America 's Economic Crisis With Import Substitution Industrialization

1265 Words Dec 15th, 2015 6 Pages
Up until the late 19th and early 20th centuries, Latin American countries had economies that were heavy exporters of goods due to their abundance of natural resources. In 1930, the Great Depression struck the global economy and foreign demand for Latin American goods became virtually nonexistent. International trade died down and deflation increased the burden of foreign debt. "Latin American presidents led efforts to foster industrialization through increasing state intervention in their economies" (Geddes 138) and proceeded to respond to the global financial crisis with Import Substitution Industrialization. Citizens thought of Import Substitution Industrialization as Latin America 's development strategy that would industrialize their country. The idea behind Import Substitution Industrialization was to enact protectionist trade policies that would protect Latin American countries ' industries from international competition by replacing foreign imports with domestic goods. Fast forward a few decades to 1980 and Latin American countries have economically regressed and have accumulated a massive amount of debt. Clientelism and protectionism derailed the industrialization of Latin American states and caused Latin American states ' economic crisis through the implementation of inefficient policies. First, I will discuss the political and economic events that led to Latin American countries ' failure to industrialize. Second, I will explain how development strategy was a…

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