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A Regional Approach to Latin America's Economic Crisis
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13842 |
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Section : |
CURRENT ISSUES
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12 / 1988 |
2,798 Words |
| Author
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William J. Weissman
William J. Weissman is a lecturer in international relations
for the European Division of Boston University. |
The Great Depression of the 1930s had a profound impact on Latin America. The prosperity that had arisen from a continuous expansion of raw material exports came to a halt. So vulnerable were Latin America economies that enactment of protective Smoot-Hawley Tariff in the United States triggered a surge of anti-Americanism in assorted countries. Amid the rubble, a number of Latin Economists—Argentine Raul Prebisch became the most prominent—began to advocate principles of import substitution, whereby Latin America countries would attempt by industrializing to move from the periphery to the center of the world economic alignment. No longer would Latin America subject itself to the whims and whines of the developed countries.
Fifty years later, and after countless experiments with populist/nationalist import substitution, Latin America remains on the periphery. For that reason, import-substitution industrialization and supporting policies such as the Kennedy administration's Alliance for Progress have not fared too well in the eyes of most historians.
Often overlooked is that import substitution, coupled with the post-World War II demand for products, did usher in a period of sustained economic growth. Latin America gross national products quadrupled between 1950 and 1980. As part of the industrialization campaign, steel production, virtually nonexistent in 1950, could fulfill 75 percent of the region's needs in 1970. Nevertheless, rapid population growth swallowed up much of the GNP increases, commodity prices dwindled in value, and an excess of steel glutted the world market in the 1980s. While these and other factors have impaired its advances, import substitution may lay claim to some belated credit for lifting Latin America
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