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Economic Development of Latin America

Introduction

Latin American countries’ economic situation is significantly influenced by both the internal policy and external initiatives of such organizations as Import Substitution Industrialization (ISI) and such countries as China. Therefore, their further economic growth depends on the capability to reorientate their efforts while considering the recent trends. This paper aims to demonstrate the current challenges of the region and scholars’ views on the problem.

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Latin America’s Trade

Latin America’s situation in terms of its trade with developed nations is a well-known phenomenon among specialists. However, their publications vary depending on the perspective on the precondition of the problems. As can be seen from the article written by Alicia Puyana, the perception of this aspect is connected to the orientation of Latin America on materials and goods with low demand. Hence, the author compares the current crisis with the improper focus of businesses complemented by the countries’ dependence on imported minerals and primary goods. In contrast to this stance, the analysis of Raul Prebisch demonstrates the dominant impact of the deteriorating terms of trade rather than materials. In this way, industrialization seems to be a better solution as opposed to reorientation stated by Puyana.

Prebisch’s Arguments

The central intuition behind the arguments of Raul Prebisch regarding international trade is related to the need for internal investments rather than strengthening of international relations. The dynamic nature of his surplus transfer argument is connected to the necessity to change the unequal exchange between Latin America and other countries. In this way, Prebisch claims that continuous economic downfall can be prevented with the help of the specified measure. From his perspective, the differences between demand and supply are in the required shift in the enhanced competition from the latter to the former.

Import Substitution Industrialization (ISI) Program

The central features of the Import Substitution Industrialization (ISI) program are the intention to establish new industries and the creation of economic benefits provided by the government. They address Prebisch’s development concerns regarding free trade by covering the two main areas of influence: industrialization and the allegedly weak connections between Latin America and other countries. The practical implementation of such national strategies can be seen in the economic indicators reflecting the growth and the initiatives facilitating access to credit.

The Impact of China

The situation with the trade in Latin America is significantly affected by the effective policy of China, resulting in its economic growth. The latter became one of the main countries which needed this region’s exported materials. As a result, Latin America could start its economic expansion. Moreover, these events led to the rise of socialism in Venezuela, and this outcome complements the consequences for the economy.

China and ISI

The recent turn of China to ISI and “inward development” affected the economic performance of Latin America. These events slowed down the export growth and thereby emphasized the need for reorientation to industrialization in contrast to the focus on international relations. Moreover, they enhanced the migration of workers within Latin American countries due to the change in demand and put pressure on the governments’ budgets.

Conclusion

To summarize, Latin America’s economic development is connected to the initiatives on the promotion of industrialization of ISI in other regions of the world. This situation implies the need for reorientation of domestic industries instead of focusing on the external markets. From this perspective, industrial progress at the expense of agriculture is an inevitable process. Thus, the challenge for the enterprises turned into an economic burden for the governments.

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StudyCorgi. (2022, July 26). Economic Development of Latin America. Retrieved from https://studycorgi.com/economic-development-of-latin-america/

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StudyCorgi. (2022, July 26). Economic Development of Latin America. https://studycorgi.com/economic-development-of-latin-america/

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StudyCorgi. 2022. "Economic Development of Latin America." July 26, 2022. https://studycorgi.com/economic-development-of-latin-america/.

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StudyCorgi. (2022) 'Economic Development of Latin America'. 26 July.

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