin-America in the 1930s because it was in this decade that many countries were able to internalize their political decision making instead of instead taking decisions made by other countries. They, therefore, wanted their own dependency and were successful in defining national development strategies. I can proudly say that national developmentalism was a success in terms of national sovereignty, the desire of the nation to govern itself and determine its own future. In Latin America, self determination and national sovereignty have been hard fought.
Cline, William R, and Sidney Weintraub. Economic Stabilization in Developing Countries. Washington, D.C: Brookings Institution, 1981. Print.
Pereira, Luiz C. B. Development and Crisis in Brazil, 1930-1983. Boulder u.a: West view Pr, 1984. Print
Furtado, Celso. Obstacles to Development in Latin America. Garden City, N.Y: Anchor Books, 1970. Print.
Bruton, Henry J. Economic Development with Unlimited Supplies of Foreign Exchange. Williamstown, Mass: Center for Development Economics, Williams College, 1981. Print.
Hemisphere, Dept I. M. F. W. Brazil. Washington: International Monetary Fund, 2013. Internet resource.
Pazos, Felipe. Chronic Inflation in Latin America. New York: Praeger Publishers, 1972. Print.
Ocampo, Jose A, and Rob Vos. Uneven Economic Development. London: Zed, 2008. Print.
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