The resilience and rapid-growth of East Asian economies even in the face of rising protectionism in their major export markets and a global recession, has intrigued developmental specialists who see Latin America as a prime candidate for comparison. By becoming increasingly libertarian and by embracing neo-liberalism Latin American countries have sought to emulate the success of East Asian economies. Nevertheless they have found it difficult to maintain their previous levels of growth, confronting piling external debts, high rates of inflation, shortages of investment capital, and the growing social and economic marginalisation of their population. Latin America’s industrialisation can be seen as a decedent of the East Asian model, however …show more content…
These countries differ not only in the timing and trajectories of their development efforts but also in the ways they are linked to the world-system. Geopolitical unions, international debt, foreign aid, DFI, and foreign trade have played very dissimilar roles in the regional development processes.
The capital and labour markets as well as price mechanisms worked very differently in Latin America than in their equivalents in the industrial nations, with only a few underdeveloped countries satisfying the assumptions underlying neoclassical and Keynasian economics. The Northern paradigm of developmental economics proved futile to explain the causes and the persistence of underdevelopment and for proposing policies to overcome these states of affairs. The two regions are the most industrialised in the developing world, with Mexico, Brazil, and Argentina being the Latin American analogues of East Asia 's "Four Tigers" (South Korea, Taiwan, Hong Kong, and Singapore).
The neoclassical economists in their eagerness to dismiss the challenge of rising inequality in the periphery, failed to notice that structuralists were among the first to recognise the limitations of import-substitution industrialisation as it was being implemented in various Latin American countries in an attempt to
The South America has evolved as the one of the most dynamic region of the world so much development taking place. In 2005 Latin American economies managed to grow at average of 5.5% while inflation is in single digit which shows that it has created the economic prerequisites to deal with the aforementioned problems.
19. After reading this chapter, what do you believe are the two greatest obstacles preventing poor countries from becoming rich?
The rise of the middle class had a potent impact on Latin America. The middle class consisted of “a high percentage of the intellectuals, authors, teachers, and journalists” and also they had the most influential voice in the late 19th century (Charlip & Burns, 177). One of the most important points about the middle class was that they were not only the true nationalists in Latin America but also they regarded the United States as their model, thus they tried to learn something beneficial from the United Sates for their nation’s prosperity and citizens. For example, the middle class was impressed by the high North American literacy rate and also considered the high literacy rate “seemed to provide the proper preparation for an industrial society”
The Americas, now known as Latin America, has gone through many changes in its history, from being conquered by Spain and Portugal, to the people fighting for its independence and finally, making a living as newly independent countries. From the years 1850 to the end of the 19th century, each region had influences, specifically those that dealt with the after effects colonial rule had on the land. Nations that made up Latin America began modifying different portions in their government in attempts to benefit the majority of the people. More or so, they accomplished this goal, each with their own challenges. Evidently, changes within the social, political and economic systems were focused on external factors.
Weak Institutions: Since the late 1800’s, “Latin America [has been] the incubator for all great United States multinational corporations” (Harvest of Empire, 2012). The domination of the local resources and land, by MNC’s and the maintenance of that domination by the U.S. military effectively captured many Central American states economically and politically. This went on from the 1896 until the end of WWII when U.S. policy shifted, the paradigm became more
Amid chaotic and drastic changes within Latin America, there is one country whose economy’s improvement has outshone the rest. According to a recent interview by CNN to the current vice president at Council of the Americas, it was possible to know that “Peru is currently Latin America’s fastest growing country”. Additionally, drastic reforms and innovative policies have fostered an environment that favours economic development. Although there is a lot left to do regarding public investment, the country has experienced drastic growth and several changes during the past years. Currently, the new president and the newest reforms have influenced the government and now the country is focusing on exporting processed goods instead of raw materials.
After WWII the United States had replaced Europe as the ideal model for Progress. The media glorified what living in the US would be like; having a refrigerator, and a car. This became increasingly unrealistic especially when Latin Americans could barely afford to dream of having a refrigerator, let alone a car. To Latin America being next to a newly developed superpower has starting to have its downsides, especially after the US announced the Marshall Plan. The Marshall Plan spent a large amount of funds to Europe to help rebuild after the devastating war, although Latin America was allied with the US, they had only received two percent between 1946 and 1959.
Direct criticism to the modernization theory created the idea of the dependency theory. Scholars from Latin America theorized about what was the cause of their dependency and underdevelopment. The theory stated “the present underdevelopment of Latin America is the result of its centuries-long participation in the process of world capitalist development” (Frank 7). In ordinary terms, the drive to compete in the global economy deepened the hole of underdevelopment. The capitalistic pull of resources from underdevelopment countries to the development country perpetuated the conditions of
The post war economy left many nations across the world severely affected. The economies of Europe, Asia, and the Middle East demanded new materials as the post war era of reconstruction began to shape modern economic thought. This lead to a rapid embrace of Keynesian, or centrally planned economic theories, to encourage the recovery of nations devastated, as well as the growth of nations that were not at that point considered amongst the “developed world”. This radical notion of central planning resulted in many nations expanding the traditional role of government in the context of the economy. This shift in dynamic and approach to economic thought was felt especially in the fledgling Latin American economies. Out of this thinking, a radical approach to increase the self sufficiency of these Latin American countries was embarked upon. The concept of Import Substitution Industrialization was pioneered to assist the Latin American countries into formulating an economy that can compete and build a better society for the citizens of their countries. The economic concept revolves around the idea of enhancing the local production of a nation, and to eventually have the nation begin to rely less on imported goods from other nations(1). This internal market enhances the production and growth of a nation’s local economy, giving jobs and sustainability to that nation while increasing the nation’s dependence upon itself rather than a foreign power. Through emphasizing industrial
The analysis of Latin America is a compelling argument for the exploitation of peripheries in the WST. There are numerous examples of cases where a core or core countries have benefited from situations where a Latin American state has been unfairly treated within the international economic community. It is natural that some countries in South America were more greatly affected by the inequalities of the modern economic system because there are differences in their their economic structures; some countries interacted more closely, more frequently, or under different agreements with core powers compared to other countries. However, a significant proportion of Latin American experienced some form of exploitation under the conditions of the capitalist
They explain that during the last half of the nineteenth century, an outward-oriented period of growth started in Latin America, based on the export of raw materials to emerging industrial nations. Unlike the ruling classes in other parts of the world, the so-called oligarchic order in Latin America concentrated the resulting large surplus in the hands of small traditional elites who imitated the consumption patterns of European upper classes, rather than seeking to enhance their countries' education, technology and production infrastructure (Arocena and Senker 2003). In the late 1950s and early 1960s, industrialization failed to reach a point at which it was self-sustaining. While there were plants and factories in Latin America that could produce consumer goods, only a comparatively small wealthy segment of the population could afford to purchase these consumer goods as opposed to the large segment of the United States and West Europe populations. This restricted expansion of the internal market for manufactured consumer durables, and the expansion of manufacturing employment. Accordingly this did little or nothing to reduce inequality. Industrialization produced by inward investment and by internal consumption of expensive products could only be sustained in Latin America in a period when external funding was easy to obtain. This came to an end with the debt crisis of the 1980s. Latin
After the end of the World War II the world faced the challenges of economic and social recovery. The majority of developing countries based their economies on Import Substitution Industrialization (ISI), the state-oriented approach to a trade and economic policy. ISI supports the replacement of import with domestic production in order to reduce foreign dependency. This protectionist policy dominated in developing countries, especially in Latin America and sub-Saharan Africa, during the first 30 years after the World War II. By 1980s, when the main gains of ISI were exhausted and it demonstrated its inefficiency, the countries of East Asia adopted a new development strategy. Consequently, this new export-oriented and market-friendly strategy, so-called East Asian model, has determined the successful economic and trade policy of East Asian countries during the next several decades. To understand the reasons of the shift from ISI to the East Asian model, it is needed to carefully examine and contrast these two approaches and their supporting theories.
At its original creation the Washington consensus did not only reflect views from Washington but also included those of Latin America. The life of the consensus can be traced from a Latin American perspective in the way that it evolves economic development models. There were many consensus-style reforms in Latin America as well as the resemblance of the incompatibility between
There are many significant change in the world economy occurred, marked by globalization each country has different speed of development under different political and cultural background. During this period, Such as the United States of America 's economic status from the rapid development to the decline, then move to the current stable trend. Brazil, Russia, India, China, which named ‘BRCIS’ those developing countries’ economic performances are very catch the attention in recent years. The decline and rise of these countries ' commercial economy are closely related to their political culture. Therefore, it attracted the attention of scholars and research circles.
He pointed out that different economic levels have their own requirements and they may not follow the same process of industrialization. Moreover, he raised the most influential theory related to late industrialization that the economically backward states may have rapider growth rate as they are late comers, and the national development process relied on the degree of economic backwardness. That is to say the more backward a country, the faster it will advance (ibid).