Econ 222F10_ISI.pptVIP

Econ 222. Latin American Economic Development Instructor: Ana Regina Andrade Fall 2010 Vanderbilt University Readings Franko: Chapter 3 Optional reading: Cardoso: Chapter 3 Baer, Werner (1972) Import Substitution and Industrialization in Latin America: Experiences and Interpretations. Latin American Research Review, Vol. 7, 1, pp 95-122 Bruton, Henry (1998) A Reconsideration of Import Substitution, Journal of Economic Literature, Vol 36, 2, pp 903-936. Import Substitution Industrialization The economic theory behind ISI Dependency theory Structuralists ISI main characteristics Did ISI work? Limitations The economic theory behind the ISI Dependency Theory Underdeveloped countries were not developed countries in the making Capitalism in its expansion generated underdevelopment Industrialized countries need to find access to cheap inputs to support its own growth through the extraction of resources, the export of minerals, and the exploitation of cheap labor. Industrial countries --in their process of economic expansion-- had caused underdevelopment in other nations. Rich countries became rich by making other countries poor. Dependency Theory Paul Baran Alliances Dependency Theory Baran Frank: While the periphery is tied to the center, there is no possibility of sustainable growth in developing countries. As long as traditional elites remained in power, the economic development of countries in the periphery would always respond to the interest of the center not to the interest of their own population and well being. Solution: Revolution. Structuralists Fernando Henrique Cardoso and Enzo Faletto Agree with the assessment that the center countries controlled the dynamic of growth. Disagree with the revolutionary prescription. Solution: Development within the periphery would be possible via strong government. Structuralists Fernando Henrique Cardoso and Enzo Faletto The pe