Development Alternatives for Latin America

TLDR: For nearly two decades discussions of Latin American development have focused on problems of structural imbalance and their possible cures as discussed by the authors, and the alternative advocated by Prebisch and pursued throughout Latin America-import substitution through industrialization-has run into increasing difficulties.

Abstract: For nearly two decades discussions of Latin American development have focused on problems of structural imbalance and their possible cures. Prebisch (1950) began the discussion when he argued that continued dependence on primary exports would place limits on further Latin American growth. While those limits appear to have been real, especially for exporters of tropical agricultural products, the alternative then advocated by Prebisch and pursued throughout Latin America-import substitution through industrialization-has run into increasing difficulties. Industrial growth, despite protection and other preferential policies, has been no more rapid in Latin America than in other parts of the world.' Apart from initial spurts due to import substitution, it has been limited by the slow growth of the other sectors of the economy. This experience points to the need for a more comprehensive analytical framework in designing development policies. In concentrating too heavily on one of the factors limiting growth, the import substitution policy has merely replaced one set of bottlenecks with another. To avoid a wasteful repetition of this process,2 it is necessary to establish a more compre-