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TODAY•Industrial history•ISI industrialization

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The Escondida "hidden") mine (at 3,100m) produces8% of all copper globallyOwned by Australian/British co.BHP Billiton – a world leader in metals production: copper, aluminum, lead, uranium, diamonds, etc.

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Industrialization in the late 19th Century — up through

WWII•Export Processing Industrialization (a

follow on from colonial patterns)

•Low technology manufacture of basic consumer goods

•Era of WW I; Great Depression; through WW II

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Import Substitution Industrialization (ISI) (1940s —

1970s)•Legitimized by Argentine economist

Raul Prebish in 1940 and adopted as official policy by the UN after WWII

• Imposed quotas or tariffs to increase the price of imported manufactured goods

• Idea is to stimulate local industries

•NOT a new idea

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Consequences of previous rounds of industrialization

•A legacy of: Colonial; 19th C; and especially ISI industrialization

•Spatially uneven: largest states benefit most

•Smaller states forced to band together

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Economic & other assumptions of ISI•Presumes that “under development”

is partly the result of uneven terms of trade between LA and the more developed Atlantic world

• Isolating the country’s economy from the wider world’s economy will allow it to develop without the pressures from the Atlantic World

•Attempt to recreate a mini-model of the economy of more developed states

•Strongly involve the state in economic activities via state enterprises etc.

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Problems with ISI•Role of modern technology in ISI

•Role of changed imports in ISI

•Role of foreign control in ISI

•Role of role of governments in ISI

•Inefficient management due to lack of competition

•Loans to do all this not easily repaid => demands to “restructure” economy”

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Growth Pole Industrialization

(1950s-60s)•Concentrate on key parts of

economy

•Develop specific locationsE.g., Arica ChileAmazonia and NE BrazilCiudad Guyana

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Fiscal environment and impacts of ISI and other rounds of development

• ISI and general growth in 1960s led to increased borrowing by LA nations

• By 1980s loans became due but growth anticipated from ISI was not sufficient

• Neo-liberal reforms or “Conditionality” as a plan to work out debt

• Higher interest rates, higher cost oil, etc => great levels of inflation beginning in 1970s

• Inflation => elites took their money out of LA to US and Europe

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Export Promotion Industrialization I

•Due to failures of ISI and need of LA countries to satisfy banks from whom they borrowed to do the ISI

• Idea was to mimic success of Asian “Tigers”

•Based on “neo-classical” economic ideasAssumes that markets manage bestThus, open markets best (lower or

eliminate tariffs) (tariffs are usually reciprocal)

Allow transnational corporationsThus, attempts to create zones of free

trade

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Export Promotion Industrialization II

•Main advantage of LA in world economy (in addition to availability of some raw materials and agricultural products) for manufacturing is Location near USA mkt. The low cost of labor => labor-

intensive (assembly) industries

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Export Promotion Industrialization III

•Mexico and Brazil initially first in this due to their already existing industrial infrastructureE.g., auto factories initially designed

for ISI changed to export

•This pattern is greatest in the sphere of small-scale assembly of finished goods or parts – often in special zones

•These are usually referred to as Maquiladora assembly plants

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Current industrialization•Mexico + Brazil ~ ½ of Latin American

population but > 70% of industrial output

•Brazil ~ 1/3 of pop but has ~ ½ industrial output by itself

•Argentina, Peru, Venezuela have ~ 25% of industrial output in LA

•Thus, ALL the rest of LA combined has less than 10% of all industrial output

end

SUDAN

SUDENE

Ciudad Guyana

Auto train near Saltillo. Mexico

Kenworth (18 wheelers) exported FROM Monterey, Mexico to USA

Honda plant near Sao Paulo

© Secretaría de Economía, Mexico

© Zachary Miles Baddorf. www.baddorf.com

© Amnesty International