Unit VI (INDUSTRY): The Economic Dev of Latin America since Independence: State Led Industrialisation (Bertola) Flashcards
What economic event prompted a shift in Latin America’s development strategy towards state-led industrialisation?
The Great Depression disrupted global trade and negatively affected Latin American economies.
What is the primary focus of state-led industrialisation in Latin America?
Making industry the core of development with a significantly expanded role for the state.
What term describes the inward-looking development strategy employed by Latin American countries?
Import-substitution industrialisation (ISI).
Which organization played a vital role in advocating for state-led industrialisation in Latin America?
The Economic Commission for Latin America (ECLAC).
During which period did state-led industrialisation reach its peak in Latin America?
From the end of World War II to 1980.
What was a significant drawback of the state-led industrialisation model?
The region’s share in world exports declined.
What macroeconomic challenges were recurring in Latin America during the state-led industrialisation period?
Balance-of-payments crises and inflation.
What significant social improvements were achieved during the state-led industrialisation period?
- Major improvements in basic education
- Healthcare systems
- Social security coverage
True or False: State-led industrialisation led to equal income distribution across Latin America.
False.
What term describes the phenomenon where Latin America did not fully close the income gap with developed nations?
Truncated convergence.
Fill in the blank: The period from the end of WWII to 1980 saw the highest economic growth rates in Latin America’s _______.
history.
What role did the US play in Latin America’s industrialisation during WWII?
Supported industrialisation through agreements and financing.
Which model gained emphasis from the mid-1960s in Latin America, combining import substitution with export promotion?
Mixed model.
What was the average annual GDP growth rate in Latin America from the end of WWII to 1980?
5.5 percent.
How did the anti-export bias affect Latin America’s share in world trade?
It led to a shrinking share of world commodity trade.
What was a key outcome of agrarian reform in rural areas during the state-led industrialisation period?
Decline of servile labour relations.
What were some of the protectionist measures taken by states during the industrialisation process?
- Exchange controls
- Import rationing
- Bilateral payment agreements
What was a major contributor to the economic recovery after the Great Depression in Latin America?
Import substitution and recovery of domestic demand.
What was the impact of ECLAC’s recommendations on economic planning in Latin America?
They were largely adopted in the US Alliance for Progress initiative.
Fill in the blank: The industrialisation process in Latin America peaked around _______.
1973–4.
What social development indicator improved more rapidly during the state-led industrialisation period than at any other time?
Human development indices.
What was the relationship between macroeconomic policies and economic outcomes in some Latin American countries?
Proactive macroeconomic policies were linked to better outcomes.
True or False: The state-led industrialisation model was universally successful across all Latin American countries.
False.
What evidence suggests that external shocks played a crucial role in the shift to state-led industrialisation?
The Great Depression and WWII caused severe disruptions and prompted policy changes.
What was the effect of high inflation in Latin America during the 1960s and 1970s?
It became a widespread problem affecting many countries.
What was a significant result of the state-led industrialisation model in terms of poverty levels?
Poverty levels saw their greatest reduction between 1950 and 1980.
What challenge did the state-led industrialisation model face regarding foreign direct investment?
Countries opposed traditional forms of investment in natural resources and infrastructure.
What is state-led industrialisation?
An economic development strategy where the state plays a significant role in promoting industrial growth through various interventions, including direct investment, policy formulation, and regulation.
What are the three main characteristics of state-led industrialisation in Latin America?
- Increasing focus on industrialisation as the basis of development
- Significant expansion of state action in economic and social affairs
- Orientation towards the domestic market, often referred to as inward-looking development or import-substitution industrialisation.
How did the Great Depression impact Latin American development strategies?
It caused a dramatic collapse in world trade and capital flows, prompting countries to focus on developing domestic markets and production capabilities.
Which group of countries in Latin America grew the least during state-led industrialisation?
The Southern Cone countries (Argentina, Chile, and Uruguay), along with Cuba.
What was the initial reaction of many Latin American countries to external debt crises during the Great Depression?
They suspended debt servicing and engaged in partial payments or buying back debt bonds at depressed prices.
What role did development banks play in Latin America during the late 1930s?
They were established to promote new manufacturing activities and nationalised certain strategic sectors.
How did the Second World War influence Latin American exports?
Initially hurt exports, but later spurred strong export-sector growth due to war-related shortages.
What is the core idea behind the Economic Commission for Latin America (ECLA)’s theory of industrialisation?
It argued that the global economic system was inherently unequal, advocating for state intervention to promote industrialisation in Latin America.
What were some key policy tools employed by Latin American countries for industrialisation from the mid-1950s onwards?
- Tariff and non-tariff protection
- Multiple exchange rates
- Foreign-exchange rationing
- Development banks
- Regulations on credit allocation and interest rates
- Tax incentives
- Public-sector investments in strategic industries
- Subsidised input prices for state-owned enterprises.
How did the approach to foreign direct investment (FDI) evolve during state-led industrialisation?
Initially focused on domestic markets but later shifted to promoting FDI as a source of external financing.
What were the main macroeconomic challenges faced by Latin America during state-led industrialisation?
- Balance-of-payments crises
- Fiscal deficits
- High inflation.
What is Import-Substitution Industrialisation (ISI)?
A development strategy focused on replacing foreign imports with domestic production through protectionist measures such as tariffs and quotas.
What is nationalisation in the context of state-led industrialisation?
The transfer of ownership of private sector assets or industries to the state, often in strategic sectors.
What does the term ‘terms of trade’ refer to?
The ratio of a country’s export prices to its import prices.
What is macroeconomic activism?
The use of active fiscal and monetary policies by the government to manage and influence overall economic performance.
True or False: Import substitution was the most dominant feature of state-led industrialisation.
False.
Fill in the blank: The Economic Commission for Latin America (ECLAC) is a _______ regional commission established to promote economic and social development in Latin America and the Caribbean.
United Nations
What event in the 1930s led to widespread external debt defaults in Latin America?
The Great Depression.
What were some social consequences of state-led industrialisation in Latin America?
- Industrial growth
- Agricultural development
- Changes in income distribution
- Macroeconomic stability.
What is fiscal deficit?
A situation where a government’s total expenditures exceed its total revenues over a given period.
What does ‘devaluation’ mean in economic terms?
A reduction in the official value of a country’s currency relative to other currencies.
What does ‘external shocks’ refer to?
Significant and often unpredictable events originating outside a country’s economy that impact its economic performance.
What is the significance of Raúl Prebisch in the context of ECLA’s theory?
He was a key figure in developing the theory that advocated for state intervention to promote industrialisation.
What is the role of development banks in state-led industrialisation?
To provide long-term financing for projects aimed at promoting economic development in specific sectors or regions.
What was the initial view of FDI in Latin America?
Initially viewed cautiously, emphasizing national investors’ roles.
FDI was considered a risk, with a focus on the importance of local investment.
What role did transnational corporations play in FDI promotion?
They promoted FDI in new import-substituting activities as a reliable source of external financing and technology transfer.
This shift marked a significant strategy change towards embracing foreign investment.
What critical view re-emerged regarding FDI?
A push for greater national control over key industries.
This reflected concerns about sovereignty and the influence of foreign corporations.
List some macroeconomic challenges associated with state-led industrialisation in Latin America.
- Balance of payments crises
- Fiscal deficits
- Inflation
- Increased external debt
These challenges often led to economic instability, particularly during global crises.
What were the social consequences of state-led industrialisation?
- Uneven distribution of modernization benefits
- Urban population growth
- Limited success of agrarian reforms
- Persistent income inequality
Despite economic growth, social progress was not uniformly experienced across the population.
How did the Great Depression influence state-led industrialisation?
It provided the initial impetus for state-led industrialisation in Latin America.
The economic downturn prompted countries to seek self-sufficiency and industrial growth.
What impact did the policies of industrialised nations have on Latin America?
They included protectionist measures and bilateral trade agreements that directly impacted Latin American economies.
Such policies affected trade dynamics and economic strategies in the region.
How did the United States influence state-led industrialisation in Latin America during WWII?
By supporting the development of the interventionist state through initiatives like raw material agreements.
This support was driven by strategic interests during the war.
Who was Raúl Prebisch and what was his contribution?
He led the Economic Commission for Latin America (ECLAC) and developed influential theories of industrialisation advocating for state intervention.
His work formed the intellectual basis for many Latin American industrial policies.
Fill in the blank: State-led industrialisation faced recurrent ________ during periods of external strangulation.
balance of payments crises.
True or False: The benefits of modernization during state-led industrialisation were evenly distributed across all social classes.
False.
