Latin American economies have had their ups and downs in the past. Different policies and ways to improve the economy have flourished and some have failed miserably. Some simply did not last as long as they thought it would. Things like import substituting industrialization had a huge impact on Latin Americas economy. World War 2 opened a lot of doors for Latin America in terms of trade and industrialization. They gained access to imports from Europe, Japan and the US. The US wanted to acquire raw materials from Latin America. With all these opportunities popping up, Latin people got a chance to really start industrializing. The idea of a newer economic philosophy called import-substituting industrialization. “Import- Substituting Industrialization …show more content…
The Latin countries changed their economic philosophy because of the uneven distribution of land and wealth and income equality were running rampant. Import-Substituting Industrialization in these countries started a self-sustaining process of economic growth. In between the 1950’s and the 1970’s, Import-Substituting Industrialization was very successful. “Industrial Production grew at the rates of 5.2 percent, 6.3 percent, and 5.8 percent annually for the periods 1960-1965, 1965-1970, and 1907-1977, respectfully.” (Hillman 152). everything must come to an end, import-substituting industrialization met that end for a couple reasons. It turns out, import- substituting industrialization provided few high-paying jobs which means the economic and industrial growth that they strived for wasn’t achieved. Also, it made an inefficient industrial sector. Import-Substituting Industrialization was protected by the taxes, the allocation of resources wasn’t done in the right way because the industries were separate and divides Latin America into “small markets where the cost advantages of large scale production could not be achieved.” (Hillman 164). Another big economic impact was …show more content…
A couple of countries decided to fall back on restrictions on their inter-trades and it also allowed companies to accomplish economies of scales by setting up a bigger market. With ore output, the products are cheaper resulting in economies of scales. There were also free trade agreements with Mexico, Canada, and the United States in the North American Free Trade Agreement. They wanted to make the Free Trade Area of the Americas but some Latin American countries didn’t want to individually talk with the US. They wanted to talk as a united front. They thought that if they worked together they wouldn’t get screwed over by the US because of strength in numbers. Neo-liberalism got really big in the 1990s’ when the US saw that investing in Latin America is cheaper and makes them more money. Because of the “peso effect” that occurred in Mexico, the economy took a huge hit and then negatively impacted the rest of Latin America. A peso was equivalent to one American dollar so the peso money supply depended on the quantity of dollars that the currency board possessed so that the government could not print any more to pay for its deficits. The problem was that dollars flowing outwards would decrease the money supply and the government could not pay for its budget deficits since they could no longer print any money. In 1994, the Mexican government lessened the value of a peso. Because of this, they lost a
...on because most of Latin America states depended on import and export tariffs. They needed import and export tariffs to charge high taxes in order to create a healthy economy. But there were no import or exports trades to tax from. These factors weaken the economy, there was no other solution but to borrow money. In most cases borrowing money was fatal because there was no money to pay back. Most liberal governments often defaulted by borrowing money.
...reated an emerging working class as a response to factories and the need for people to work them; as a response to immense social tensions of industrialization, both regions had distinct revolutions for better working conditions. Russia and Latin America responded differently to industrialization in that Russia created a socialist political party and a unified working class in order to combat industrial social tensions leading to an international, long term, effect of their revolution whereas Mexico experienced factionalism which led to short-term effects condensed within their region solely. Also, Russia responded to industrialization by creating steady enterprises, manufacturing efforts, and foreign investments unlike Latin America which did not engage in manufacturing or investments, thus did not have an ‘Industrial Revolution” as did their Russian counterparts.
...a of Latin America: The Age of Globalization 3 (2010). Modern World History Online. Web. 11 May 2014.
...icies from past Presidents. Furthermore, it was strongly detrimental to Latin America, for the reason that it eliminated the possibility of increasing Latin American exports to the United States, thereby destroying the hopes of Latin American countries focused upon President Nixon’s policy of “trade rather than aid.” During this time, the government justified itself by proclaiming that the United States needed to focus on avoiding involvement and learning from the mistakes made in Vietnam. All in all, over the course of the presidencies of Monroe, Roosevelt, FDR, and Nixon, the U.S. intervened in Latin America numerous times. Now, was it the right thing to do? At those specific points in time, the government thought so. Various arguments can be forged over the suitability of the actions of the U.S. during these times; however that is a discussion for another time.
Many years of war made Latin America’s economy suffer, and made it almost impossible to be able to recover from their debt. A stable economy was crucial to be able to gain credibility, from other countries so that investments would continue. In Peru, for example the silver mines and machinery where destroyed beyond repair. “Horrendous economic devastation had occurred during the wars of independence. Hardest hit were…Peruvians silver mines. Their shafts flooded, there costly machinery wrecked.” 120(Chasteen ). This made Peru suffer greatly because this was one of their main trades. In Mexico, one of their largest economic struggles was the lack of transportation infrastructure, meaning that Mexico did not have railroads. Mexico also lacked navigable rivers which made it much harder to be able to...
Latin America after the Wars of Independence, were looking to modernize the nations after years of unstable politically and economically. This new idea called “progress” was to change Latin America for the better of the nations that took part of the progress. More European influences came during the period to help nations progress even further.
In the past few decades, Brazil has turned around their economy from bust after boom to a strong and growing economy. Between the 16th and 18th centuries, Brazil was reliant on its sugar industry, until the Caribbean became a competitor for the country. Unfortunately, these sugar booms caused the plantation owners to receive all of the profit, which created a large gap between the very rich and very poor, with no middle class. The gold industry had some prospects, but because the gold rushes were in isolated areas, the mon...
Neoliberalism is a form of economic liberalism that emphasizes the efficiency of private enterprise, liberalized trade, and relatively open markets. Neoliberals seek to maximize the role of the private sector in determining the political/economic priorities of the world and are generally supporters of economic globalization. During the 1930s and the late 1970s most Latin American countries used the import substitution industrialization model to build industry and reduce dependency on imports from foreign countries. The result of the model in these c...
Mignolo, W. D. (2005). The Idea of Latin America (pp. 1-94). Malden, MA: Blackwell Publishing.
Mignolo, W. D. (2005). The Idea of Latin America (pp. 1-94). Malden, MA: Blackwell Publishing.
The political power has had enormous affect to the Latin American economy. Most of the countries in the Latin America remained colonies for over a long period of time; therefore, they were controlled by the Europeans power. These colonies never thought of development of the Latin American countries, rather all wealth from the colonies was taken out to the home country. This situation is similar to other colonized continents such as Asia and Africa. Almost every colonized country in the world is still in the process of development. These countries were never benefited economically from the colonizers. Therefore, the historic imperialism is still harming countries in the Latin America as well as they are still underdeveloped. According to Marxist theory “The colonies were used as places to invest surplus capital and sell goods from the colonizing countries and as sources of cheap raw materials and cheap labor.”(P165) Therefore, the investors will always get high benefits from their investment; however, the raw materials will get low prices for it. Hence, still Latin American countries face various problems due to the excessive use of natural resources and due to late from the Europeans
After the fall of the ISI standard, many questions began to arise in regards to how Latin American countries should move forward in its development, improve growth, and create jobs. From around the 1930s until the 1980s after many Latin American countries became independent, they wanted to have economic success and become somewhat economically independent and self-sustaining. Initially these countries thought that the best way to move forward with was Import Substitution Industrialization (ISI). However, when the 1980s came around these counties realized that ISI was not the best policy for the economy or the future. ISI lead inefficient industries because they were not exposed to international competition, the focus was not on the rural sector and lead to impoverishing the local producers, and the extreme protectionist ideals did more harm than good. The issue that has to be resolved as Latin America moves forward pertains to unemployment and the job market; many countries are trying to fix the issues that surround the job market and define who are the people that actually have jobs so that those that do not can learn what they need to in order to become employed.
With industrialization comes corruption within big businesses that benefits the upper class and exploited the working middle class and lower class. Latin America and the Caribbean have been influenced by its neighbor, the United States, and Britain to undergo industrialization and modernization of its major cities in the 20th century; however, the same positive and negative effects of industrialization still apply to Latin America and the Caribbean. Although modernization has improved the quality of life in the cities, it only benefits a small portion of the population. On average, wealthy elites make up only 1% of the population, the urban middle class makes up 8% of their populations, and the rest of the population continue to live in poverty. A majority of the lower class still live in rural areas that do not receive the same benefits as in the city, including accessibility, condition of living, and opportunity. Industrialization has not only caused alarming environmental issues that affect the international community, but it has also created inequalities and imbalances
Most Latin America countries are known as third world countries because the economic structure still in development. To overcome such judgment the countries had been developing different policies since the 1970s. The policies promise to help the countries to obtain a healthier economy and have an economic growth. The author Franko explains in the book The Puzzles of Latin America Economic Development how the economist Paul Rosenstein “believes that in order to achieve sustained growth, an economy must develop various industries simultaneously, requiring a coordination of investment or a big push.” (pg. 19) But to accomplished economic growth countries need to reduce the government control over the economy and start developing a market-base economy. Market-base economy would not only guarantee positive results of development, but will also create a more stable economy. Mexico is one of the countries that have integrated new policies and other economic change which have been giving the country positive results mainly on its economy.
Around the 1930s, Brazil and Latin American began following the process of Import Substitution Industrialization, which lasted until the end of the 1980s. The ISI policies devaluated the currency in order to boost exports and discourage imports, followed by adopting different exchange rates for goods (Watkins). ISI in Brazil had an interesting effect; it created a three-prong system of governmental, private, and foreign capital being directed at the infrastructure and heavy industry, manufacturing goods, and the production of durable goods. The program worked at first but then became a serious economic problem. When the 1980s came around Brazil realized that ISI policies lead to inefficient industries because of their lack of exposure to international competition, the policies ignoring the rural sector, and finally limiting the local producers. Following the end of the ISI policies, Brazil went through many plans to correct the economy and none seemed to work until the Real Plan made real changes to the country.